Five Things You Need to Know to Start Your Day
All you need to know about global markets today.
(Bloomberg) --
Concern is rising about the pervasiveness of the coronavirus as cases of asymptomatic carriers begin to appear, the Fed keeps interest rates on hold and Hong Kong faces down another huge political challenge in holding back the virus outrbreak. Here are some of the things people in markets are talking about today.
The Federal Reserve kept its key interest rate unchanged and continued to signal policy would stay on hold for the time being as the U.S. enters a presidential election year, but Fed Chairman Jerome Powell isn’t satisfied with inflation running persistently below 2%. The central bank also made a technical adjustment to the rate it pays on reserve balances and said it would extend a program aimed at smoothing volatility in money markets — at least through April. “We believe monetary policy is well positioned to serve the American people,” Chairman Jerome Powell told a press conference Wednesday in Washington following the decision. Policy makers also changed their language to say that the current stance of monetary policy is appropriate to support “inflation returning to the committee’s symmetric 2% objective.” Previously they had said policy was supporting inflation “near” the goal. U.S. stocks climbed and then pared those gains, while yields on the 10-year Treasury declined, as did the dollar.
The case of a 10-year-old boy who was diagnosed with the Wuhan coronavirus — even though he showed no symptoms — is raising concern that people may be spreading the virus undetected by front-line screening methods. The boy was part of a family who visited relatives in the central Chinese city over the New Year. His case was the first to demonstrate person-to-person and health-care associated spread of the newly identified virus, dubbed 2019-nCoV. The asymptomatic infection has fueled concern the pathogen may turn out to be harder to detect and contain than SARS, the similar pneumonia-like illness that erupted into a global epidemic in 2003, prompting the World Health Organization called a meeting of its Emergency Committee Thursday to consider issuing a global alarm after cases in China surpassed the official number of SARS infections in the country during that epidemic. As of Thursday, the coronavirus death toll had reached 169, with close to 6,000 people infected across 15 countries.
Hong Kong has lately been served a nasty cocktail of political unrest and financial downturn. Now, the city can add disease into the mix. The semi-autonomous region was always going to face a huge challenge holding back the present coronavirus outbreak raging in the mainland, but deep mistrust built up over seven months of protests in the city is making that task even harder. As new cases of a deadly new corona virus mounted this week, Chief Executive Carrie Lam was forced to cancel plans to turn a newly built housing estate into a quarantine facility after protesters set fire to the lobby. She’s denied rumors that the government was blocking shipments of surgical masks and found her efforts to dramatically curtail visits by mainlanders panned by health workers, as well as lawmakers. The outbreak left Lam facing a strikingly similar situation to one of her predecessors, Tung Chee-hwa, who in 2003 found himself grappling with an uprising against China-backed national security legislation and an outbreak of severe acute respiratory syndrome that ended up killing almost 300 people in Hong Kong. Tung later resigned — something Lam has so far refused to do, despite having even lower poll numbers.
Treasuries rose after the Federal Reserve continued to signal policy would stay on hold and cited inflation concerns. Meanwhile, Asian stock futures pointed to a cautious start and U.S. equities closed flat as ten-year Treasury yields retreated toward the lowest levels since October and traders lifted bets on a U.S. interest rate cut by November. American stocks struggled to hold on to gains, and Asia was on course for modest declines amid lingering concern about the coronavirus. Earnings continue to roll in, with Facebook Inc. falling in after-hours trading following its underwhelming result. Microsoft Corp. rose as sales and profit topped estimates. Elsewhere, oil fell after a government report showed the biggest jump in U.S. crude stockpiles since November. The European Parliament approved Prime Minister Boris Johnson’s Brexit deal, clearing the way for the U.K. to leave the EU on Jan. 31 with an agreement that, for the time being, will avoid a chaotic rupture.
The Goldman of tomorrow wants to be more like everyone else. Previously, with its big bets, practiced secrecy and narrow focus, Goldman Sachs always stood apart from the rest of the large banks on Wall Street. But now, Goldman’s new leaders on Wednesday gave investors an unprecedented look under the hood for a firm that scoffs at even displaying its name on its headquarters, laying out a plan that could leave it looking more like an everyday bank. Out were private-equity deals with the firm’s own money; in were the unglamorous businesses of transaction banking and deposit gathering. The investment bank long known for its lucrative partnership now touted how it could cut costs by delayering management and using robotics. Some Goldman veterans see the moves as falling in with the crowd at the expense of the company’s unique strengths. Others see it as the inevitable reckoning with a reality that other banks embraced years ago. “Imagine a Goldman Sachs in which one or more of these opportunities really blossoms,” Chief Executive Officer David Solomon said at its debut investor day. “Our earnings power could grow dramatically.”
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- A fleet of electric ferries will help fight Bangkok's smog.
- The crisis that shattered India's economic dreams.
- After New York, San Francisco bans cars on iconic market street.
- This Swiss ski resort Zermatt now accepts tax receipts in Bitcoin.
- The EU spared Huawei from a blanket 5G ban, much to Trump’s displeasure.
- This could be America’s most expensive home ever — if it can find a buyer.
- Warren Buffet throws in the towel on his newspaper empire.
- Apple’s closing more stores in China as the coronavirus spreads.
To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net
©2020 Bloomberg L.P.