President Trump renewed his criticism of the Federal Reserve ahead of the central bank’s Federal Open Market Committee meetings Tuesday and Wednesday.
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Fed Chairman Jerome Powell and his colleagues “don’t have a clue,” Trump tweeted Monday morning. He said he wants to see a “big” drop in interest rates.
“Producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus. Federal Reserve not watching?” Trump wrote on Twitter. “Will Fed ever get into the game? Dollar strongest EVER! Really bad for exports. No Inflation...Highest Interest Rates.”
The Fed is expected to announce a rate cut Tuesday at 2 p.m. EST after the meetings.
FILE - This Feb. 5, 2018, file photo shows the seal of the Board of Governors of the United States Federal Reserve System in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. (AP Photo/Andrew Harnik, File)
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“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” he continued. “They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!”
Last week, Trump called for zero or negative interest rates, which the European Central Bank announced in a new round of stimulus.
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The U.S. central bank lowered the benchmark federal funds rate in July for the first time in nearly a decade, citing “global developments in the economic outlook as well as muted inflation pressures." At the time, Fed officials did not say whether they anticipated additional cuts, but warned it was not the beginning of an aggressive rate-cutting series.
Since then, however, global economic conditions have significantly weakened: Manufacturing contracted in the U.S. for the first time in three years; the spread between two-year and 10-year Treasury yields inverted, a common harbinger of an impending recession; and employment data in the U.S. suggested the labor market is softening, all amid heightened trade tensions between the U.S. and China.
President Donald Trump launched a new attack against his own Federal Reserve chairman in a pair of Monday morning tweets.
The president has been publicly pressuring Fed chairman Jerome Powell to lower interest rates in hopes of staving off a recession, but the Trump appointee has so far resisted his calls.
“Producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus,” Trump tweeted. “Federal Reserve not watching? Will Fed ever get into the game? Dollar strongest EVER! Really bad for exports. No Inflation…Highest Interest Rates…”
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Trump has publicly questioned Powell’s judgment on numerous occasions and even suggested he was an “enemy” of the United States, and he hurled another disparaging remark at the Fed chairman.
“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” he tweeted. “They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!”
…The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries. They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!
… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and legal efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. And unlike other news outlets, we’ve decided to make our original content free. But we need your support to do what we do.
Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from billionaires and corporate overlords, we fight to ensure no one is forgotten.
… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.
Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.
United Auto Workers President Gary Jones speaking at the opening of GM-UAW contract talks on July 16 in Detroit.
The deadlock comes at an awkward time for the United Auto Workers union, one of the most powerful labor groups in the country.
UAW President Gary Jones was directly implicated late Thursday in a growing scandal involving the union and its finances, the Detroit News reported.
It could further damage the necessary trust that rank and file union members have in the union's leadership during negotiations.
The scandal involves misappropriation of union funds, and in some cases, union officials accepting bribes from officials at one of the automakers, Fiat Chrysler.
Agents from the FBI, IRS and Labor Department had searched Jones' home late last month, an FBI spokesman confirmed to CNN.
On Thursday a top union official, Vance Pearson, became the first active union official to be indicted in the scandal.
Nine other people who have pleaded guilty in the scandal were former union officials, the widow of one union official, or employees at Fiat Chrysler who dealt with the union.
The indictment did not name Jones, but the Detroit News reported that he's one of the unidentified co-conspirators named in the government's filing, identified only as "UAW Official A." The News cited three unnamed sources for its report.
The allegation against the UAW president, even if only in a news report, could be bad news for GM in its hope of reaching a deal with the union at a difficult time for the industry, said Kristin Dziczek, vice president of industry labor and economics for the Center for Automotive Research, a Michigan think tank.
The union's 46,000 hourly workers walked out at 31 GM factories and 21 other facilities, spread across nine states, mostly in the center of the country. It's the largest strike by any union against any business since the last strike at GM in 2007.
The strike started at 11:59 pm Sunday night. The two sides did not formally meet Sunday after the union declared its intention to strike at a morning press conference, although union spokesman Brian Rothenberg said that the dialogue between the two sides was ongoing. A new meeting of the two sides is set for 10 a.m. Monday.
The union said that GM was putting profits ahead of employees who helped to turn the company around when it went through bankruptcy and federal bailout a decade ago.
The company said it made a substantial offer that includes improved pay and profit sharing for union members, along with investment to bring new jobs. It also promised a "solution" for two of the four plants currently slated for closure: one in Detroit and another in Lordstown, Ohio.
The company did not say what the solution would be. But a person familiar with GM's offer said it included a promise to build a new electric truck at Detroit Hamtramck, and to build new batteries for electric vehicles in Lordstown. That work wouldn't start immediately, so the plants would likely remain dark for some time. Work would start sometime in the next four years if the offer is accepted.
A source close to the UAW with direct knowledge of negotiations said most of the proposals the company disclosed publicly on Sunday came very late in negotiations Saturday.
The UAW has vowed that keeping the plants open would be a key bargaining demand. Late Saturday it said while there had been progress in the talks there was still "significant differences between the parties on wages, health care benefits, temporary employees, job security and profit sharing."
GM says its average hourly employee earns about $90,000 per year, not including benefits. But the number of hourly workers at GM has declined sharply in recent decades, due to a combination of automation, lost market share and outsourcing. But GM still builds the overwhelming majority of cars it sells in the US market in North America. And it has far more factories in the United States than it does in Mexico or Canada.
The union had earlier extended the contracts at two other US automakers with UAW contracts, Ford(F) and Fiat Chrysler(FCAU), as it targeted GM in an effort to reach a deal that would set a pattern for the industry. The union announced late Saturday while membership would work past the original 12:01 a.m. ET contract expiration early Sunday, there would be no long-term extension of the contract at GM if the two sides did not reach a deal on Sunday.
All three automakers are dealing with slower sales and the need to make huge multi-billion-dollar investments in developing electric and self-driving vehicles that have more long-term potential than current market demand.
It was the need to save money for those efforts that GM halted operations at three US plants — including the assembly line in Lordstown, and announced plans to shut the Hamtramck plant, its last Detroit factory, early next year.
But negotiations come as the union is hit by a scandal involving misappropriation of union funds, and in some cases, union officials accepting bribes from officials at Fiat Chrysler. Nine people associated with the union or Fiat Chrysler have already pleaded guilty to federal charges.
Last week, the Detroit News reported the union's president, Gary Jones, was the unnamed union official identified in the most recent indictment as "UAW Official A." The union has not responded to a request for comment about that report.
Experts say the scandal will make it more difficult to get rank and file union members at the automakers to ratify any tentative deal reached by union leadership. Four years ago the deals all passed by only narrow margins, even though there was no scandal at that time.
The last strike 12 years ago lasted only three days, but some strikes against GM in the past have stretched on for months. For many of the employees hired since 2007, this is their first work stoppage.
The union's 46,000 hourly workers walked out at 31 GM factories and 21 other facilities, spread across nine states, mostly in the center of the country. It's the largest strike by any union against any business since the last strike at GM in 2007.
The strike started at 11:59 pm Sunday night. The two sides did not formally meet Sunday after the union declared its intention to strike at a morning press conference, although union spokesman Brian Rothenberg said that the dialogue between the two sides was ongoing. A new meeting of the two sides is set for 10 a.m. Monday.
The union said that GM was putting profits ahead of employees who helped to turn the company around when it went through bankruptcy and federal bailout a decade ago.
The company said it made a substantial offer that includes improved pay and profit sharing for union members, along with investment to bring new jobs. It also promised a "solution" for two of the four plants currently slated for closure: one in Detroit and another in Lordstown, Ohio.
The company did not say what the solution would be. But a person familiar with GM's offer said it included a promise to build a new electric truck at Detroit Hamtramck, and to build new batteries for electric vehicles in Lordstown. That work wouldn't start immediately, so the plants would likely remain dark for some time. Work would start sometime in the next four years if the offer is accepted.
A source close to the UAW with direct knowledge of negotiations said most of the proposals the company disclosed publicly on Sunday came very late in negotiations Saturday.
GM announced plans in November of 2018 to shut the Detroit and Lordstown assembly plants, along with transmission plants in Baltimore and Warren, Michigan. The UAW has vowed that keeping the plants open would be a key bargaining demand. Late Saturday it said while there had been progress in the talks there was still "significant differences between the parties on wages, health care benefits, temporary employees, job security and profit sharing."
GM says its average hourly employee earns about $90,000 per year, not including benefits. But the number of hourly workers at GM has declined sharply in recent decades, due to a combination of automation, lost market share and outsourcing. But GM still builds the overwhelming majority of cars it sells in the US market in North America. And it has far more factories in the United States than it does in Mexico or Canada.
If the union goes on strike, it will be the largest by any union against any US business since the last time UAW members struck GM in 2007.
The union had earlier extended the contracts at two other US automakers with UAW contracts, Ford(F) and Fiat Chrysler(FCAU), as it targeted GM in an effort to reach a deal that would set a pattern for the industry. The union announced late Saturday while membership would work past the original 12:01 a.m. ET contract expiration early Sunday, there would be no long-term extension of the contract at GM if the two sides did not reach a deal on Sunday.
All three automakers are dealing with slower sales and the need to make huge multi-billion-dollar investments in developing electric and self-driving vehicles that have more long-term potential than current market demand.
It was the need to save money for those efforts that GM halted operations at three US plants — including the assembly line in Lordstown, and announced plans to shut the Hamtramck plant, its last Detroit factory, early next year.
But negotiations come as the union is hit by a scandal involving misappropriation of union funds, and in some cases, union officials accepting bribes from officials at Fiat Chrysler. Nine people associated with the union or Fiat Chrysler have already pleaded guilty to federal charges.
Last week, the Detroit News reported the union's president, Gary Jones, was the unnamed union official identified in the most recent indictment as "UAW Official A." The union has not responded to a request for comment about that report.
Experts say the scandal will make it more difficult to get rank and file union members at the automakers to ratify any tentative deal reached by union leadership. Four years ago the deals all passed by only narrow margins, even though there was no scandal at that time.
The last strike 12 years ago lasted only three days, but some strikes against GM in the past have stretched on for months. For many of the employees hired since 2007, this is their first work stoppage.
The US Federal Reserve looks set to follow the European Central Bank, and cut rates next week by perhaps a quarter of a percentage point. Fed Chairman Jerome Powell has made clear that he doesn't think a US recession is likely, but he has acknowledged that economic headwinds are intensifying.
"There are all these risks, and we're monitoring them very carefully and we're conducting policy in a way that will address them," he said earlier this month.
The comments helped bolster investor expectations that a rate cut will be announced following the central bank's meeting on September 17 and 18. The Fed slashed interest rates for the first time in a decade in July as the cost of the US-China trade war mounted.
"The domestically focused, consumer-orientated parts of the economy are holding up, but with inflation looking non-threatening the Federal Reserve has scope to offer support to the economy," wrote analysts at ING, a Dutch bank.
The Trump factor: US President Donald Trump has been using his Twitter feed to keep the pressure on the central bank. "The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt," he tweeted last week.
Lest Trump's own nominee to lead the Fed not get the message, the president used the ECB's decision last week to push interest rates further into negative territory to drive his point home.
"They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports.... And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!" he tweeted.
Over to you, Mr. Powell.
US stock records on tap?
Fed action could lead the S&P 500 and Dow to new all-time highs. Last week was stellar for stocks, with concessions by the United States and China raising hopes that trade negotiations could yield a breakthrough if they resume next month as expected.
China agreed last week to exempt shrimp, cancer drugs, pesticides and more than a dozen other products from tariffs. US President Donald Trump responded by delaying a planned tariff increase from October 1 until October 15 in what he called "a gesture of good will." Then, on Friday, Beijing cleared the way for more purchases of US soybeans and pork.
The Dow added 1.6% last week for its third consecutive weekly gain. The S&P 500 rose nearly 1% and Nasdaq rose 0.5% last week, matching the Dow's winning streak.
Apple's next big test
The iPhone 11 and its more expensive Pro brothers go on sale in a large handful of countries Friday.
Apple(AAPL) could use a sales win: iPhone sales have fallen in three of the past four quarters, and with China's economy in a prolonged slump, there's little chance of a turnaround in the near future.
That's why Apple is banking on its $5-a-month Apple TV+ and Arcade subscription services to help boost revenue.
But investors will still pay close attention to reports about how well Apple's iPhone 11 sales performed during its opening weekend. The lower-than-expected $699 price could give those sales a boost.
Saudi oil capacity
Oil traders are on alert after coordinated strikes knocked out 5.7 million barrels a day of Saudi Arabia's crude oil and gas production, about half the country's total output.
Two Saudi Aramco sites including the world's biggest petroleum processing facility were struck. State-owned Aramco "hopes to have that capacity restored within days," a source told CNN Business. The outage will affect 5% of daily global oil output.
US Secretary of State Mike Pompeo pinned the strikes directly on Iran. Tehran has dismissed the claim.
"Oil prices will jump on this attack," said Jason Bordoff, founding director, Center on Global Energy Policy at Columbia University. "The risk of tit-for-tat regional escalation that pushes oil prices even higher has gone up significantly."
The International Energy Agency said it was in touch with Saudi authorities. "For now, markets are well supplied with ample commercial stocks," it said.
Monday: China retail sales, industrial production
Tuesday: US industrial production for August; FedEx(FDX) earnings
Wednesday: Fed rate decision; General Mills(GIS) and Lloyd's of London earnings
Thursday: BOE and BOJ rate decisions; US existing home sales
Friday: Apple's iPhone 11 goes on sale in select countries
CNN Business' Victoria Cavaliere contributed to this report
NEW YORK (Reuters) - Adam Neumann showed he can capitalize on troubled times a decade ago, tapping into demand for workspace by those forced out of jobs in the aftermath of the financial crisis to grow WeWork into a global brand commanding a $47 billion valuation.
FILE PHOTO: Adam Neumann, CEO of WeWork, speaks to guests during the TechCrunch Disrupt event in Manhattan, in New York City, NY, U.S. May 15, 2017. REUTERS/Eduardo Munoz -/File Photo
Yet his plans to take WeWork’s corporate parent the We Company public have backfired, as his company becomes the poster child for a bubble in venture capital fundraising that has pushed some start-ups to unsustainable valuations.
The We Company is contemplating slashing its valuation to as low as $10 billion from the $47 billion billing clinched in a private fundraising round in January backed by Japan’s SoftBank Group Corp, people familiar with the matter said on Friday.
The sharp drop comes amid investor criticism of widening losses and Neumann’s firm grip on the company.
Neumann, 40, is under pressure to proceed with the initial public offering (IPO) to raise cash to keep WeWork’s operations going. The New York-based company rents workspace to clients under short-term contracts, even though it pays rent for them itself under long-term leases.
It is by far the biggest crisis Neumann has faced in his career, after arriving in New York at the age of 22 following service in the Israeli military.
He failed in several ventures before selling his first co-working firm, Green Door, for $300,000 with business partner Miguel McKelvey a decade ago. Neumann and McKelvey used the proceeds from that sale to start WeWork, with its first customers coming to the lower Manhattan site just off Chinatown in February 2010, after seeing ads in Craigslist.
Community was a driving force behind the new venture, launched at a time when millions who had lost jobs during the 2008 financial crisis were looking for flexible work space.
“It quickly became apparent that people were ready for a new approach to work, not just their workspace,” Neumann said in a blog post in 2016, marking the launch in Berlin of WeWork’s 100th site.
Neumann’s parents divorced when he was a boy and he moved 13 times as a child and adolescent, living awhile in Indianapolis where his mother, an oncologist, finished her medical residency. He has called his childhood challenging because of the moves.
They returned to Israel where he lived in kibbutz Nir Am, near the Gaza Strip, and later served in the Israeli military, which he says taught him to be something greater than himself.
Neumann’s experience on a kibbutz and McKelvey’s growing up in a five-mother commune in Oregon have been cited as a reason the pair hit it off. McKelvey is an architect with the title of chief culture officer at WeWork.
Neumann, now a billionaire as the majority owner of We Company, also has said he thought money was the goal in life until he met his wife Rebekah, a cousin of actress Gwyneth Paltrow.
Formerly called chief brand director, Rebekah Neumann is referred to as a co-founder of WeWork. She is also a filmmaker and introduced Neumann to Kabbalah, a form of Jewish mysticism that has attracted celebrity followers. They have five children.
ELEVATING WORLD’S CONSCIOUSNESS
The early success of the shared workspace validated the global community Neumann envisioned where people can achieve more together than alone, or in the words of the company’s famous mantra: “to make a life, not just a living.”
Neumann arrived in New York in 2001 where he lived with his sister Adi, an Israeli model, and started a handful of businesses that failed, including women’s shoes and a line of baby clothes with knee pads called Krawlers.
“When I came to New York I was angry about my history,” Neumann told a luncheon at the New York Stock Exchange in June 2017, adding he learned that you don’t deserve anything. “I became happy. My past helped make who I am today,” he said.
Neumann, described as key to setting WeWork’s strategic direction and execution priorities in the IPO filing, can come off as a bit zany. In the 2016 blog post he said the future of cities would require a healthy mix of 70% magic and 30% logic.
The We Company also said in the filing that its mission is to elevate the world’s consciousness and that as a community company it is committed to maximum global impact, a vision Neumann endorses.
Reporting by Herbert Lash in New York; Editing by Daniel Wallis
