Powell Didn’t Provide the Answers Everyone Needs. Here’s Where Investors Can Look Instead.

One thing in which investors can have more confidence, though, is rates being held steady at the central bank’s next decision on Nov. 1.

Powell said the recent rise in bond yields was clearly a tightening in financial conditions. When asked if it could negate the need for further rate rises, he said: “At the margin, it could.”

But in his typical noncommittal style of late, he added: “I think that remains to be seen.” That was Powell’s performance in a nutshell—he didn’t give much away. The idea of rates staying higher for longer just about emerged as a key takeaway amid the smoke and mirrors.

He also hinted that further tightening may be needed in the face of the U.S. economy’s resilience. “Does it feel like policy is too tight right now? I would have to say no,” he said.

Come on Powell, what does that even mean? But maybe, that’s the point—it’s more damaging to commit to a path and then perform a U-turn.

Unfortunately, it leaves markets none the wiser. Instead, investors will return to watching data next week for more clues. The Fed’s preferred inflation metric—core PCE—is released Thursday, while a busy week of corporate earnings will shed more light on how the U.S. economy is holding up, especially
United Parcel Services
’ results.

—Callum Keown

*** Join Investor’s Business Daily’s multimedia content editor Alissa Coram and senior markets writer Ken Shreve today at noon when they share how to interpret signals from the major indexes and leading stocks to ensure traders are following the market trend rather than letting the headlines dictate their trades. Sign up here.

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Groundwork Laid for Holding Rates Steady

Federal Reserve Chairman Jerome Powell paved the way for another pause on interest-rate increases at the end of the central bank’s November meeting, saying the committee is proceeding carefully given uncertainties, and that it will continue to rely on economic data and an evolving outlook.

• The remarks, made during a lunchtime meeting in New York that was briefly interrupted by climate-change protesters, were similar to comments by other Fed officials in recent days that indicated they favored holding rates steady.

• Their view is supported by a sharp rise in interest rates in the past month, which also has the effect of slowing the economy as a Fed rate increase would. The yield on the 10-year Treasury is a hair away from 5%.

• The 10-year note, which helps guide rates on mortgages and other loans, closed Thursday at 4.987%—a fresh 16-year high. The 10-year’s yield has risen nearly one percentage point since the Fed last raised rates at the end of July.

• Mortgage lenders have been quoting rates around 8% on the popular 30-year fixed-rate loan—a height not reached since 2000. Powell, when asked if higher borrowing costs could substitute for further Fed increases, said: “At the margin, it could.”

What’s Next: Since Powell’s lunchtime speech, the futures markets have factored in a greater than 99% probability of a pause in November, according to the CME’s FedWatch tool. The market has a 70% probability of a pause in December, too, with about a 30% probability of a quarter-point increase.

—Liz Moyer, Megan Leonhardt, and Megan Cassella

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FCC Starts Process of Reviving Net Neutrality Rules

The Federal Communications Commission is moving forward with proposals that would revive the 2015 net-neutrality rules for internet service providers such as
Comcast
or
Charter Communications
to prevent them from slowing or blocking content on their networks. The cable industry is already pushing back.

• The Democratic-led agency voted 3-2 along party lines to expand its power to regulate internet service providers as essential telecommunications utilities. FCC Chair Jessica Rosenworcel said tighter oversight is needed to ensure the internet remains “fast, open, and fair.”

• The Trump administration repealed the rules in 2017, saying regulation of broadband was unnecessarily intrusive. The rules were designed to prevent providers from blocking, slowing, or favoring content delivery from platforms such as Google and
  Netflix.

• Reviving the policy would apply utility-like regulation to internet providers, and likely raise their costs. Jonathan Spalter, CEO of industry group USTelecom, said the FCC’s move amounted to a “regulatory power grab.”

• Michael Powell, president of the trade group NCTA—the Internet & Television Association, which represents Comcast, Charter Communications, and other cable companies—called the FCC’s proposal a “monumental change” in how the internet will be regulated going forward.

What’s Next: The FCC’s proposal also comes amid the Biden administration’s work to expand the nation’s connectivity, including $65 billion included in the bipartisan Infrastructure Investment and Jobs Act passed in 2021 to expand underserved communities’ access to affordable high-speed internet.

—Janet H. Cho

***

House Republicans Are Still Trying to Choose a Speaker

House Republicans are in disarray late Thursday as a push by Ohio Rep. Jim Jordan for a third ballot on his speaker nomination appeared to be flailing amid several holdouts. An earlier idea to extend temporary powers to Speaker Pro Tempore Patrick McHenry (R., N.C.) is also on ice.

• Jordan met late Thursday afternoon with members who didn’t vote for him on the first two ballots, when he failed to get the needed votes. Later Thursday, Jordan’s office said a vote on a third ballot would be scheduled for later this morning, Punchbowl News reported.

• Fellow Ohio Republican David Joyce proposed the idea to give McHenry extra powers so legislative work could start moving again. But Rep. Pat Fallon (R., Texas) estimated that about two-thirds of House Republicans opposed because it likely would have needed support from House Democrats.

• Having a temporary speaker could allow the House to proceed with votes to approve aid for Israel and Ukraine and keep the federal government open beyond Nov. 17. House business has been on hold for two weeks since members ousted former Speaker Kevin McCarthy.

• Rep. Mariannette Miller-Meeks (R., Iowa) said she received “credible death threats” and threatening calls after voting against Jordan on Wednesday, and Rep. Donald Bacon (R., Neb.) said his wife got threatening texts pressuring him to support Jordan. Jordan called the threats “abhorrent.”

What’s Next: As he presses forward on another vote to become Speaker, Jordan has to win over several Republican lawmakers who help determine spending levels and who have been worried he will seek deeper cuts than they believe to be reasonable, The Wall Street Journal reported.

—Janet H. Cho

***

China Plans to Curb Graphite Exports

The Chinese government is planning additional controls on exports of graphite, a key material for electric-vehicle batteries, used by vehicle manufacturers such as
Tesla
and battery makers such as LG Energy Solution.

• China has placed export controls on the sale of some types of graphite to foreign customers, which will be effective from Dec. 1, the country’s Ministry of Commerce said Friday.

• The move comes just days after the U.S. government tightened controls on exports of advanced semiconductors to China. A spokesperson for the Ministry of Commerce said China’s curbs on graphite exports weren’t targeted at any specific country.

• The export controls will cover high-purity and high-density synthetic graphite material, and natural-flake graphite. Most lithium-ion batteries, the type used in electric vehicles, use synthetic graphite.

What’s Next: Depending on how the controls are implemented, the curbs could push up the price of graphite and intensify the search for alternative supplies of the material. Shares of Tesla-supplier
Syrah Resources
—an Australian company that produces graphite in Mozambique—rose 16% on Friday.

—Adam Clark

***

Christie’s Sets Auction Plans for $25 Million 19th Century Painting

Auction house Christie’s in New York plans to sell more than 20 works of art from the Phillips Family Collection of Canada in November, showcased with an 1888 painting by French Neo-Impressionist artist Paul Signac that could fetch between $15 million and $25 million.

• Combined, the 20 works of art—just a portion of the collection—are expected to sell for at least $25 million during the auction’s house’s 20th-century evening sale on Nov. 9 and the impressionist and modern art works on paper and day sales on Nov. 11.

• Works by Henri Matisse, Camille Pissarro, Pierre Bonnard, George Seurat, and Alfred Sisley are also included. Along with the Signac, the evening sale will include Matisse’s Nature Morte, 1904, and Pissarro’s La barrière du chemin de fer, aux Pâtis près Pontoise, 1873-74, each estimated around $3 million and $5 million.

• The collection of impressionist and post-impressionist art was created over 50 years by Ivan and Neil Phillips. It was started by their parents, former lawyer and Canadian senator Lazarus Phillips and his wife, Rosalie, Christie’s said.

• Art sales have slowed. Christie’s reported $3.2 billion in global sales in the first half of 2023, down 23% from the same period in 2022, though it noted that was above the average of the past five years. Among new buyers, 38% are millennials or younger.

What’s Next: Christie’s has other high-profile works for auction in November, including an estimated $65 million for Claude Monet’s Le bassin aux nymphéas, and an estimated $50 million for Francis Bacon’s Figure in Movement.

—Liz Moyer and Penta

***

Do you remember this week’s news? Take our quiz below to test your knowledge. Tell us how you did in an email to [email protected].

1.
Pfizer
cut $9 billion off its sales projections for Covid-19 vaccines and treatments this year, acknowledging that demand wouldn’t be as robust as it had hoped. But it is also selling them commercially for the first time, and this week priced its Paxlovid antiviral medication at what level?

a. $700 for a five-day course

b. $1,000 for a five-day course

c. $1,400 for a five-day course

d. $2,000 for a five-day course

2. Retail sales rose 0.7% in September from the month before, more than double the expected pace, as people spent money at which of the following:

a. Car dealerships

b. Health and personal care stores

c. Restaurants and bars

d. All of the above

3. Netflix stock surged after it reported a surprising number of subscriber additions in the third quarter, after its crackdown on password sharing. How many net new subscribers joined?

a. 8.8 million

b. 9.0 million

c. 9.2 million

d. 9.4 million

4. Finnish telecommunications firm
Nokia
is suffering from a 45% fall in North American sales and now has plans to cut up to how many people from its staff?

a. 9,000

b. 11,000

c. 14,000

d. 17,000

5. The 10-year Treasury yield is near 5%, pushing the rate on the popular 30-year fixed rate mortgage to near 8%, which is weighing on would-be home buyers. The 10-year’s yield is the highest since when?

a. January 2001

b. July 2007

c. October 2012

d. April 2019

Answers: 1(c); 2(d); 3(a); 4(c); 5(b)

—Barron’s Staff

***

—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner