Study: Trump's Fed tweets affect trades
President Donald Trump's Twitter attacks on the Federal Reserve are prompting investors to bet the central bank will bow to political pressure and lower interest rates, according to a new study.
Trump has frequently used social media to criticize the Fed and Chairman Jerome Powell for running rates higher than he thinks they should be. A review of such tweets and the market response by economists from Duke University and the London Business School found they have a "statistically significant and negative effect" on markets.
The broadsides knocked a combined 10 basis points off the expected fed funds futures contract, the equivalent of about 0.30 basis point per tweet, the study found.
"We provide evidence that market participants believe that the Fed will succumb to the political pressure from the President, which poses a significant threat to central bank independence," Francesco Bianchi, Thilo Kind and Howard Kung said in a study published Monday by the National Bureau of Economic Research.
The finding will likely disappoint Fed officials who argue they don't take Trump's lobbying into account when setting monetary policy.
-- Bloomberg News
Diamond find a help for struggling miner
Petra Diamonds Ltd. has found a 20.08 carat blue stone at its flagship mine in South Africa, offering some relief to a miner struggling with weak demand and a mountain of debt.
The company said it found the gem quality diamond at its Cullinan mine, famous for producing expensive gems, including those in the British crown jewels. Petra gave no forecast on price, but blue gem quality stones are among the world's most valuable.
Petra's share price has collapsed to a record low amid falling diamond prices and concerns about its debts. Last week it wrote down the value of its mines by almost $250 million and said co-founder and Chairman Adonis Pouroulis will depart.
Petra has slid from a peak value of more than $1.5 billion as it redeveloped the Cullinan mine, where the world's biggest diamond was found in 1905. The cost of that project saw Petra's debts swell, just as the diamond market weakened.
-- Bloomberg News
Flat Arkansas Index wraps up at 436.39
The Arkansas Index, a price-weighted index that tracks the largest public companies based in the state, closed Monday at 436.39, up 0.66.
"The prolonged U.S.-China trade war continues to confuse investors as U.S. stocks closed mostly flat on Monday and a series of mixed economic data created a more cautious Wall Street," said Chris Harkins, managing director at Raymond James & Associates in Little Rock.
The index was developed by Bloomberg News and the Democrat-Gazette with a base value of 100 as of Dec. 30, 1997.
Business on 09/24/2019