Fed Chair Powell says he wouldn't resign if requested

Cheryl Sanders
January 8, 2019

Currently, the USA inflation rate remains below what the Fed considers an optimal 2 percent level, meaning there is still space for economic expansion and workers are just beginning to benefit from the growth. USA stocks have tumbled over the last three months as investors anxious that the economy might slow down dramatically because of a variety of challenges including the trade dispute and rising interest rates.

The broader market gains follow comments by the Fed Chair at the American Economic Association's annual meeting in Atlanta.

The tech sector was the best performing subset of the S&P 500, rising 4%. "The strong December jobs report is a net positive for stocks because investors' biggest concern has been slowing growth".

Netflix jumped 8.8 percent after Goldman Sachs added the streaming service to its "conviction list".

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Shares of Apple closed at US$148.26 apiece on Friday, down about 5.1 per cent this week. The economy created 2.6 million jobs a year ago compared to 2.2 million in 2017.

Stocks surged further, with Wall Street up more than 3 percent, after Powell said policymakers were paying attention to market activity and would be flexible in deciding future interest rate hikes and reducing the Fed's balance sheet.

The central bank chief's remarks came on the heels of a report released Friday by the U.S. Bureau of Labor Statistics showing U.S. nonfarm payrolls rose by a seasonally adjusted 312,000 in December, well above the average monthly job gains of 254,000 for the last three months and the strongest average employment increase in more than two years.

The December job report also indicated that unemployment rate was up 0.2 percentage point month-on-month to 3.9 percent, and that average hourly earnings for all employees on private nonfarm payrolls rose 11 cents, or 0.4 percent over November, to 27.48 USA dollars.

Furthermore, Fed Chair Powell also said that rate hikes would continue to be gradual and data dependent. The Indexes move up The Dow Jones Industrial Average (DJI) rose a huge 746.9 points or about 3.3 percent. He also pledged to stay in his post even if asked to quit by President Donald Trump, who has repeatedly chastised the man he put in the job over the Fed's repeated rate hikes. "There aren't signs of significant economic weakness".

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The caretaker boss added: "In a five-minute spell we gave them two or three chances but then we settled down again". It's touch, pass, move, and he plays the efficient game, and Paul knows he's at his best when he plays that game.

Stocks have been unusually volatile in recent weeks. "Can we wait?" Mester said.

Bond prices also changed course and moved sharply lower.

The benchmark 10-year government yield was last at 2.65 percent, up 10 basis points from Thursday's close. That helps banks, as higher interest rates allow them to make bigger profits on mortgages and other loans. South Korea's Kospi added 0.8 per cent. Japan's Nikkei 225 index fell 2.3 per cent on its first day of trading in 2019 as technology and electronics makers slumped on Apple's report that Chinese iPhone sales were slipping.

The dollar strengthened. It rose to 108.51 yen from 107.77 yen. Brent crude, used to price worldwide oils, was up 2 per cent to $57.06 per barrel in London. The euro rose to $1.14 from $1.1391. The British pound slipped to $1.2628 from $1.2630.

Flu cases surge: What you need to know to stay healthy
Cover your nose and mouth with a tissue when you cough or sneeze, then throw away the tissue and wash your hands. People like Gene Hemshrot says he and his wife have gotten the flu shot every year for the past 20.

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