Next Week News

Existing home sales in the U.S. unexpectedly decreased in the month of July, according to a report released by the National Association of Realtors on Wednesday.

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Mark Carney confirmed on Tuesday that he is willing to extend his term as the Bank of England governor to support a "smooth Brexit transition". In recent weeks, speculation has been rife that the former Bank of Canada governor was willing to change his earlier stance of leaving the BoE in June 2019, which was two years short of the usual eight-year term.

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In a widely expected move, the Federal Reserve announced its decision to raise interest rates by 25 basis points on Wednesday. The Fed decided to raise the target range for the federal funds rate to 2 to 2.25 percent, citing realized and expected labor market conditions and inflation.

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Something strange is happening in the investment-bank and hedge-fund world: a growing sense that the next recession finally has a due date: 2020.

Bloomberg’s Joe Wisenthal has collected a few predictions, such as one from Moody’s Analytics chief economist Mark Zandi, who said 2020 will be the economic “inflection point,” and Société Générale’s economic team, who said the likelihood of a 2020 recession has risen due to, among other things, a tight labor market and higher borrowing costs.

Even former Federal Reserve Chairman Ben Bernanke is getting in on the act, saying a boom “is going to hit the economy in a big way this year and next year. Then in 2020, Wile E. Coyote is going to go off the cliff.”

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Today’s payrolls report might seem disappointing if you only focus on the headline number showing jobs growth of just 134,000 in September. But where did jobs growth occur? Mainly in growth industries. Also, the government made large upward revisions to prior reports and wage growth stayed in check.

The old adage about not judging a book by its cover probably applies to Friday’s September payrolls report. Though the headline jobs growth number slid dramatically, there may be enough to paint a relatively positive picture about the economy.

Most importantly, the report might push back some of the inflation fears that plagued Wall Street on Thursday. While payrolls rose a relatively muted 134,000 during the month, wages climbed only 2.8% year over year. That was down from 2.9% in August and basically in line with analysts’ expectations. Going into the report, there was a lot of concern that if wages rose faster than in August, the market might interpret that as a sign of the economy getting too hot. Judging from Friday’s data, it doesn’t look like there’s any need to turn up the air conditioning.

Looking deeper into the data, the government upwardly revised job growth for both July and August, meaning that combined growth in those two months is now 87,000 above the previous mark. In August, a massive 270,000 jobs were created, while July was subdued at 165,000 but up nearly 20,000 from the previous report.

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The International Monetary Fund slashed the global growth forecast for this year and next on Tuesday, citing an increase in the likelihood of further negative shocks, such as a full-blown trade war. In its latest World Economic Outlook, released in Bali, Indonesia, the Washington-based lender forecast 3.7 percent growth for the world economy for this year and next.

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Amid recent concerns the Federal Reserve may raise interest rates more aggressively than currently anticipated, the minutes of the central bank's September monetary policy meeting showed members continue to favor a "gradual approach" to hiking rates.

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The latest episode of the Forbes Asia Investment Briefing comes from Yifan Hu, who is UBS Wealth Management's regional CIO and chief China economist. She tells us what's caught her eye this week, and what she'll be watching for in future.

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The economy will do well with government control divided between Democrats and Republicans. I didn’t always believe this, but a decade ago I was persuaded by the late economist William A. Niskanen. He said, "Divided government is, curiously, less divisive. It’s also cheaper."

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The stock market continued to punish the tech darlings last week as it took a $23 billion drop for analysts to lower price targets for chip maker NVIDIA. So how oversold are the tech stocks and how much lower can they go right now?

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