By Syndication Washington Post, Bloomberg · Claire Ballentine, Vildana Hajric · BUSINESS, US-GLOBAL-MARKETS U.S. stocks tumbled and bonds soared after President Donald Trump said he is ending stimulus talks until after the election, hours after Federal Reserve Chairman Jerome Powell renewed his warning that the economy will stumble without additional fiscal support.
The benchmark S&P 500 slumped 1.4% after Trump tweeted his comments late in the trading session, erasing a gain of as much as 0.7%. The Dow Jones industrial average and Nasdaq Composite indexes also turned negative. Treasuries surged and the dollar jumped against most its major peers.
“It was certainly a surprise to the market that had started to price in another stimulus,” Ed Clissold, chief U.S. equity strategist at Ned Davis Research, said in an interview on Bloomberg Television. “It’s going to be difficult for the economy to gain much traction until there is another round of stimulus.”
House Speaker Nancy Pelosi, D-Calif., had called on Republicans to get on board with a version of the stimulus bill the House passed last week with only Democratic votes. But significant gaps remained between the Democrats’ $2.2 trillion proposal and a $1.6 trillion offer backed by the White House.
“Over the past few trading sessions the market had rallied around stimulus talks and now it’s almost a slap in the face,” said Gene Goldman, chief investment officer at Cetera Financial Group
There are also lingering concerns about the trajectory of the pandemic and its effect on the economy. New York City’s seven-day average of daily cases is approaching Democratic Mayor Bill de Blasio’s warning threshold of 550. In France, the country’s statistics agency, downgraded its growth forecast to zero.
Elsewhere, the pound weakened after a report that the European Union has no plans to offer concessions to Prime Minister Boris Johnson before next week’s Brexit deadline. Oil rose further after the biggest gain since May.
– – –
Here are some key events coming up:
– On Wednesday, the minutes of the Sept. 15 and 16 meeting of the FOMC could be especially fruitful for Fed watchers, beginning with details of the debate on conditions necessary to trigger a rate increase
– The vice presidential debate takes place at the University of Utah in Salt Lake City on Wednesday
– Although the final formal round of talks is over, the British government expects trade negotiations to continue up to the E.U. summit in mid-October.
– – –
These are some of the main moves in markets:
Stocks
– The S&P 500 index declined 1.4%, to 3,360.75, as of 4 p.m. New York time, the largest drop in almost two weeks.
– The Dow Jones industrial average declined 1.3%, to 27,770.65, the biggest drop in almost two weeks.
– The Nasdaq composite index dipped 1.6%, to 11,154.61.
– The Nasdaq 100 index sank 1.9%, to 11,291.27.
– The Stoxx Europe 600 index rose 0.1%, to 365.88, the highest in more than two weeks.
Currencies
– The Bloomberg Dollar Spot index climbed 0.4%, to 1,173.78, the biggest rise in almost two weeks.
– The euro fell 0.3%, to $1.1751.
– The British pound decreased 0.6%, to $1.2907, the biggest dip in two weeks.
– The Japanese yen strengthened 0.1% to 105.60 per dollar.
Bonds
– The yield on 10-year Treasuries decreased four basis points, to 0.75%, the biggest tumble in four weeks.
– Germany’s 10-year yield advanced less than one basis point, to -0.51%, the highest in more than a week.
– Britain’s 10-year yield declined less than one basis point, to 0.287%, the first retreat in a week.
Commodities
– West Texas Intermediate crude climbed 2.3%, to $40.13 a barrel.
– Gold weakened 1.3%, to $1,888 an ounce, the biggest drop in almost two weeks.
By The Washington Post · Erica Werner, Jeff Stein · NATIONAL, BUSINESS, POLITICS, CONGRESS, US-GLOBAL-MARKETS
WASHINGTON – Economic relief talks screeched to a halt Tuesday as President Donald Trump ordered Treasury Secretary Steven Mnuchin to stop negotiating with House Speaker Nancy Pelosi until after the election.
In a series of tweets less than 24 hours after he was released from a hospital, Trump accused Pelosi, D-Calif., of failing to negotiate in good faith, after she rejected an opening bid from Mnuchin in their latest round of talks.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump wrote.
Trump’s surprising announcement stood in stark contrast with recommendations from Federal Reserve Chair Jerome Powell, who had said in a speech hours earlier that more economic stimulus was needed to sustain the recovery.
Trump’s tweets sent the stock market lower, as many businesses, households and investors had been hoping for a jolt of fiscal stimulus amid signs the economy had lost momentum. The Dow Jones industrial average ended down 376 points, or 1.3%. The Nasdaq and S&P 500 also fell.
Trump is still dealing with his recent covid-19 diagnosis, but he has tried to dismiss the illness’s impact on him in the past two days.
Trump’s declaration appeared to kill any near-term chance of new aid for millions of Americans who remain out work and at risk of eviction. Pelosi and Mnuchin spoke shortly after Trump’s tweets, and Mnuchin informed Pelosi that the negotiations were indeed over, according to Pelosi’s spokesman.
Trump said he instead asked Senate Majority Leader Mitch McConnell, R-Ky., “not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett.”
McConnell, who spoke with Trump shortly before the president’s announcement, said he agreed with the decision.
“I think his view was that they were not going to produce a result and we needed to concentrate on what’s achievable,” the majority leader told reporters at the Capitol.
Trump’s pronouncement came after days of sustained if long-shot negotiations between Pelosi and Mnuchin. Pelosi later speculated to Democratic colleagues on a conference call that the president’s sudden change in position might be connected to the steroids he’s taking as he battles covid-19.
“Believe me, there are people who thought, who think that steroids have an impact on your thinking,” she told Democrats, according to a person on the call, who spoke on the condition of anonymity to discuss the private comments. “So, I don’t know.”
The White House’s focus now appears to have shifted from the economic talks to solely pushing for the Supreme Court confirmation. Even though several Republican senators have tested positive for the novel coronavirus, McConnell is moving forward swiftly with Barrett’s nomination, trying to get her confirmed before the election.
Still, Trump’s move disappointed some members of his party who were hoping to be able to deliver new relief to their constituents.
“Waiting until after the election to reach an agreement on the next covid-19 relief package is a huge mistake,” Sen. Susan Collins, R-Maine, a moderate in a tough reelection race, said in a statement.
The U.S. economy is facing new head winds. It contracted sharply earlier this year because of the pandemic, leading to massive layoffs and business closures.
The economy showed signs of a partial recovery in May and June, but businesses and households have struggled as the virus continues to infect thousands of Americans each day. Trump has sought to play up the economy’s recovery, often touting partial or incomplete information. That continued Tuesday, when he misstated the health of the U.S. economy during his string of tweets.
“Our Economy is doing very well,” he wrote. “The Stock Market is at record levels. JOBS and unemployment also coming back in record numbers.”
Even some of Trump’s top advisers have said that the economy is not doing well and that more assistance is needed. Further, the stock market is not at record levels, and it also doesn’t reflect the broader health of the economy. The unemployment rate has come down from its April peak of about 15 percent, but it is still at 7.9 percent, and millions are struggling to pay their bills, afford food and find jobs. The United States has recovered barely half of the jobs lost in March and April.
Trump keeps shifting his position on how he plans to proceed.
Three days ago, during his first day in the hospital, he tweeted, “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!”
And then after he announced Tuesday that the talks were off and that the economy was great, he wrote another Twitter post in the evening that suggested he actually supported the idea of more spending.
Trump’s first set of tweets Tuesday came just after he and Mnuchin conferred with McConnell and House Minority Leader Kevin McCarthy, R-Calif., on a conference call. McConnell and McCarthy have expressed skepticism about Republicans signing on to a giant new spending bill. During Tuesday’s call, McConnell suggested to Trump that Pelosi was stringing him along and no deal she cut with Mnuchin would command broad GOP support to pass in the Senate, according to two people with knowledge of the call who spoke on the condition of anonymity to discuss it.
Pelosi and Mnuchin had been working on assembling a relief bill of between $1.6 trillion – which was Mnuchin’s opening offer – and $2.2 trillion, the size of a stimulus bill passed last week by House Democrats. Talks had been moving slowly but appeared to be progressing. Pelosi last week expressed optimism about reaching a deal, although many Republicans had been skeptical.
The Trump tweets landed while House Democrats were in the middle of a conference call. Pelosi had been updating them on the status of her talks with Mnuchin. She had been telling them that they remained divided on issues including state and local funding and coronavirus testing.
A few minutes after Trump tweeted that the talks were over, Pelosi told lawmakers on the call what the president had said, made her comment about a potential link with steroids and then quickly got off the call, according to people listening in.
“Clearly, the White House is in complete disarray,” Pelosi said in a statement shortly afterward.
Because of the White House’s move, she said, “over time, household insolvencies and business bankruptcies will rise, harming the productive capacity of the economy and holding back wage growth.”
The spending package was supposed to send another round of $1,200 stimulus checks to millions of Americans, give the jobless new unemployment benefits, and provide a new round of small-business aid, help for the airline industry and a range of other measures.
Congress has not passed economic or health-care relief legislation since the spring, when lawmakers came together on four bipartisan bills totaling about $3 trillion, an unprecedented sum.
But many of the programs approved at that time, such as small-business relief and enhanced unemployment benefits, have since expired, in some cases months ago. In the past week, numerous companies announced plans for big layoffs.
The airline industry last week began furloughing more than 30,000 employees because government aid expired, and some surveys have found that as many as 40 percent of restaurants will close within six months without additional aid. Tens of millions of Americans who have lost their jobs will receive no federal unemployment supplement absent an additional package from Congress, draining the U.S. consumer market and a key source of stimulus. Personal incomes already dropped in August as the spring relief expired.
Powell issued a dire warning Tuesday about the potential consequences of Congress and the White House failing to pass an additional stimulus deal. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said.
Pelosi last week urged airlines to hold off on layoffs, saying an airline payroll support program would be extended either as part of an overall deal or a stand-alone bill. It’s unclear now whether there will be an attempt to move forward on that.
Talks involving Pelosi, Mnuchin, White House Chief of Staff Mark Meadows and Senate Minority Leader Charles Schumer, D-N.Y., collapsed in early August and remained stalled for weeks, but last month, Pelosi was pressured by moderate House Democrats who wanted to pass more relief for their constituents ahead of the election.
She and Mnuchin restarted negotiations. But they always faced tough odds, with many congressional Republicans reluctant to agree to a deal anywhere near the size of what Mnuchin was proposing, even as Pelosi repeatedly criticized his opening offer as too stingy.
Additionally, the Trump administration has been divided internally, with Mnuchin pushing hardest for a deal despite skepticism about it from other senior officials.
Larry Kudlow, the president’s top economic adviser, has for months said an additional stimulus deal would help bolster the economy but was not necessary for the recovery.
Shortly after Trump’s tweets, White House trade adviser Peter Navarro got into an argument with Fox Business host who pressed him on why the administration would let a deal fall through. Navarro pointed to executive actions Trump took in August, including on unemployment and evictions, that provided a measure of relief – but nowhere near what legislation could accomplish.
Despite the push from some within the White House and lawmakers from both parties, conservatives had urged Trump to reject a new spending package.
Art Laffer, a supply-side economist generally regarded as outside the economic mainstream, said he visited the White House about a week ago and expressed the view that Trump should not approve a stimulus package. Stephen Moore, another outside economic adviser, has told White House officials that a stimulus package would do little to boost Trump’s political fortunes because it would not show results until after the election.
The Centre for Economic Situation Administration (CESA) is holding discussions on further opening the country to foreign business people, while the Finance Ministry is planning new measures to stimulate the domestic economy.
Government Spokesman Anucha Burapachaisri said that the CESA would discuss on Wednesday the details of rules and regulations for more entrepreneurs and foreign investors to enter the country. Special Tourist Visa (STV) details may also be considered to allow more foreigners to enter Thailand.
The major issue of debate is how to facilitate travel by entrepreneurs and foreign investors, as this group would be inconvenienced by 14 days of quarantine for a short-term visit. Originally, the practice was to have them test at the country of origin and to test for Covid-19 again when they reach Thailand, without mandatory quarantine. A travel manager who is a qualified Thai medic or public health personnel was to oversee the trip. However, there are proposals that the business partner or business negotiating company should take responsibility.
Anucha said the Centre for Covid-19 Situation Administration has approved approximately 11,000 business people and work permit holders to enter the country, and these people has agreed for 14 days of alternative state quarantine.
Meanwhile, the Ministry of Finance will on Wednesday offer additional measures to stimulate domestic consumption, targeting middle-income earners and upper middle-income people in purchasing goods and receiving tax deductions. They would grant tax deduction up to Bt50,000 to incentivise people with income and purchasing power to buy products during the fourth quarter of this year.
The central bank will introduce new rules on the rate of penalty imposed on loan defaulters in a bid to ease borrowers’ burdens and motivate them to repay their debts, a Bank of Thailand (BOT) executive said on Tuesday.
Thanyanit Niyomkarn, assistant BOT governor, said the central bank will let financial institutions charge no more than 3 per cent on top of the contract rate stated in the loan contract.
For instance, if a bank offers personal loans at 20 per cent interest, and if the borrower fails to pay the instalment, then the bank can only impose a penalty of 3 per cent, resulting in total interest rate rising to 23 per cent.
Currently, the interest rate automatically rises to 25 per cent when a debtor misses an instalment.
This move to keep the penalty low should motivate debtors to honour their obligations as well as reduce their burden, she said.
The central bank plans to announce the new rule in the fourth quarter of this year, and will implement it in April next year. The new regulation will apply to personal, retail and business loans.
Financial institutions would also be required to offer borrowers the option of debt-restructuring first before the case is taken to court.
Thai exporters are upbeat about business prospects, citing gradual increase in demand, but they are worried about the baht strengthening as well as the shortage of migrant workers.
The Thai National Shippers’ Council (TNSC) has revised upward its export projection this year to 8 per cent contraction from 10 per cent contraction previously forecast, says Ghanyapad Tantipipatpong, the council chairman.
Products in demand include rubber gloves, washing machines, fax machines, telephones and parts, and gold, she noted.
Demand for Thai products have risen as many countries have eased Covid-19 lockdown restrictions. Demand for basic need products, such as canned food, farm products, processed farm products have risen, and the coming Christmas and New Year seasons would further boost demand, she said.
Thailand’s exports in August amounted to $20.2 billion, falling 7.94 per cent, against imports of $15.86 billion, dropping 19.68 per cent. Exports in the first eight months contracted 7.75 per cent, amounting to $153.37 billion.
However, there are many negative factors. Consumer purchasing power remains weak due to the global recession. So, Thai exporters should focus on necessity products and products whose prices were not high, she said.
The baht remains strong and can be an obstacle for exports, as it makes Thai products more expensive than products of competitors. The baht should stay at around Bt34 per dollar, down from the current Bt31 level, or it must move along with regional currencies, she said.
A shortage of migrant workers is also adversely affecting businesses, she complained. The rise of logistics cost, including freight cost, is also a cause for concern, she pointed out.
She said exporters want newly appointed Finance Minister Arkhom Tempittayapaisith to deregulate exchange rate regulations. The government should also provide financial aid to those who have not yet been supported by previous measures, she added.
Meanwhile, Visit Limluecha, vice chairman of the TNSC, said the US presidential election in November may have an impact on Thai exports. If Democrat Joe Biden wins the election, the US government may implement more free trade policies than incumbent President Donald Trump, he added.
The Stock Exchange of Thailand (SET) Index closed at 1,250.15 on Tuesday, up 7.16 points or 0.58 per cent, while total transactions stood at Bt56.52 billion with an index high of 1,257.46 and a low of 1,249.14.
In the morning session, an analyst at Krungsri Securities said he expected the index to fluctuate between 1,235 and 1,250 due to mixed positive and negative sentiments.
He said the market gained positive sentiment from hopes of new economic stimulus measures and rising price of oil.
“After news that President Donald Trump was discharged on Tuesday morning, investors began hoping that he will urge Republican senators to approve the US$2.2-trillion stimulus bill,” he said.
“Meanwhile, Thailand’s Centre for Economic Situation Administration aims to discuss measures to stimulate expenditure during the latter part of this year.”
However, he said, uncertainty over commercial banks’ third-quarter performance and foreign investors’ mass sell-offs were still pressuring the index.
The top 10 stocks with the highest trade value on Tuesday were STGT, IVL, PTTEP, PTT, KBANK, SCC, PTTGC, AOT, TASCO and TOP.
As of 4.30pm, the price of oil rose by US$0.46 or 1.17 per cent to $39.68 per barrel, while gold dropped by $2.40 or 0.12 per cent, to $1,917.70 per ounce.
Other Asian indices were on the rise:
Japan’s Nikkei Index closed at 23,433.73, up 121.59 points or 0.52 per cent.
Hong Kong’s Hang Seng Index closed at 23,980.65, up 212.87 points or 0.90 per cent.
South Korea’s KOSPI Index closed at 2,365.90, up 7.90 points or 0.34 per cent.
Taiwan’s TAIEX Index closed at 12,704.23, up 155.95 points or 1.24 per cent.
China’s stock indices were closed for the Moon Festival.
EconOct 06. 2020Newly appointed Finance Minister Arkhom Termpittayapaisith
By The Nation
Newly appointed Finance Minister Arkhom Termpittayapaisith will take office on October 12, Prime Minister Prayut Chan-o-cha said on Tuesday.
He added that Arkhom will be sworn in before HM the King on October 11.
The premier said that Arkhom was the right person for the job in the current situation due to his rich background and knowledge.
Arkhom was previously transport minister in the post-coup Prayut Chan-o-cha government. Before that he was secretary-general of the National Economic and Social Development Board, a state think-tank now known as the National Economic and Social Development Council.
The appointment of Arkhomwas announced in the Royal Gazette on Monday. He succeeds Predee Daochai, who abruptly quit the post on September 2 after less than a month in office, citing health problems.
The Electricity Generating Authority of Thailand (Egat) has signed a memorandum of understanding (MoU) with Mitsubishi Motors to develop a business model for converting electric vehicle battery energy to home electrical system, aiming to expand electric charging stations across the country.
Egat and Mitsubishi Motors (Thailand) signed an MoU on energy conversion between electric vehicles (plug-in hybrid electric vehicle ( PHEV) with electrical systems and power control from the National Power System Control Centre.
Jiraporn Sirikham, Egat’s deputy governor for strategy, and Morikazu Chokki, president of Mitsubishi Motors (Thailand) Co Ltd, sign an MoU witnessed by executives from both agencies.
Jiraporn Sirikham, Egat’s deputy governor for strategy, said that this cooperation was another important step for Egat, which was ready to continue promoting new energy innovations for sustainable development in both economic, social and environmental aspects. He said Egat was committed to supporting the use of various types of electric vehicles, such as electric cars, in Thailand
The cooperation will be for three years.
For the conversion of energy between electric vehicles and electrical systems, it will be a study and test of power supply from Mitsubishi PHEV batteries to electrical systems such as houses or office buildings, using an inverter as a connection device between the electric vehicle and the electrical system. In the future, if there are more electric cars, such energy conversion could potentially support a virtual power plant innovation to help stabilise and strengthen the domestic power grid, the official said.
The price of gold was unchanged in morning trade on Tuesday, the Gold Traders Association reported.
As of 9.26am, the buying price of a gold bar was Bt28,200 per baht weight and selling price Bt28,300 while gold ornaments were priced at Bt27,697.32 and Bt28,800, respectively.
Gold price at close on Monday, when the association announced changes in the precious metal’s price four times — dropped by Bt150 per baht weight
The global market price moved to US$1,910 (Bt59,799.21) per ounce on Tuesday morning after the price rose by $12.5 to $1,920.1 per ounce at close on Monday from the weakening dollar and ongoing progress of US economic stimulus measures.
Hong Kong gold price rose by HK$190, opening at $17,690 (Bt71,463.46) per tael on Tuesday morning, the Chinese Gold and Silver Exchange Society reported.
The Stock Exchange of Thailand (SET) Index rose by 8.82 points, or 0.71 per cent, to 1,251.81 in the morning session on Tuesday.
An analyst at Krungsri Securities expected the index to fluctuate between 1,235 and 1,250 due to mixed positive and negative sentiments.
He said the market gained positive sentiment from hopes of new economic stimulus measures and the rising oil price.
“After the news that US President Donald Trump can leave the hospital on Tuesday morning has been reported, investors believe that he will urge Republican Senators to approve a US$2.2-trillion stimulus bill,” he explained.
“Meanwhile, the Centre for Economic Situation Administration aimed to discuss measures to stimulate expenditure during the latter part of this year.”
However, he said uncertainty over commercial banks’ third-quarter performance and foreign investors’ mass sell-offs of shares were still pressuring the index.
As an investment strategy, he recommended that investors buy:
▪︎ PTTEP, TOP and PTTGC that will benefit from the rising oil price.
▪︎ Banpu and AGE that benefit from rising coal price in response to China’s strong demand.
▪︎ PSL, TTA and RCL that benefit from the sharp rise in Baltic Dry Index.
The SET Index closed at 1,242.99 on Monday, up 5.45 points or 0.44 per cent. The volume of total transactions stood at Bt39.48 billion with an index high of 1,248.67 and a low of 1,239.06.
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