|Federal Reserve Chairman Jerome Powell said he sees inflation risks in the U.S. economy as muted. An international survey found that a hefty majority of people don’t trust U.S. President Donald Trump. And the death toll continues climbing in Indonesia. Here are some of the things people in markets are talking about.
‘Muted’ U.S. Inflation Risk
Fed Chairman Powell welcomed recent increases in Americans’ wages while expressing confidence that low unemployment won’t spur a takeoff in prices that would force him to hike interest rates aggressively. “The rise in wages is broadly consistent with observed rates of price inflation and labor productivity growth and therefore does not point to an overheating labor market,” Powell said in a speech Tuesday in Boston. “Further, higher wage growth alone need not be inflationary.”
The death toll from the Sulawesi earthquake and tsunami topped 1,200 as authorities scrambled to bring food and medicines to thousands displaced by Indonesia’s deadliest such disaster in more than a decade. Thousands of military and police personnel joined relief and rescue workers in the worst affected areas of Sulawesi island, now in its fourth day since the 7.4 magnitude earthquake and subsequent tsunami unleashed a trail of devastation. President Joko Widodo ordered officials to intensify relief and rescue operations and boost the supply of essential items as reports of looting of food and other goods emerged.
Little Trust in Trump
President Donald Trump has shaken global faith in U.S. leadership, an international survey found, as confidence in him lags behind other major world leaders including Russia’s Vladimir Putin and China’s Xi Jinping. The Pew Research Center found 70 percent of more than 26,000 people surveyed across 25 countries this year said they lacked confidence in Trump, compared with 27 percent who said they trusted the American president’s handling of international affairs. Still, respondents in almost every country said it would be better for the U.S. to remain as the top global power, rather than China, which is seen rising.
Bitcoin’s lone U.S. investment trust is feeling the burn as investors reconsider hefty fund fees and its underlying cryptocurrency fails to buck this year’s downward trend. Grayscale Bitcoin Investment Trust, or GBTC, which tracks Bitcoin’s market price, has seen its net asset value hit its lowest point since the cryptocurrency’s price surged late last year. Shares of GBTC are down around 80 percent since Bitcoin hit a high of $19,511 in mid-December. The price of Bitcoin has dropped nearly 66 percent during the same time period, making the premium to the cryptocurrency almost nonexistent. The fund has traded at more than twice its net asset value.
Tencent Music’s IPO
Tencent Music Entertainment Group, the online-music arm of China’s largest social-media company, filed for a initial public offering in a continuing surge of U.S. listings by Chinese companies. The music-streaming site listed its offering size as $1 billion in a filing Tuesday with the U.S. Securities and Exchange Commission. The amount is likely a placeholder and may change. While some of their U.S. counterparts have held back on public offerings, Chinese startups have enthusiastically pursued listings this year. On U.S. exchanges alone, $7.4 billion has been raised in IPOs by China-based businesses, almost double the $3.9 billion total in 2017, according to data compiled by Bloomberg.
What we’ve been reading
This is what caught our eye over the last 24 hours.
And finally, here’s what David’s interested in this morning
Two recent indicators from China suggest that its economy is not just cooling more than most were expecting at the start of the year, but also that whatever cold it’s suffering from may start working through the country’s trading partners as well. When China’s producer prices for August came out about three weeks ago, they already suggested a moderation in global data might soon follow, especially for resource-intensive economies. The manufacturing PMIs from the weekend, effectively at two-year lows if you strip out aberrations from the lunar new year, now provide further evidence of headwinds. The latest numbers were especially worrying because of a sharp drop-off in a sub-gauge for new export orders.
Many analysts consider PPI and PMI to be fairly reliable leading indicators for global activity. And they’re both telling us something’s up (or down). It’s obviously entirely possible that things will improve. In fact, the rebound in commodity prices from mid-September may show up and lift the next China PPI report, which is out in two weeks. But overall, odds still point to uncertainty weighing on sentiment and capex plans.