U.S. Car & Student Loans Increase Rapidly, Fed Chairs & Deutsche Bank Chief Call for Rate Hikes, more…


Contrary to earlier reports, the raising of the U.S. debt ceiling (which Congress approved on Friday) runs through to December the 8th, and not the 15th as was stated when the agreement between Donald Trump and the Democrats first became public knowledge.

The House of Representatives ratified the debt ceiling bill with 316 in favour and 90 against. All 90 dissenters were Republican. Altogether, there are 240 Republicans in the House, meaning that on the debt ceiling issue Trump has lost the support of nearly 40% of his party.

The deal provides $15 billion in ‘hurricane relief‘ for Hurricane Harvey which recently caused damages north of $100 billion in Texas. If Hurricane Irma proves more disastrous (as the media have been meticulously prepping people for), the debt ceiling agreement may struggle to last until December.

And the Federal Reserve’s response to these spate of hurricanes? New York Fed Chairman William Dudley all but confirmed this week that despite the devastation to property and infrastructure, the programme to ‘normalise‘ the Fed’s balance sheet will be announced as planned this month on September the 20th.

Given that the ‘normalisation of monetary policy‘ agenda is a centralised directive, this should come as no surprise. Once the fed starts selling off assets, the next step will be to push on with their interest rate hikes. 

Guardian: Congress agrees to raise US debt ceiling and provide $15bn in hurricane aid

  • Congress on Friday approved with bipartisan majorities a budget and hurricane relief deal brokered between Donald Trump and top Democrats.
  • By a vote of 316 to 90, the House of Representatives approved a bill to raise the debt ceiling, fund the federal government through 8 December and provide $15bn for relief from Hurricane Harvey, which hit Texas and Louisiana last month. All 90 votes against came from Republicans.
  • The deal, which was approved by the Senate on Thursday by 80-17, came as Hurricane Irma bore down on Florida.
  • Republican leaders had pushed for a longer-term deal, to raise the debt ceiling through the 2018 midterm elections.

CNBC: NY Fed President William Dudley says it is appropriate to ‘gradually’ curb stimulus

  • The Federal Reserve should continue gradually raising U.S. interest rates given low inflation should rebound, an influential Fed policymaker said in a Thursday speech that sounded slightly less confident than his previous hawkish comments in the face of weak price readings.
  • “Even though inflation is currently somewhat below our longer-run objective, I judge that it is still appropriate to continue to remove monetary policy accommodation gradually,” said Dudley, a permanent voter on policy and a close ally of Fed Chair Janet Yellen.
  • Dudley said he hoped that the inflation puzzle would be clearer in “coming months.”
  • It is widely expected, however, that the Fed will announce at a Sept. 19-20 policy meeting the beginning of trimming its $4.5-trillion bond portfolio, likely starting in October.

Nasdaq: U.S. Consumer Credit Climbs More Than Expected In July

  • The Fed said consumer credit jumped by $18.5 billion in July after rising by a downwardly revised $11.8 billion in June.
  • The bigger than expected increase in consumer credit came as non-revolving credit such as student loans and car loans surged up by $15.8 billion in July after climbing by $7.1 billion in June.
  • Revolving credit, which largely reflects credit card debt, edged up by a more modest $2.6 billion in July after rising by $4.7 billion in the previous month.
  • The Fed said consumer credit increased by an annual rate of 5.9 percent in July, as revolving and non-revolving credit rose by 3.2 percent and 6.9 percent, respectively.

Reuters: U.S. wholesale inventories revised higher in July

  • The Commerce Department said on Friday that wholesale inventories rose 0.6 percent, matching the rise in each of the previous two months. The department last month reported that wholesale inventories rose 0.4 percent in July.
  • Auto inventories increased 0.2 percent in July after jumping 1.1 percent in June. Slowing demand for autos has left manufacturers with an inventory glut.
  • Sales at wholesalers slipped 0.1 percent after rising by a revised 0.6 percent in June. Economists had expected sales to rise 0.4 percent in July.
  • Motor vehicles sales slid 0.8 percent in July after rising 0.2 percent in June.

Politico: Trump suggested scrapping future debt ceiling votes to congressional leaders

  • President Donald Trump suggested to congressional leaders on Wednesday morning that votes to raise the debt ceiling could be done away with altogether, according to three people familiar with the conversation.
  • Speaking to reporters later on Thursday, Trump confirmed that he believes “there are a lot of good reasons” to scrap the debt ceiling process in Congress.
  • “For many years people have been talking about getting rid of the debt ceiling altogether,” Trump said. “Certainly that is something that could be discussed. We even discussed it at the meeting we had yesterday.”
  • Senate Minority Leader Chuck Schumer (D-N.Y.) raised the topic with Trump, a source familiar with the conversation said. Schumer said such a move could not be accomplished now, but indicated he would talk to his caucus about considering structural changes to the debt limit in December, a conversation Trump supported.

CNBC: Fed’s Mester: Don’t wait for inflation to rise before hiking rates

  • The Federal Reserve shouldn’t wait until it reaches its economic goals before starting to tighten monetary policy, Cleveland Fed President Loretta Mester said Thursday.
  • “Because we know that it takes some time for monetary policy to work itself through the economy, we can’t wait until these policy goals are fully met to act,” Mester said in prepared remarks. “We need to assess what incoming information is telling us about where the economy is going over the medium run, and the risks around that medium-run outlook, and set policy appropriately.”
  • “In my view, if economic conditions evolve as anticipated, I believe further removal of accommodation via gradual increases in the fed funds rate will be needed and will help sustain the expansion,” she said.
  • Mester added that going ahead with periodic hikes “removes policy ambiguity at a time when uncertainty seems to be rising on other fronts.”

Guardian: Time to raise eurozone interest rates, says Deutsche Bank chief

  • It is time to start raising interest rates, the chief executive of Deutsche Bank has said, warning that bubbles are emerging in parts of the market.
  • Speaking in Frankfurt, John Cryan said: “The era of cheap money in Europe should come to an end, despite the strong euro.”
  • “It would help us greatly if Europe were to bring negative rates to an end and a single European financial market were finally to be created,” said Cryan.
  • “For me, this means one thing above all: we are now seeing signs of bubbles in more and more parts of the capital market where we wouldn’t have expected them,” he said.

Bloomberg: U.K. Manufacturing Jumps, Construction Falls as Quarter Starts

  • Manufacturing rose in July for the first time this year, boosted by a strong rebound in car production, and the trade deficit was little changed from a downwardly revised June. But construction shrank for a fourth consecutive month after a plunge in new orders in the second quarter.
  • Construction output fell a larger-than-expected 0.9 percent, with private housebuilding contracting following a strong couple of months.
  • The effect of Brexit on investment and consumer spending was underlined by separate figures showing new construction orders plunged by 7.8 percent in the second quarter. Housing fell 4.9 percent and other work declined 9 percent.

BBC: Trinity Mirror in talks to buy Express newspaper

  • The owner of the Daily Mirror has said it is in talks to buy the owner of the Daily Express and Daily Star.
  • Trinity Mirror hopes to buy all of the publishing assets of Northern & Shell, which also owns celebrity magazine OK!.
  • As well as the Mirror titles, Trinity Mirror also publishes the Daily Record, the Sunday People and more than two hundred regional newspapers.
  • The company currently owns four national newspaper titles – the Daily Express, Sunday Express, Daily Star and Daily Star Sunday. It also publishes celebrity magazines OK!, new! and Star, and has a 50% stake in the Irish Daily Star.

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