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German manufacturers are reinforcing concern that Europe’s largest economy is headed into a recession. A nationwide gauge showed orders at factories and services companies are dropping at the fastest pace in six years, and more companies now expect output to fall than rise over the next 12 months. That’s the first time that’s happened since 2014, according to the Purchasing Managers’ Index from IHS Markit.
The peek into the engine room of European industry provides a damning snapshot of the economy, which shrank in the second quarter. The persistent weakness -- driven by mounting global trade tensions, car industry woes and slowing demand in China -- doesn’t bode well for the broader euro area.
European Central Bank policy makers have already started laying the groundwork to add monetary stimulus and are expected to cut interest rates at their next meeting in three weeks. In Germany, the government has made only tentative steps toward a fiscal stimulus program aimed at supporting growth. (BBG – Continue Reading)
Emmanuel Macron will hold a friendly but “frank” working lunch with Boris Johnson on Thursday after dismissing his request to renegotiate the Brexit withdrawal agreement and scrap the Irish backstop as “not an option”.
The French president told reporters on Wednesday night that there was a “British democratic crisis” over Brexit and he was seeking “clarification” from Johnson on his proposals as the 31 October exit date approaches.
Macron said it was not possible to agree to Johnson’s demand to scrap the Irish backstop which had been negotiated by Britain during two years of talks. Doing so would give the EU an unacceptable choice between protecting its internal market or preserving peace in Ireland. (Guardian – Continue Reading)
Every August, investors around the world obsess over what’s going on in a tiny Wyoming resort on the edge of the magnificent Teton mountain range. They have good reason to do so. Over the past two decades, central bankers have used the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole to plot out and signal changes in monetary policy.
With global recession fears growing and bond yields tumbling, this week’s gathering is one of the most anticipated in years. Fed watchers expect Chairman Jerome Powell to suggest that the central bank is ready to reduce interest rates further when he delivers the opening address to the conference on Friday.
In 2014, European Central Bank President Mario Draghi laid the groundwork for quantitative easing in his address, warning that inflation expectations had deteriorated and assuring his audience the ECB “will use all the available instruments needed to ensure price stability.” The ECB launched QE the following year and bought over 2.6 trillion euros of mostly government bonds. (BBG – Continue Reading)
U.S. corporations are repurchasing their own shares at the slowest pace in 18 months, a potential sign of more volatility as the buyback bonanza from the corporate-tax overhaul wanes.
Companies in the S&P 500 repurchased about $166 billion of their own stock in the second quarter, S&P Dow Jones Indices projects, down from $205.8 billion in the first quarter and $190.6 billion in the same period a year ago. That marks the lowest total since the fourth quarter of 2017 and the second consecutive quarter of contraction.
Federal Reserve officials viewed their interest-rate cut last month as insurance against headwinds from the trade war and low inflation -- reasons that look even sharper as they move toward their meeting in September.
Minutes of their July 30-31 meeting released Wednesday in Washington laid out the reasons for the quarter percentage-point cut, highlighting risks to the outlook even though the U.S. economy, for now, is performing well.
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