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Presidential Town Halls, Brexit and U.S. Retail Sales

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© Reuters

By Geoffrey Smith 

Investing.com — The U.S. presidential candidates spar remotely at town hall meetings, the EU puts the pressure on Boris Johnson to back down over Brexit, stocks are flat ahead of retail sales and industrial production data, while oil dips as OPEC gives no hint of abandoning plans to raise output next year. Here’s what you need to know in financial markets on Friday, October 16th.

1. Presidential candidates spar remotely

The two U.S. presidential candidates sparred with each other at a distance in two separate town halls.

President Donald Trump’s was generally free of any new commitments on policy and was more notable for his refusal to disavow the QAnon conspiracy theory movement.

Democratic Party nominee and former vice-president Joe Biden said he would aim to raise $2.4 trillion in taxes over the next decade from corporations and the wealthiest U.S. households. As regards oil exploration policy, he said he didn’t support a ban on ‘fracking’, but said it has to be managed “very, very carefully”.

Biden also chose not to rule out adding judges to the Supreme Court if the Republican-controlled Senate presses ahead with the confirmation of Amy Coney Barrett to the court in the coming days,

2. Retail sales, industrial output data due

The day’s main economic data come from the real economy, with U.S. retail sales for September due at 8:30 AM ET (1230 GMT). Analysts expect core retail sales growth to slow to 0.5% on the month, from 0.7% in August, in what would be further evidence of the post-lockdown recovery flattening out.

Pressure on consumer spending is increasing as layoffs continue at a high rate, while Congress has failed to produce a new stimulus package to support incomes since September. Initial jobless claims rose to their highest level since August last week, at nearly 900,000.

At 9:15 AM, there will also be industrial production data for September, where a marginal acceleration of 0.5% is expected.

At 10 AM, the University of Michigan will publish its monthly consumer sentiment survey. The main index is expected to edge up to 80.5 from 80.4 last month.

3. Stocks flat; Honeywell (NYSE:), Schlumberger (NYSE:) reports eyed

U.S. stock markets are indicated to end the week on a flat note, with none of the futures contracts on the major indices moving much in the overnight session.

By 6:30 AM ET, were up 43 points or 0.2%, while S&P futures were up by a little less than 0.2%. Nasdaq futures were up 0.3%.

The week’s earnings roster rounds off with updates from Honeywell and oilfield services giant Schlumberger, along with Ally Financial (NYSE:), State Street (NYSE:) and Bank of New York Mellon (NYSE:). Intuitive Surgical (NASDAQ:) stock may also garner interest after posting much stronger-than-expected results after the closing bell on Thursday.

4  EU raises pressure on Johnson over Brexit

EU leaders refused to make any further concessions over post-Brexit trading arrangements with the U.K., putting the ball back firmly into Prime Minister Boris Johnson’s court. An EU summit said it was up to the U.K. to honor the terms of the Withdrawal Agreement signed between the two parties last year.

It flagged ongoing concerns about the U.K. government’s new draft bill that would violate the terms of that agreement and force customs checks on the Irish border. The EU is also looking for further concessions on the issues of fisheries and competition. 

Johnson is due to give a statement later.

5 Oil edges down after OPEC

Crude oil prices fell overnight but held above $40 a barrel in the wake of a solid draw on U.S. stockpiles confirmed on Thursday by the U.S. Energy Information Administration.

Major oil trader Gunvor estimates that world stockpiles are currently falling by 3 million barrels a day, its CEO Torbjorn Tonqvist told Bloomberg earlier. However, that may not last for long. A technical meeting of OPEC experts on Thursday gave no indication that an increase in output of nearly 2 million barrels a day, scheduled for the start of next year, will be postponed.

futures were down 0.9% at $40.61 a barrel, while futures were down 0.9% at $42.76 a barrel.





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Honda reaches $5 million defective air bag settlement with Arizona By Reuters

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© Reuters. FILE PHOTO: The Honda logo displayed at the 89th Geneva International Motor Show in Geneva

(Reuters) – Arizona reached a $5 million settlement with Honda Motor Co’s (T:) U.S. units Wednesday in a probe into defective Takata air bag systems, state Attorney General Mark Brnovich said.

The settlement follows an $85 million settlement announced in August with nearly all other U.S. states. Arizona said the Honda settlement includes $1.65 million in restitution for state consumers, a $2.13 million repair incentive program, $750,000 for consumer outreach and a $500,000 payment to Arizona.

Faulty air bag inflators have been tied to at least 15 U.S. deaths in Honda vehicles.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Fed’s Mester says policymakers need to watch for financial stability risks By Reuters

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© Reuters. Cleveland Federal Reserve Bank President Loretta Mester speaks in London

(Reuters) – The Federal Reserve’s new approach to monetary policy should help the central bank influence the economy at a time when interest rates and inflation are low, but policymakers need to keep an eye out for financial stability risks, Cleveland Fed Bank President Loretta Mester said Wednesday.

The framework clarifies that strong employment on its own is not a concern to the Fed unless there are strong inflationary pressures or financial stability risks, Mester said. But policymakers also need to remember that low rates could encourage “higher levels of borrowing and financial leverage, increased valuation pressures, and search-for-yield behavior,” she said.

“While monetary policy that leads to a stable macroeconomy encourages financial stability, it is also possible that in an environment with low neutral rates, a persistently accommodative monetary policy could, in some cases, increase the vulnerabilities of the financial system,” Mester said in remarks prepared for a virtual event on monetary policy.

The relationship between low rates and stability needs to be studied, she said. “How best to approach the nexus between monetary policy and financial stability in a low-interest-rate world deserves more consideration,” Mester said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Fed’s Brainard says more fiscal, monetary support needed By Reuters

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© Reuters. Federal Reserve Board Governor Lael Brainard speaks at the John F. Kennedy School of Government at Harvard University in Cambridge

By Dan Burns and Ann Saphir

(Reuters) – Despite a “heartening” early bounceback from the initial hit to the U.S. economy delivered by the COVID-19 pandemic, the recovery has been uneven and will require continued support from the Federal Reserve and fiscal authorities to ensure it becomes broadbased and sustainable, Federal Reserve Governor Lael Brainard said on Wednesday.

Brainard, in remarks to an online conference of the Society of Professional Economists, said the economy’s overall gains since the worst of the crisis mask big disparities among sectors and among Americans that could hold back the overall recovery.

The Fed, she said, is committed to providing “sustained accommodation” to the economy for as long as needed. At the same time, the biggest risk to her outlook for recovery is that fiscal support from the federal government will be withdrawn too soon.

“This strong support from monetary policy – if combined with additional targeted fiscal support – can turn a K-shaped recovery into a broad-based and inclusive recovery that delivers better outcomes overall,” Brainard said.

Brainard’s reference to a “K-shaped” recovery nods to an increasingly popular description of the rebound from the spring’s low point in activity, under which many households and small businesses have seen little improvement.

“Premature withdrawal of fiscal support would risk allowing recessionary dynamics to become entrenched, holding back employment and spending, increasing scarring from extended unemployment spells, leading more businesses to shutter, and ultimately harming productive capacity,” Brainard said.

Among the more troubling developments from the recession caused by the pandemic, she said, are that job losses have occurred disproportionately among minority populations and, more recently, that prime-age working women have left the labor force.

“If not soon reversed, the decline in the participation rate for prime-age women could have longer-term implications for household incomes and potential growth,” she said.

Brainard signaled that the Fed will not only keep rates at their current near-zero level for years, but will, even after liftoff, raise them only gradually to keep rates at levels designed to stimulate economic growth.

The central bank will “have the opportunity” in the months ahead to clarify how the Fed’s asset purchase program could best work in combination with forward guidance on rates, she said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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