LBLV Fed cuts rate to maintain economy 19|09|2019

LBLV provides an overview of economic news.

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The main economic news for Thursday, September 19, 2019:

1. Federal Reserve cuts rate to maintain economy
The U.S. Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion. However, the central bank set a higher bar to further reductions in borrowing costs, getting a fast and sharp criticism from President Donald Trump. Describing the U.S. economic outlook as “favorable,” Fed Chairman Jerome Powell said the rate cut was designed “to provide insurance against ongoing risks” including weak global growth and renewed trade tensions. “If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate,” Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75% to 2.00%. It was the second Fed rate cut this year.

2. Asian stocks continue to drop after Fed rate cut
Asian shares extended losses on Thursday after the U.S. Federal Reserve hinted on further political easings, while the Bank of Japan held off from offering more stimulus as some analysts expected. The Fed cut rates for the second time this year, forcing policymakers around the world to step up efforts to stimulate their economies. Earlier in the day, the BOJ kept policy steady as expected, though there were some expectations the Japanese central bank would increase its already massive stimulus. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.6%, while Japan’s Nikkei climbed 0.43%. Hong Kong’s index Hang Seng dropped 1.36%. Meantime, the pan-region Euro Stoxx 50 futures decreased 0.06%, while German DAX futures slipped 0.1%, and FTSE futures tumbled 0.27%.

3. Huawei launches the most powerful 5G smartphone
The telecoms giant Huawei launches what could be the world’s most powerful and feature-packed 5G smartphone on Thursday. Meantime, the fate of new device in Europe will hang on whether it can overcome a U.S. ban to give customers the Google software they expect. The Shenzhen-based company will showcase its Mate 30 range in Munich, Germany, in its first unveiling of an all-new phone since President Donald Trump hit Huawei with an export ban in May. The second largest smartphone maker is caught in the fallout of a trade conflict between Washington and Beijing that analysts say is escalating into a technology cold war. The U.S. ban will likely cost the Chinese company $10 billion. Holding the launch in Europe underlines the importance of the region’s 500 million consumers to Huawei. It lost five percentage points in market share here following the U.S. ban, even as buyers rallied to its brand at home.

4. Netanyahu calls Gantz to form governing coalition
Prime Minister of Israel Benjamin Netanyahu called on Thursday on his main rival, former general Benny Gantz, to join him in a unity governing coalition after Israel’s election ended with no clear winner. A spokeswoman for Gantz, leader of the centrist Blue and White party, had no immediate response to the surprise offer from Netanyahu, head of the right-wing Likud party. The change of strategy reflected Netanyahu’s weakened position after he failed again in Tuesday’s election, which followed an inconclusive ballot in April, to secure a parliamentary majority.

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