The Fed is expected to raise interest rates by a quarter point today and indicate that it plans to keep hiking them in what many expect to be a hawkish message for markets, CNBC.com reported. Wall Street economists expect the Fed to make a number of changes that reinforces a hawkish tone, including raising its growth forecasts, sounding more confident about the outlook and dropping language that says its policy is accommodative. The Fed releases its statement and revised economic and interest rate forecasts at 2 p.m. EDT today, and Fed Chairman Jerome Powell holds a briefing at 2:30 p.m.
When the floodwaters from Hurricane Florence recede and rebuilding kicks into high gear, homeowners and businesses will face an additional burden as tariffs imposed by the Trump administration drive up the cost of construction materials, the New York Times reported. Homebuilders and contractors say that the administration’s trade policy will add to the price increases that usually follow natural disasters. In addition to materials like lumber, steel and aluminum, the United States will impose tariffs on $200 billion in Chinese imports this week, including countertops, furniture and gypsum, a key ingredient in drywall. All told, some builders estimate that construction costs could be 20 to 30 percent higher than they would have been without these tariffs. Perhaps the biggest impact will come from wood prices, which are up 40 percent from a year ago. The Trump administration imposed a 20 percent tariff on Canadian softwood lumber late last year, and supply shortages have also driven up prices.
The end of the London interbank offered rate after 2021 could have costly consequences for states and cities, and managers need to start preparing, the Government Finance Officers Association said yesterday, Bloomberg News reported. About $44 billion of floating-rate municipal bonds and an unknown amount of loans and interest-rate swaps entered into by states and cities are tied to the U.S. dollar Libor. Many of these securities and contracts will continue long after 2021, when Libor is phased out. Municipalities will need to take inventory of debt and investments tied to Libor, and hire lawyers and advisers to review contracts and renegotiate them before 2022, according to the GFOA. States and cities should also develop mechanisms to transfer Libor-based products to the Secured Overnight Financing Rate, Libor’s replacement.
Small businesses around the country say that they are bracing for the latest round of tariffs, which could cut into already-thin profits and leave them with little recourse but to pass on additional costs to consumers beginning this holiday season, the Washington Post reported. And while larger retailers such as Walmart, JC Penney and Amazon say they have already locked in low-priced inventory for the holidays, independent retailers tend to rely on third-party suppliers to import products for them, giving them little control over where their goods come from, or how much they cost. “Larger retailers may be able to find alternative sources or be able to absorb a price increase without passing the cost on to their customers,” said David French, senior vice president of government relations for the National Retail Federation. "But the smaller you are, the more vulnerable you are to the impact.” Analysts say the tariffs — which begin Monday at 10 percent and will rise to 25 percent on Jan. 1 — are likely to trickle down to retailers and consumers in the coming weeks and months, raising the prices of everyday household goods.
The tech industry and consumer groups are gearing up for a fight as lawmakers begin considering whether to draft a national privacy law, The Hill reported. The push to get Congress to enact federal privacy standards is gaining new urgency after California passed what is being seen as the nation’s toughest privacy law this June. The measure forces businesses to be more transparent about what they do with consumer data and gives users unprecedented control over their personal information. The California law has sparked worries within the tech industry, which fears having to comply with a patchwork of varying state regulations. Industry groups are pushing Congress to pass a national privacy bill that would block states from implementing their own standards. Next week, executives from Google, Apple, AT&T and other major technology and telecommunications companies will testify before the Senate Commerce Committee as the panel’s chairman, Sen. John Thune (R-S.D.), prepares to introduce a new privacy law. Consumer groups are concerned that only industry voices will be heard at the hearing and that internet companies will have an outsized role in shaping the legislation. They are now demanding a seat at the table. The stakes are high for all sides in the privacy debate after a year that saw Facebook rocked by a massive data scandal. Overseas, Europe has already passed its own tough privacy law, which took effect this year.
A top securities regulator is calling for his agency to beef up its oversight of the nation’s stock exchanges to root out conflicts and curb rising fees that he says are harming investors, the Wall Street Journal reported. In a policy speech to be delivered Wednesday, Robert J. Jackson Jr., a Democratic commissioner at the Securities and Exchange Commission, will allege that the SEC has “stood on the sidelines” as the New York Stock Exchange, Nasdaq Inc. and other market operators have significantly boosted their profits while raising investors’ costs, according to a copy of his remarks. Jackson will call on the SEC to ensure “that the exchanges’ actions do not unduly burden competition and are fair and reasonable.” All of the currently active U.S. stock exchanges are for-profit enterprises, a reversal of the way the stock market operated for nearly two centuries. The NYSE, for instance, was a member-owned nonprofit until 2006 and was later acquired by Intercontinental Exchange Inc., an Atlanta-based global exchange operator. Critics charge that for-profit exchanges exploit their central position in the markets to extract greater fees from traders.
Republican lawmakers are taking aim at the growing practice of federal judges issuing nationwide rulings, hoping to tackle an issue that has repeatedly stymied President Trump’s agenda during his year-and-a-half in office, the Wall Street Journal reported. The House Judiciary Committee will consider legislation today to curb nationwide injunctions — when a federal judge on one of the U.S.’s 94 district courts issues a ruling that covers the entire country, often halting a presidential initiative, program or action. The bill, proposed by committee Chairman Bob Goodlatte (R-Va.), would instruct judges to write rulings that apply only to the individuals, organizations or entities that are part of the lawsuit in front of them.
U.S. securities law can be used to prosecute fraud cases over cryptocurrency offerings, a New York federal judge ruled on Tuesday in what appeared to be the first court decision to address the issue, Reuters reported. The ruling from U.S. District Judge Raymond Dearie in Brooklyn allows federal prosecutors to pursue their case against Maksim Zaslavskiy. The Brooklyn resident was arrested in November on charges that he defrauded investors in two cryptocurrencies, violating the federal Securities Exchange Act. Prosecutors have said that Zaslavskiy last year raised at least $300,000 from investors in a cryptocurrency called REcoin, which he claimed was backed by real estate, and another cryptocurrency called Diamond, which he said was backed by diamonds. In fact, prosecutors said, no real estate or diamonds backed the virtual currencies.
Federal Reserve figures released yesterday showed that consumer borrowing picked up in July, MarketWatch.com reported. Total consumer credit rose $16.6 billion in July to a seasonally adjusted $3.91 trillion. That’s an annual growth rate of 5.1 percent. Revolving credit, such as credit cards, rose only slightly in July. Borrowing on credit cards rose by 1.5 percent, reversing a 1.4 percent drop in June. Non[-] revolving credit, typically auto and student loans, jumped 6.4 percent in July after a 4 percent gain in the prior month. That is the largest increase in eight months. The report does not include mortgage debt.
The Consumer Financial Protection Bureau faced a legal challenge at the Supreme Court on Thursday to its single-director format, the Washington Times reported. State National Bank of Big Spring, Texas, along with the nonprofit Competitive Enterprise Institute and the seniors’ advocacy group 60 Plus Association, filed a petition with the high court to hear a lawsuit that seeks to declare the CFPB’s organizational structure unconstitutional. The agency was created in 2010 as part of the Dodd-Frank financial regulatory law. The petition from CEI notes that the bureau has a single director that the president cannot remove from office for policy reasons, that Congress has no control over or oversight of CFPB funding, and that the bureau lacks internal checks or balances of a multimember commission.