Published: Sat, January 05, 2019
Markets | By Jeffery Armstrong

Strong US jobs growth makes 'mockery' of market fears

Strong US jobs growth makes 'mockery' of market fears

U.S. stocks opened the session higher following the December jobs report and added to gains after Federal Reserve Chairman Jerome Powell said the U.S. central bank had no "pre-set" plan for interest rates and was carefully monitoring economic conditions.

US stocks were pummelled on Thursday after Apple slashed its revenue forecast due to weak demand in China and a report showed US manufacturing activity slumping to a two-year low, reviving fears about a global economic slowdown in the wake of the US-China trade war.

"I think the Fed is a much bigger problem than China", he told the paper, adding that his "gut" was a more reliable guide to manage the economy than other people's "brains".

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In mid-December, the Federal Open Market Committee voted to raise interest rates for the fourth and final time in 2018, even as President Trump urged them to "feel the markets". Sliding equity prices, weakness overseas and mixed economic data at home have prompted calls for the Fed to put rates on hold, but the USA labor market remains red-hot.

"We will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track", he said, adding "there is no pre-set path for policy". He also says that the Fed could alter its approach to trimming its huge balance sheet if it determines such a change is needed. The Fed chairman, responding to a question about what he would do if Trump asked him to step down, said he would not resign.

Trump has for months criticized the Fed chief for raising rates, and Bloomberg News reported December 21 that the president had discussed firing Powell.

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"No", Powell answered without hesitating when asked at the American Economic Association's annual meeting in Atlanta if he would quit if Trump asked.

Powell had been sitting next to former Federal Reserve chairmen Janet Yellen and Ben Bernanke when he was asked about his impending meetings with the President regarding Fed policy, which the President has emphasized in the past as the number one problem with the economy.

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