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Magic Eight Ball Looks At Upcoming Fed Decision - The Policy Market

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Includes: BMWYY, F, FMCC, FNMA, GM, HMC, TM, VWAGY
by: The Policy Market

Welcome to The Policy Market - Seeking Alpha's presentation of today’s top policy-related news stories with potential market impact. Follow this account and turn the e-mail alert on to receive this article in your inbox each morning before the market open.

Magic Eight Ball says: 25 basis point rate cut on the way

"The idea of an aggressive half-point cut to battle the slowdown hasn’t gained much support inside the central bank," writes Nick Timiraos at the WSJ. Timiraos takes note of a speech this week by FRBNY President John Williams, who is known to have the ear of Chairman Jay Powell. "The economy is in a good place, but not without risk and uncertainty,” said Williams. There's also Boston Fed chief Eric Rosengren ... He dissented against July's rate cut, and says he's since seen nothing in the data that shows he was mistaken. The Fed meets in less than two weeks.

Administration releases Frannie overhaul plan

A quick read shows the plan as looking to return Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) to what they were prior to the housing bust - private companies (but with implicit government backing) gobbling up a vast swath of the U.S. mortgage market. Important to the administration will be accomplishing this without disrupting the ease and low cost of the current mortgage environment. Not yet known is what the government will do with its large stake in the companies, or how they will build up the capital necessary to operate as private outfits.

Government moves to block California vehicle emissions rules

Two federal agencies are preparing to submit for final review a plan to revoke California's authority to set its own vehicle emissions standards and declare that states are pre-empted from setting their own vehicle rules, Reuters reports. The EPA and the National Highway Traffic Safety Administration reportedly will seek approval to finalize the first portion of the rule dealing with California and other states before completing action on setting yearly fuel efficiency requirements. In July, four automakers - Ford (NYSE:F), Volkswagen (OTCPK:VWAGY), BMW (OTCPK:BMWYY) and Honda (NYSE:HMC) - said they had reached a voluntary agreement with California on fuel efficiency rules that would enforce stricter Obama-era emissions standards, after the Trump administration proposed rolling back the federal rules. Other automakers, including General Motors (NYSE:GM) and Toyota (NYSE:TM), have declined to back the deal with California. The Obama rules called for a fleet-wide fuel efficiency average of 46.7 mpg by 2025, compared with 37 mpg by 2026 under Trump's preferred option to freeze requirements.