‘Buy on the cannons, sell on the trumpets’ — Nicholas Vardy

1. China Tries to Jolt Ailing Economy — The People’s Bank of China cut its benchmark interest rate and lower the amount of cash that banks need to hold in reserve—a bid to free up more resources for lending. It also said it would cut the interest rate payable on existing mortgages and lower down payments for second homes. At a press conference in Beijing, PBOC Gov. Pan Gongsheng said further easing is in the pipeline, with another reduction in bank reserve requirements expected before year-end.
The central bank also announced it would offer 500 billion yuan in loans, equivalent to roughly $70 billion, to funds, brokers and insurers to buy Chinese stocks as part of an effort to lift the country’s ailing stock market. It said it would put up another 300 billion yuan to finance share buybacks by listed companies.
2. Key Fed inflation gauge at 2.2% in August, lower than expected — The personal consumption expenditures price index, a gauge the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%, down from 2.5% in July and the lowest since February 2021.
Economists surveyed by Dow Jones had been expecting all-items PCE to rise 0.1% on the month and 2.3% from a year ago. Excluding food and energy, core PCE rose 0.1% in August and was up 2.7% from a year ago, the 12-month number 0.1 percentage point higher than July. Fed officials tend to focus more on core as a better measure of long-run trends. The respective forecasts were for 0.2% and 2.7% on core.
3. Netanyahu Pledges to Continue Fight Against Hezbollah in U.N. Address — Israeli Prime Minister Benjamin Netanyahu vowed to continue his country’s military campaign against Hezbollah in Lebanon, amid U.S.-led efforts to seek a diplomatic solution before all-out war breaks out. Netanyahu’s comments came after Israel shot down a missile that was fired from Yemen by the Iran-aligned Houthi rebels. It was the third time in the past two weeks that Israel’s central area—where a majority of its population resides—has been targeted and signaled the risk of a widening conflict as the fighting in Gaza and Lebanon continues. The Biden administration is pressing for Israel and Hezbollah, a U.S.-designated terrorist group, to pause their escalating attacks, hoping to avert a ground war that could escalate into a regional conflagration. The U.S. and France, backed by allies, in a joint statement called for a 21-day pause in the fighting on the Israel-Lebanon border.

The week ahead — Economic data from Econoday.com: