Trump orders US companies to 'come home' from China – as it happened

What an eventful end to this bank holiday Friday. Here’s a reminder of the global events we covered off today:

• The US toy company behind My Little Pony and Play-Doh has agreed to buy Peppa Pig for £3.3bn in the the latest foreign takeover of a much-loved British brand for a bargain price following the collapse in the value of the pound over fears of a no-deal Brexit. The sale of Peppa Pig’s owner Entertainment One to America’s Hasbro brings the total value of UK companies to fall into overseas hands in the last two months to more than £25bn

• China will impose tariffs on American exports worth about $75bn. China’s ministry of commerce said it will impose levies of 5% and 10% on more than 5,000 products originating in the US, with crude oil, small aircraft and cars among the items targeted, Reuters reported. Some of the tariffs will take effect on 1 September, with the rest on 15 December

• Fed chair Jerome Powell spoke at the Jackson Hole Symposium, but the much-anticipated was overshadowed by fresh blows in the US-China trade war. The US central bank boss said the US economy was still performing well and pledged to remain “vigilant” around risks to financial stability. He also stressed that while trade uncertainty was weighing on global growth, foreign trade policies are ultimately outside of the Fed’s remit

• Trump quickly hit out at Powell for saying “nothing” in his speech and compared the US Fed boss to China’s leader Xi Jinping, asking which figure was a bigger enemy

• Not to be outdone by Beijing’s fresh tariffs, Trump went on a Twitter tirade and ordered US companies to come home from China, sending US shares into the red

Have a great long weekend. We’ll be back on Tuesday.

US stock markets are back in the red after Trump’s tweets:

• S&P 500 -0.69%
• Dow -0.56%
• Nasdaq Composite -0.82%

Our colleague Dominic Rushe has full coverage of Powell’s speech at Jackson Hole

Not to be outdone by Beijing, Trump is now apparently ordering US companies to come home from China.

He insists the US would be “better off without” China, full stop:

Steen Jakobsen, chief economist at Saxo Bank, says Powell’s speech has a something for everyone:

The war of words between the White House and Fed continues. And even if it’s more subtlety worded on the Fed’s side, analysts say Powell is holding his own:

Shepherdson, chief economist at Pantheon Macroeconomics, adds:

Fed Chair Powell is rather more diplomatic in his language than the president - a low bar, admittedly - but it is clear from his speech that the single biggest factor driving both market volatility, the actual global slowdown, and fears of a U.S. slowdown, is trade policy, both its current stance and uncertainty about the future.

After a long discussion of how the Fed arrived at its current policy framework, Mr. Powell stuck the knife in, pointing out that “fitting trade policy uncertainty into this framework is a new challenge… [there are] no recent precedents to guide any policy response to the current situation… Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rulebook for international trade.”

In other words, the Fed has been handicapped by Mr. Trump’s damaging and capricious trade policy, which has made it very hard for monetary policymakers to take a settled view of where the economy is headed.

Donald Trump has come out swinging after Powell’s speech failed to signal that it will bow to presidential pressure to cut interest rates further.

The US Fed boss added that the July interest rate cut – which was the first in more than a decade – had eased financial conditions and helps explain why the US inflation outlook and employment “remains largely favourable.”

But he lists a number of recent “developments” that the Fed has kept an eye on, including (drumroll, please):

• The announcement of new US tariffs on imports from China
• Economic slowdown in Germany and China
• Growing possibility of a hard Brexit
• Rising tensions in Hong Kong

Equity markets have been volatile. Long-term bond rates around the world have moved down sharply to near post-crisis lows.

Meanwhile, the U.S. economy has continued to perform well overall, driven by consumer spending.

More highlights from Mr Powell’s speech.

He has hailed the strong performance of the US economy, at least on balance:

The outlook for the US economy since the start of the year has continued to be a favourable one.

Business investment and manufacturing have weakened, but solid job growth and rising wages have been driving robust consumption and supporting moderate growth overall.

But he laments that the global growth outlook has been “deteriorating” since mid-2018, mostly due to trade wobbles:

Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States. Inflation fell below our objective at the start of the year. It appears to be moving back up closer to our symmetric 2% objective, but there are concerns about a more prolonged shortfall.

Equity markets seem to have been soothed – if only slightly – by Powell’s comments.

The S&P 500 is now just trading lower by around 0.16% compared to minus 0.43% earlier.

The Dow is now flat, after trading lower by minus 0.36%.

The Nasdaq is now down around 0.3%

Powell alludes to Washington’s trade war with China, saying the central bank is well aware of “trade policy uncertainty” but is powerless to influence trade deals despite their affect on the US economy:

Setting trade policy is the business of Congress and the Administration, not that of the Fed. Our assignment is to use monetary policy to foster our statutory goals.

In principle, anything that affects the outlook for employment and inflation could also affect the appropriate stance of monetary policy, and that could include uncertainty about trade policy.

There are, however, no recent precedents to guide any policy response to the current situation. Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.

We can, however, try to look through what may be passing events, focus on how trade developments are affecting the outlook, and adjust policy to promote our objectives.

The Federal Reserve has released Jerome Powell’s speech at Jackson Hole. Here are some highlights:

• The US economy continues to perform well, but he notes a sharp drop in global long-term bond rates and volatility across stock markets

• The risks to financial stability appear to be “moderate” but Powell insists that “we remain vigilant”

• He says the US economy is in a “favourable place” and that the Federal Reserve will “act as appropriate to sustain the expansion with a strong labour market and inflation near its symmetric 2% objective”