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U.S. Consumer Sentiment Ticks Up, Still Below Pre-Virus Level By Bloomberg

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© Bloomberg. A shopper carries boxes of shoes at the Queens Center shopping mall in the Queens borough of New York on Sept. 9.

(Bloomberg) — U.S. consumer sentiment ticked up in early October to a seven-month high on an improved economic outlook, though confidence remained well below pre-pandemic levels.

The University of Michigan’s preliminary sentiment index for October advanced to 81.2 from a final September reading of 80.4, according to data released Friday. The median estimate from economists surveyed by Bloomberg was for 80.5; the index was at 101 in February, near the highest since 2004.

The gauge of current conditions decreased 2.9 points to 84.9, while a measure of expectations rose 3.2 points to 78.8.

While the result indicates pessimism about the future has diminished a bit, views of buying conditions for durable goods worsened in the survey, pointing to slightly less appetite for big-ticket purchases ahead of the holiday shopping season. In addition, the gap between Democrats and Republicans on sentiment remained wide.

With coronavirus infections accelerating again in the U.S. and congressional talks for further stimulus at a stalemate, the economic rebound and labor market face headwinds that will challenge whoever wins the Nov. 3 presidential election.

“Slowing employment growth, the resurgence in Covid-19 infections, and the absence of additional federal relief payments prompted consumers to become more concerned about the current economic conditions,” Richard Curtin, director of the survey, said in a statement. “Those concerns were largely offset by continued small gains in economic prospects for the year ahead.”

A separate government report earlier Friday showed retail sales rose in September by the most in three months.

The Michigan report also showed inflation expectations remained relatively tame. Consumers anticipated prices rising 2.7% in the year ahead, up from 2.6% in September, while longer-term inflation expectations fell to 2.4%, the lowest since March.

The preliminary survey covers responses received through Oct. 14. The final report for the month will be issued Oct. 30.

©2020 Bloomberg L.P.

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U.S. offers Brazil telecoms financing to buy 5G equipment from Huawei rivals By Reuters

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© Reuters. U.S. Ambassador Todd Chapman walks between flags during a meeting at Sao Paulo’s Industries Federation in Sao Paulo

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By Lisandra Paraguassu and Andrea Shalal

BRASILIA/WASHINGTON (Reuters) – The U.S. government stepped up an offensive on Tuesday to keep China’s Huawei Technologies out of Brazil’s 5G market, with Washington offering to finance purchases by Brazilian telecom companies of equipment from its competitors.

During a visit to Brasilia, officials of the U.S. International Development Finance Corporation (DFC), the U.S. EXIM bank and the National Security Council told reporters that funding was available to buy equipment from other companies.

The U.S. delegation was headed by National Security adviser Robert O’Brien, who met with Bolsonaro before they attended the signing of an EXIM bank financing agreement that identifies areas of business cooperation that includes 5G telecoms.

In Washington, top U.S. officials urged Brazil to carefully monitor Chinese investments in Brazil and moves by Beijing to expand its influence in Latin America’s largest economy through sale of 5G technology by Huawei.

U.S. Trade Representative Robert Lighthizer said trade agreements reached with Brazil on Monday would pave the way for further negotiations on steel, ethanol and sugar, and promote greater U.S. investment as Washington moves to provide a counter-weight to China’s expansion in the region.

“I would say clearly there is a China element … in everything that all of us do,” Lighthizer told an event hosted by the U.S. Chamber of Commerce. “China has made a very significant move in Brazil. They’re Brazil’s biggest trading partner, so it’s something that we’re concerned about.”

Lighthizer’s remarks were part of a full-court press. White House economic adviser Larry Kudlow said Washington had urged Brazilian President Jair Bolsonaro and other Brazilian officials to keep a close watch on China’s investments and advanced technologies, as Washington had done.

“We have encouraged Brazil .. to try to work together to make sure that we watch China carefully with respect to all manner of technology and telephoning and 5G,” he told the event.

“We have taken actions here in the States; we continue to move, and it is my great hope that Brazil will move with us,” he added. “We hope that Brazil will also keep a careful, critical eye on Chinese investment.”

Washington believes Huawei would hand over data to the Chinese government for spying, a claim Huawei denies.

Brazil plans to auction 5G frequencies next year to telecom companies operating in Brazil, many of which already buy from Huawei and would like to continue doing for their 5G networks because the Chinese equipment is cheaper.

“The U.S. concern is how they use the data, how they use the technology for state benefit, not for the individuals who use that the technology,” Joshua Hodges, senior director for Western Hemisphere affairs on the NSC, said in Brasilia.

DFC Managing Director Sabrina Teichman said 20% of its $135 billion portfolio was available for commercial deals with companies that wanted to partner with the United States as part of the Trump administration’s China and Transformational Exports program, which is aimed at neutralizing Chinese competition.

“We have equity financing and we also have debt financing and those plans are available to Brazilian companies” that are looking to acquire new technology,” she told the reporters.

“We are looking forward to supporting the Brazilian telecom sector,” she added.





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Fed’s Evans says recovery could stall without more fiscal stimulus By Reuters

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(Reuters) – Chicago Federal Reserve Bank President Charles Evans said on Tuesday he is “reasonably confident” the U.S. economic recovery will maintain momentum into next year, but without more fiscal stimulus the recovery could stall and more job losses could become permanent.

“I am worried about the lack of fiscal support,” Evans said at a virtual event hosted by the Detroit Economic Club, adding that the prospect of no new relief “really makes me nervous” particularly because it could mean state and local governments would need to cut more jobs.

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 Quarles says pandemic stresses highlighted fragility in nonbanks By Reuters

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© Reuters. Quarles, vice chairman of the Federal Reserve Board of Governors, testifies before a Senate Banking, Housing and Urban Affairs Committee hearing in Washington

By Pete Schroeder

WASHINGTON (Reuters) – U.S. Federal Reserve Vice Chair Randal Quarles said Tuesday that the market stresses created by the coronavirus pandemic showed the nonbank financial system is “significantly more fragile” than its traditional counterpart.

Quarles said that while decisive action from central banks and regulators helped ease market turmoil, recent events have shown global regulators have “work to do” to shore up nonbanks, including improving resiliency in money market funds.

Speaking in his capacity as head of the Financial Stability Board, Quarles did not lay out precise policy prescriptions, but rather said the global regulatory group is hard at work examining the issue and expects to lay out recommendations soon.

“Addressing vulnerabilities in the financial system going forward…will require a holistic perspective given the various linkages within nonbank financial intermediation and between nonbanks and banks,” he said, according to prepared remarks. “We have gained some clarity regarding areas of the market that needed significant bolstering and have to look closely at whether and how resilience in these segments can be improved.”

The rapid onset of economic lockdowns and market stress revealed some flaws across the market, he added, particularly as companies worldwide scrambled for cash, specifically U.S. dollars.

For example, margin calls appeared to be larger than expected for some firms, leading to stretched liquidity. And the stress raised new questions about the functioning and resilience of core government debt markets, particularly when it comes to the ability of private parties to intermediate in those markets.

Quarles noted that markets returned to normal thanks to massive intervention by central banks across the globe, addressing the immediate issue but raising longer-term questions.

“While swift and decisive policy action succeeded in calming markets, this does not mean that our work is complete. While central bank action succeeded in restoring market functioning, this support does not address the underlying vulnerabilities,” he 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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