President Donald Trump kept up the pressure on the Federal Reserve, calling Tuesday for the central bank to enact a substantial interest rate cut.
The call, made during an exchange with reporters, comes as the policymaking Federal Open Market Committee convenes for its two-day meeting, during which it is widely expected to approve a 25 basis point cut in the central bank's benchmark overnight funds rate.
"I'd like to see a large cut, and I'd like to see quantitative tightening immediately stopped," Trump said, the latter remark a reference to the Fed's efforts to reduce the bonds it is holding on its $3.85 trillion balance sheet.
"They moved in my opinion far too early and far too severely, and puts me at somewhat of a disadvantage," he added.
Trump said he thinks the Fed should have acted sooner to cut and believes the economy would have been better off without the rate hikes that began in December 2015.In total, the Fed increased rates nine times in an effort to normalize monetary policy from the extreme accommodation implemented during and after the financial crisis.
Despite his disapproval of the Fed's actions, Trump said he thinks the economy is strong enough to withstand tighter monetary policy.
"Fortunately, I've made the economy so strong that nothing is going to stop us," he said.
However, he repeated previous assertions that the Dow Jones Industrial Average would be 10,000 points higher and GDP growing by 4% had the Fed not tightened.
"I'm very disappointed in the Fed. I think they acted too quickly by far," Trump said.
Traders work on the floor of the New York Stock Exchange (NYSE) on February 6, 2018 in New York City.
Spencer Platt | Getty Images News | Getty Images
The Federal Reserve is expected to cut rates this week for the first time since 2008, potentially giving investors the green light to play offense. CNBC took a look at stocks that tend to pop on the day the central bank pulls the trigger.
CNBC analysis using Kensho, a hedge fund analytics tool, found the stocks in the Dow Jones Industrial Average with the highest one-day return when the Fed initially cut rates in each cycle going back to 1990. The first rate reduction in every easing cycle took place in 1995, 1998, 2001, 2003 and 2007. General Electric and DuPont are excluded as they are no longer in the Dow.
The 30-stock index climbed 0.7% on average on rate-cut day as an easier monetary policy is typically bullish for stocks especially cyclicals like industrials. Procter & Gamble takes the cake as the best-performing stock in the Dow on decision day, rising 2.2% on average. Caterpillar and 3M both jumped nearly about 1.9% when the Fed lowered interest rates.
Investors have piled into big dividend payers on rate-cut day as Verizon, Chevron and P&G, all having attractive dividend yields, have done well in the past.
The Fed will announce its latest decision on whether to adjust interest rates at 2 p.m. ET Wednesday. The central bank is widely expected to cut its benchmark lending rate for the first time in more than 10 years. Fed Chair Jerome Powell has signaled his willingness to do what it takes to sustain the record-long expansion.
The Fed’s going to switch gears on how it responds to inflation.
It’s here — the Federal Open Market Committee meets on Tuesday for a two-day meeting that is expected to end with lower interest rates and Federal Reserve Chairman Jerome Powell stating for the umpteenth time from the podium that no, President Donald Trump is not directing interest rates.
But let’s for a second take a longer-term view, and not whether the Fed can meet expectations or whether Powell will tank markets as he often does during press conferences.
MarketWatch’s Call of the Day comes from JPMorgan’s Asian equity strategy team, which points out the Fed is changing its so-called reaction function, which its in-house economists believe will result in a move to an inflation-averaging framework. That means the Fed will purposely let the economy overheat if inflation has been undershooting its target for some time. This isn’t just a Fed thing — the European Central Bank also is considering a review.
Okay, great, but what does that mean? Well, it should mean lower bond yields. Lower bond yields are not necessarily good news for stocks if that means lower growth expectations. But JPMorgan says that should the yield on the 10-year Treasury
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average 2%, U.S. equities should trade an average valuation multiple of 20 times. “Thus, while typically we would assume that lower yields come with more downside due to lower growth expectations than upside due to re-rating, a structural step down in yields can actually sustain a higher average level of valuations,” the strategists say.
Growth stocks — because they are by definition long-duration assets — and yield stocks should benefit, the strategists say.
The market
After a meh Monday — the Dow Jones Industrial Average
DJIA, -0.20%
rose, the S&P 500
SPX, -0.33%
fell — U.S. stocks slumped at the open.
The British pound
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continued to drop like a rock on concerns over a no-deal exit of the U.K. from the European Union.
Beyond Meat
BYND, -9.83%
was the talk of markets after reporting better than expected sales, and then announcing a big stock sale of 3.25 million shares (mostly from stockholders, so it won’t get much in the way of proceeds.) Whether you think the valuation is insane or not, good luck shorting it — as of Monday, shares were commanding a borrow fee of 135.9%, rising to 150% for new borrows, according to analytics firm S3 Partners.
U.S. and Chinese negotiators are due to restart trade talks in Shanghai, the first time negotiators have met since Trump said China would probably wait until after the U.S. election to strike a deal. Possibly coincidentally, Huawei said its sales rose even accounting for the U.S. blacklisting it.
If you want to understand why the Federal Reserve will be cutting interest rates despite a decent economy at home, consider this chart. FactSet Research looked at earnings growth for S&P 500 components that have reported second-quarter earnings, and broke them out by companies that generate more than 50% of sales in the U.S. versus those that generate more than 50% of sales outside the United States.
No surprise — earnings are hammered for those reliant on overseas money, but they’re holding up for companies that generate sales stateside.
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IHG has today announced that they’ll switch entirely to bulk-size bathroom amenities by 2021.
This will apply to all 17 IHG brands, ranging from InterContinental to Holiday Inn Express. IHG is one of the world’s largest hotel groups, with around 5,600 properties that have around 843,000 guest rooms.
IHG says that this will remove 200 million miniature bottles from their properties every year. This is part of a larger sustainability agenda intended to reduce plastic waste, and it makes IHG the first global hotel company to commit all brands to removing bathroom miniatures in favor of bulk-size amenities.
IHG’s CEO, Keith Barr, had the following to say regarding this:
“It’s more important than ever that companies challenge themselves to operate responsibly – we know it’s what our guests, owners, colleagues, investors and suppliers rightly expect. Switching to larger-size amenities across more than 5,600 hotels around the world is a big step in the right direction and will allow us to significantly reduce our waste footprint and environmental impact as we make the change.
We’ve already made great strides in this area, with almost a third of our estate already adopting the change and we’re proud to lead our industry by making this a brand standard for every single IHG hotel. We’re passionate about sustainability and we’ll continue to explore ways to make a positive difference to the environment and our local communities.”
This move follows IHG committing to removing plastic straws from their properties by the end of 2019, which is something we’ve seen at a lot of companies.
IHG notes that many of their brands already offer bulk-size toiletries, and they’re well received by guests:
Six Senses Hotels Resorts Spas offers bathroom products in refillable ceramic dispensers across its entire luxury estate, whilst Kimpton Hotels & Restaurants is already moving to larger-size amenities
IHG’s voco Hotels, EVEN Hotels, and avid hotels brands have all offered bulk-size amenities since launch, working closely with suppliers to offer dispensers and products that retain a quality feel
More than 1,000 Holiday Inn Express hotels in the Americas have already been implementing the change, alongside a number of Staybridge Suites and Candlewood Suites properties in the region
My take on bulk-size toiletries
I have to be honest, this is an area where I’ve evolved over time. In general I’ve not been a fan of hotel groups switching to bulk-size amenities, since it seemed to me mostly like a cost cutting measure.
While I do think it cuts cost, the reality is that it’s also the right thing to do. Toiletry miniatures are so wasteful and unnecessary, even if they are something that some people love about hotels.
So while I’m in favor of this nowadays, I do have a few hopes for IHG (and any other hotel brand that chooses to go this direction):
Please don’t introduce worse toiletries just because the labeling might not be as obvious
Please make sure housekeepers clean the containers properly
Please make sure the containers work correctly, which I’ve found to be a major issue (like a pump being broken)
Bottom line
IHG is the first global hotel group to announce that they’re eliminating miniature toiletries globally, though I’d be willing to bet that the competition will follow shortly, and before you know it, single use toiletries will be a thing of the past.
I know some people will miss taking home some toiletries from some of the better brands out there, but I also can’t blame IHG for this. It’s the right move, ultimately.
What do you make of IHG eliminating miniature toiletries globally?
Merck shares jumped more than 3% on Tuesday after the pharmaceutical giant reported second-quarter earnings and revenue that easily beat Wall Street's expectations.
The company also narrowed its earnings and revenue forecast for the year.
Here's how the company did compared with what Wall Street expected:
Earnings: $1.30 per share vs. $1.16 per share forecast by Refinitiv
Revenue: $11.76 billion vs. $10.96 billion forecast by Refinitiv
The company expects full-year earnings per share between $4.84 and $4.94 versus the $4.75 a share Wall Street expects. It sees 2019 revenue coming between $45.2 billion and $46.2 billion. Wall Street was expecting revenue of $44.74 billion this year. Merck said the reduction in the earnings range reflects the inclusion of a charge of about $1.1 billion related to the acquisition of biotech firm Peloton Therapeutics, announced in May.
"Our science-led strategy and execution across our key growth pillars have driven another quarter of accelerating revenue growth with strength across our global portfolio," Merck Chairman and CEO Ken Frazier said in the earnings release.
Merck said sales of Keytruda immunotherapy surged 58% in the quarter to $2.6 billion. Keytruda, which boosts the immune system to attack cancer, has driven growth for Merck and put pressure on Bristol-Myers Squibb's rival drug Opdivo.
Sales of Merck's Gardasil vaccine to prevent certain types of cancer were up 45.7% to $886 million. Sales of vaccines to children, which includes the company's MMR vaccine for measles, jumped 58% to $675 million.
The financial results come as the entire pharmaceutical market struggles amid scrutiny from the White House and Congress to lower prescription drugs costs. The SPDR S&P Pharmaceuticals XPH, an ETF that tracks the pharma industry's biggest companies, has increased roughly 3% year to date as of Monday's close, significantly lagging the S&P 500's 20% rise over the same time period.
This is a developing story. Please check back for updates.
Approximately 100 million people in the United States and 6 million more in Canada are affected, the company said, with about 140,000 Social Security numbers, 1 million Canadian Social Insurance numbers and 80,000 bank account numbers compromised.
If you're a Capital One(COF) customer worried about your data, there are immediate steps you can take to safeguard your personal information, experts say.
Here's what you should do.
Don't panic
First off, "get ready to spend some time and energy," to make sure everything's in order, said Erica Sandberg, a consumer finance expert based in San Francisco.
The bank says it will notify everyone who was affected by the breach, and offer them free credit monitoring and identity protection services.
Take advantage of those services.
Check your accounts now
Look over your credit card and banking statements, and report any suspicious activity to the bank as soon as possible.
"If you find suspicious activity on your credit card, banks like Capital One allow you to freeze your card so that purchases can no longer be made," said Sara Rathner, a credit card expert at personal finance website NerdWallet.
"You can do this easily on the Capital One app or online."
Some experts suggest being extra cautious to avoid potential future hacks.
"Change your passwords on all accounts," said Sandberg. "Yes, again."
Freeze your credit
Taking this step means that no one will be able to access your credit reports without your permission. In other words, if someone tries to take out a loan in your name, banks can't review your report so they won't authorize the credit.
"This can be done for free online through each of the three main credit bureaus: Experian, Equifax [and] TransUnion," said Rathner.
Just be aware that it could lead to inconveniences, too.
"You can unfreeze it for your own applications but there will be a short delay. If you're buying a home, vehicle, or applying for a loan or credit card, give yourself time to work on this," said Sandberg.
"A lender or business won't be able to gain entry to your credit file until you unfreeze it."
Stay vigilant
Cybersecurity attacks happen all the time, but there are some best practices that could help protect your information in the future.
The key is staying vigilant, experts say.
One way to do that is to sign up for a credit monitoring service, if you're not offered one by the bank and are still worried.
You could also check your credit reports yourself to make sure fraudulent accounts haven't been opened in your name — and flag any reported balances that don't match up to your statements, said Rathner. Do this at least once every quarter.
Another option is to request notifications about activity on your accounts from banks and other service providers. "If the companies offer activity alerts via text or email, it may make sense for you to sign up for them," writes cybersecurity giant Norton by Symantec.
Watch out for scams
"Don't respond to phone calls or emails from creditors," warns Sandberg. "Call them using the phone number you find on the legitimate website."
Also, check that you're only visiting secure sites when browsing the web. "Reputable sites begin with https://. The "s" is key," says Norton by Symantec. "This is especially important when entering credit card or other personal information."
Lastly: Remember this could happen to anyone, anywhere.
"There are countless hacks going on all the time. We just don't hear about them because they're smaller, and the lenders and security teams tend to catch them before damage is done," said Sandberg.
"I'm a Capital One cardholder and will be doing all of this."
Procter & Gamble's Joy brand dishwashing liquid is arranged for a photograph in Tiskilwa, Illinois.
Daniel Acker | Bloomberg | Getty Images
Procter & Gamble on Tuesday topped analysts' estimates for its quarterly earnings and revenue and released an optimistic outlook for its next fiscal year.
Shares of the company rose 4% in premarket trading.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Earnings per share: $1.10, adjusted, vs. $1.05 expected
Revenue: $17.09 billion vs. $16.86 billion expected
The consumer products giant reported a fiscal fourth-quarter net loss of $5.24 billion, or $2.12 per share, compared with net income of $1.89 billion, or 72 cents per share, a year earlier. P&G said that the primary driver of the loss during the quarter ended June 30 was an $8 billion charge for accounting adjustments to the carrying values of its Gillette Shave Care business.
Excluding items, P&G earned $1.10 per share, beating the $1.05 per share expected by analysts surveyed by Refinitiv.
Net salesrose 4% to $17.09 billion, topping expectations of $16.86 billion.
The Cincinnati, Ohio-based company said that it expects fiscal 2020 revenue growth in the range of 3% to 4%. This includes a slight negative impact from foreign currency. Wall Street was forecasting fiscal 2020 revenue of $69.76 billion, up 3.5% from fiscal 2019.
It also expects adjusted earnings per share to increase by 4% to 9%. P&G said that its current forecast for commodities, foreign currency, transportation and tariffs is expected to result in a "modest net benefit" to earnings growth in fiscal 2020. Analysts were estimating that the company's adjusted earnings next fiscal year would rise 5.1% to $4.75 per share.
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