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The Fed is set to taper interest rate hikes again as inflation slows

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Federal Reserve officials are set to lower the pace of rate hikes again next week amid signs of slowing inflation, while Friday’s jobs report could show steady demand for workers improving chances of a soft landing for the world’s largest economy. .

Policymakers are preparing to raise the benchmark federal interest rate by a quarter of a percentage point on Wednesday, to a range of 4.5% to 4.75%, mimicking the size of the increase for the second consecutive meeting.

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The move comes on the heels of a recent string of data indicating that the Fed’s aggressive campaign to slow inflation is working.

“I expect that we will raise interest rates several more times this year, although, in my opinion, there are certainly days when we raised them by 75 points,” said Patrick Harker, President of the Federal Reserve Bank of Philadelphia, in a speech on January 20. basis every time. . “Increases of 25 basis points would be appropriate going forward.”

The main questions for Fed Chairman Jerome Powell at his press conference after the meeting will be how far the central bank intends to raise interest rates, and what officials need to see before stopping.

Fed officials have made it clear that they also want to see evidence that the imbalances of supply and demand in the labor market are starting to improve.

Employment may have slowed in January, according to economists polled by Bloomberg, who expected employers to add 185,000 jobs compared to 223,000 in December. They see the unemployment rate rising to 3.6%, still near a five-decade low, and they expect average hourly earnings to rise 4.3% from a year ago, a slowdown from the previous month, according to their median estimate.

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The Fed will get another important reading on inflation on Tuesday when the Labor Department releases its Employment Cost Index, a broad measure of wages and benefits. Job openings figures for December are also due on Wednesday, as well as a January survey of manufacturers.

What Bloomberg Economics says:

The Fed faces a dilemma: On the one hand, inflation data came in weaker than expected, and activity indicators showed slowing momentum over the past month; On the other hand, financial conditions eased as traders believe that the Fed will soon turn to cutting interest rates. The data will justify a smaller rate hike, but the Fed is likely to see easier financial conditions – while inflation remains uncomfortably above target – as a reason to act hawkish.”

Anna Wong, Eliza Winger, and Neeraj Shah, economists. For the full analysis, click here

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Elsewhere, the Fed, the European Central Bank and the Bank of England are likely to raise interest rates by half a point. The day after Eurozone data, Eurozone data is likely to show slowing inflation and a stagnation in the economy. Meanwhile, polls from China may reveal an improvement, Brazil’s central bank may keep borrowing costs unchanged, and the International Monetary Fund will publish its latest World Economic Outlook.

Click here to see what happened last week, and here is our summary of what is going to happen in the global economy.

Asia

China returns to work after the Lunar New Year holidays with the focus on the strength of its economy.

Official PMIs released on Tuesday are likely to improve sharply from the dismal December readings, but the manufacturing sector is still not expected to return to a clear expansion. They will be followed by PMIs from across Asia on Wednesday.

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Japan releases factory production, retail sales and unemployment figures which may cast doubt on the strength of the economy’s recovery from the summer deflation.

India unveiled its latest budget in the middle of the week as policymakers there try to keep growth on track while curbing deficits.

Export figures from South Korea will provide a check on the pulse of global trade on Wednesday, while inflation numbers the next day will be closely scrutinized by the Bank of Korea.

Trade figures are also due from New Zealand, although unemployment figures will be the main concern for the RBNZ as it considers the possibility of a lower rate hike.

The RBA will watch house prices and retail sales data in the run-up to its interest rate decision the following week.

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Europe, Middle East and Africa

Key interest rate decisions will dominate the news in Europe, with the first meetings of the year at the central banks of both the Eurozone and the UK.

Ahead of the European Central Bank on Thursday, key data will call attention to clues to the path of policy. Economists are divided on whether euro zone GDP on Tuesday will show contraction in the fourth quarter – potentially heralding a recession – or whether the region has avoided a recession.

The next day, inflation in the eurozone is expected to slow in January for a third month, although a small minority of forecasters expect an acceleration.

Growth and consumer price data from the region’s three largest economies – Germany, France and Italy – are also due in the first half of the week, making for a busy few days for investors.

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The so-called core core measure of inflation may show slight weakness. This metric is drawing more focus from officials who justify more aggressive policy tightening.

The ECB’s own decision will almost certainly include a half-point increase in interest rates and more details of a plan to shed bond holdings built up over years of quantitative easing.

Given President Christine Lagarde’s tendency to hint at future decisions, investors may focus on any forecasts she reveals for March at her press conference, at a time when officials are increasingly bickering over whether to slow down tightening.

The Bank of England’s decision will also be taken on Thursday, and it may also include an interest rate increase of half a point. This would extend the UK’s fastest monetary tightening in three decades. And while inflation has fallen in each of the past two months, it is still five times the central bank’s target of 2%.

Also on that day, the Czech Central Bank is likely to keep interest rates unchanged at the highest level since 1999 and present new inflation forecasts.

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Looking south, Ghana is expected to raise borrowing costs on Monday after faster-than-expected price growth in the last two months of 2022 renewed volatility in Cedis, as the country negotiates its debt restructuring plan.

On the same day, Kenyan policymakers prepare to slow down tightening measures after inflation has fallen for two straight months. They are expected to raise borrowing costs by a quarter of a percentage point.

Egypt, where yields on domestic treasury bills have already widened to a record high compared to their emerging market peers, may raise interest rates again on Thursday as inflation rose to a five-year high.

Latin america

Mexico this week became the first economy in the region to achieve October-December production. Most analysts see GDP falling for the third quarter in a row, and more than a few expect a mild recession sometime in 2023.

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December remittance data due midweek will likely push the full-year 2022 figure comfortably above $57 billion, handily improving the previous record of $51.6 billion in 2021.

Over the course of three days, Chile publishes at least seven economic indicators, led by a proxy reading of December GDP which is expected to be consistent with the economy heading towards recession.

In Colombia, readings of the January 27 central bank meeting – where policymakers extended a record hike – will be released on Tuesday. At 12.75%, BanRep may be close to its final price.

In Brazil, look for the broadest measure of inflation slowed in January while industrial production continues to suffer.

With inflation now only up to target, this week Brazil’s central bankers had little choice but to keep the key interest rate at 13.75% for the fourth meeting. Economists surveyed by the bank see only 229 basis points of deceleration over the next four years, meaning missing the target for the seventh consecutive year in 2025.

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– With assistance from Andrea Dudek, Vince Jull, Benjamin Harvey, Paul Jackson, and Robert Jameson.

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Rast’s accusations against Alec Baldwin were formally dismissed by Reuters

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© Reuters. FILE PHOTO: A view of the movie “Rust” playing at Bonanza Creek Ranch near Santa Fe, New Mexico, US January 20, 2023. REUTERS/Drone Base/File Photo

Written by Andrew Hay

TAOOS, New Mexico (Reuters) – Special prosecutors in New Mexico on Friday dropped charges against actor Alec Baldwin in the 2021 shooting of “Rust” cinematographer Halina Hutchins, referring to what many legal analysts described as a rationale for a prosecution. flawed jurisprudence.

A person close to prosecutors said the move followed new evidence of the gun Baldwin was carrying when he fired the shot that killed Hutchins while shooting the movie in Santa Fe, New Mexico.

This information undermined the prosecution’s case after a series of legal flops, leading them to dismiss the charges before a May hearing when a judge was to decide whether there was enough evidence to prosecute Baldwin and gunsmith “Rust” Hannah Gutierrez Reid.

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“The case was dismissed without bias and the investigation is active and ongoing,” prosecutors Carey Morrissey and Jason Lewis said in a memo.

Prosecutors went on to charge Gutierrez Reed, 25, with manslaughter. She has said she held the live round in the gun thinking it was a dummy round. The preliminary hearing in her case has been postponed to August 9.

The dismissal of the same charge against Baldwin came after his attorney presented evidence last week that the copy of the .45 Colt Baldwin has used has been modified with new parts since being manufactured by Italian gunsmith FLL Pietta.

The information compromised the prosecution’s argument that the gun was in fully working condition and could only fire if Baldwin recklessly pulled the trigger, according to the person familiar with the case.

Special prosecutors have said they may re-file charges against Baldwin once new evidence is examined, though legal experts are skeptical.

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“This very weak case against Baldwin should never have been brought in the first place,” said Ambrosio Rodriguez, a former district attorney with the District Attorney’s Office in Riverside County, California.

Filming for “Rust” resumed in Montana this week with many of the same lead actors, including Baldwin, and was expected to wrap up in May.

Rust Movie Productions (RMP) said in February that it would not resume filming in New Mexico, without giving a reason. A Santa Fe prosecutor charged Baldwin and others in January.

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Leading news reporter Jill Christian dies at 83

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Gail Christian, who broke barriers as a black on-air reporter and came to national prominence at NBC News and PBS, died April 12 in Los Angeles. She was 83 years old.

Her wife, Lucy Debardelapine, said it was a complication from a recent bowel surgery.

Christian overcame a troubled youth—including a prison term for armed robbery—to end a career as a prominent television journalist and news executive in the 1970s and 1980s, an era when the industry was dominated by white men.

It became a visible presence in American living rooms with it coverage to NBC News on the trial of Patricia Hearst, the newspaper heiress who was kidnapped in 1974 by a gang of left-wing revolutionaries called the Symbionese Liberation Army, and who was convicted two years later for participating in a bank robbery with the group.

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But for Ms. Christian, it wasn’t enough just to appear as a rare black face on the evening news.

She said in Interview with the Chicago Tribune In 1986. I felt that was the reason I was there. I didn’t resent it in the least. I felt then, as I feel now, that it is very dangerous for a group of people to live in a society in which they are not allowed to explain themselves.”

It has succeeded in this task with features like “A Country Called Watts”, An hour-long 1977 NBC News special that explored the efforts of residents of this Los Angeles neighborhood to come together and re-evaluate the bloody civil unrest that occurred in response to police brutality in 1965, rebuilding burned-out blocks in the face of perceived government indifference and continued police harassment.

Gary Gilson, former faculty director of a summer program for minority students at Columbia University’s Graduate School of Journalism, in a phone interview. “And her pioneering role as a black news reporter allowed black kids to see, many for the first time, an impressive person on television who looked like them. It gave them recognition and hope.”

After two years at NBC News, Ms. Christian became news director for public station KCET in her hometown of Los Angeles, where she created a “60 Minutes”-style investigative series called “28 Tonight” (the station was on channel 28).

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The program featured several award-winning segments, including a segment on a banking scandal that harmed low-income communities and another on a chemical spill in Orange County that caused illnesses in the area, each of which won a Peabody Award.

In 1981 she moved to Washington, where she began nearly a decade as the news director for the Public Broadcasting Service.

“Since I’ve been in the business, I’ve always wanted to be one of the officers who goes out in that little room and decides what’s going to be covered and who’s going to cover it,” she said in a 1976 interview with the Los Angeles Times. “But at NBC, I never saw any women walk into that little room. Nor any minorities. I thought this was my chance.”

She added, “As Bobby Seale said,” referring to one of the founders of the Black Panther Party, “take the time.”

Jill Christian Jill Patricia Wells was born on February 20, 1940, in Los Angeles, one of four children of Edwin Wells, who worked on an assembly line for the Hughes Aircraft Company, and Lucille (Scruggs) Wells, who owned a cosmetology college. In the Leimert Park neighborhood of South Central Los Angeles. (She later adopted Christian, a name from her mother’s family, as her professional surname.)

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Ms. Christian grew up in Venice, California, and spent three years studying world history at California State University, Los Angeles, before dropping out to join the Air Force in 1962. She was caught in a raging crowd after being discharged, and in 1965, was found guilty of Armed robbery after eroticism in a hotel.

The theft, which resulted in less than $100, led to her admission to the California Institute for Women in Chino for 18 months. Christian said in a 1976 interview with TV Guide. “I really didn’t need to do that. I had a loving family, unlike a lot of the others in prison. I was just kind of pushed out at the time.”

After she had served her time, a paroled colleague who was working as a switchboard operator at The San Francisco Examiner gave her a tip that the paper was planning to hire two black reporters to diversify its staff. Without any experience, Ms. Christian considered the opportunity far-reaching, but talked her way into the role of an apprentice by stretching the truth.

“I gave them this song and they danced around working on this little black paper that the Klan burned,” she told the Tribune.

In 1970, she participated in an 11-week summer program for minority students in broadcast journalism at Columbia. (Geraldo Rivera was a classmate.) Two years later, she was hired by local NBC affiliate KNBC. She worked there for six years before NBC News hired her.

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Her tenure at PBS ended in 1989, shortly after the network found itself embroiled in controversy over the airing of a pro-Palestinian documentary, Days of Rage, which Ms. Christian had acquired and was responsible for vetting. A news report confirmed that the film was partially supported by undisclosed Arab funding, which was denied by the film’s producer.

In an interview with The New York Times, Ms. Christian said she quit PBS for other reasons. She said, “You’re burning because this is a no-win situation.” “You are silent when things are going well and angry when there are questions.”

She eventually settled in Palm Springs, California, with Mrs. DeBardelaben, whom she married in 2016. In 2003, the couple started the Palm Springs Women’s Jazz Festival.

In addition to Mrs. DeBardelaben, Mrs. Christian is survived by her grandson. Her daughter, Sunday Barrett, died in 2019.

While Ms. Christian kept quiet about her prison term early in her career, she finally decided to divulge it to a sympathetic NBC executive. “The guy just looked at me,” she recalls. He says: I don’t have enough problems. Do I have to listen to you? Get outta here.’ I didn’t hear another word.”

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Economic mood and other investment stories you may have missed this week

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This week has been a tough bullish one. Here’s what investors saw:

  • Oil prices have given up most of the gains from the OPEC+ production cut.

  • The Philadelphia Fed Manufacturing Index hit a new low for this economic cycle and missed expectations. Other indicators from the Conference Board The leading economic indicator I also fell.

  • Initial jobless claims were a surprise to the upside for the fourth consecutive week.

  • Weak earnings and more caution emerged from freight operators JB Hunt and Union Pacific as well as auto retailer AutoNation. Netflix and Taiwan Semiconductor, a major supplier to Apple, also issued guidance warnings.

  • There have been more layoffs in Meta’s Cloroxwith reports of planned job cuts at Disney.

  • Tesla reported a quarterly gross margin loss recently price cuts.

The bottom line is that there is an ongoing negative shift in economic data, most likely as interest rates continue to rise in the economy. This is a red flag.

Oddly enough, however, investors can’t seem to jump into it judging by the resilience of the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average.

“The latest data is further evidence that there will be a recession in the US soon, which fits with our own view at DB Research that it is expected to happen later in the year,” Jim Reed, Deutsche Bank strategist wrote in the client note.

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Good words of wisdom now.

Tesla CEO Elon Musk speaks to a visitor as he arrives to look at the Tesla Gigafactory construction on September 3, 2020, near Gruenheide, Germany. (Photo by Maja Hitij/Getty Images)

3 things you might have missed

1. The mood among AmEx cardholders: I met with American Express CEO Stephen Squarey, and he struck an optimistic tone about order trends.

“The economy is definitely divided, and I think at the lower end of the economy, we’re seeing some pressure, but we don’t have that,” Squirey said, adding that he sees strong demand for travel in the spring and summer. The call to travel lines up with what we’ve heard about this earnings season from Delta and United Airlines.

2. Elon Musk is following the storm. An interesting highlight from Tesla’s earnings call was when Elon Musk said he didn’t see the economy improving until 2024. The CEO predicted another year of “stormy economic weather” before “things start to get sunny in the spring of next year.”

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Musk joins the likes of JPMorgan CEO Jamie Dimon in using weather to describe the economic outlook.

3. About this credit cost: In an exclusive on Yahoo Finance Live, Loretta Mester, President of the Federal Reserve Bank of Cleveland, tells Jane Schoneberger that there is only one direction for interest rates in the near term: higher.

“I think that, given the complexity of inflation, and given the still-strong job market, I think rates should go above the 5% level,” Mester said.

Loretta J.  Jim Urquhart

Loretta J. Jim Urquhart

C-Suite, quote of the week

“We are not seeing a significant drop in trade [among consumers]John Mueller, CEO of Procter & Gamble (PG) told Yahoo Finance Live. We are witnessing, if anything, more careful use of the product they purchased. So they might use half a sheet of a Bounty paper towel instead of a full sheet. But overall, again, just looking at the numbers, the consumer holds up very well.”

planner of the week

For those investors who are ignoring the dangers of the impending debt ceiling, here’s a helpful reminder from the macroeconomics team at Goldman Sachs on how markets will price in the 2011 debt ceiling debate:

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Remember the debt ceiling debacle of 2011?

Remember the debt ceiling debacle of 2011?

Brian Suzy He is the Executive Editor of Yahoo Finance. Follow Suzy on Twitter @tweet and on linkedin. Deal tips, mergers, activist positions, or anything else? Email brian.sozzi@yahoofinance.com

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