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Rate Cut On Tap - The Policy Market

Includes: GM
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.

All signs point to a rate cut today

The FOMC began its two-day meeting yesterday, and the interest rate decision is due this afternoon, to be followed by Chairman Jay Powell's press conference. Likely fed up with pressure from President Trump, there have been plenty of hawkish rumblings from Fed speakers since late August. Markets, however, are fully expecting a 25-basis point rate cut, and the central planners at the Eccles Building don't like to disappoint. Investors will be checking the language of the policy statement and Powell presser to try and figure out the timing of the next move.

FDIC mulls easing some post-crisis rules for banks

The FDIC is proposing to ease a post-financial crisis restriction that determines how much cash big banks should set aside to safeguard derivatives trades between affiliates. The proposal could free $40B of cash across the nation's largest banks, according to a 2018 survey by the International Swaps and Derivatives Association, which has been lobbying for the rule change. The agency is also proposing relief for banks switching from LIBOR to SOFR, and for delaying rules that would require smaller fund managers to begin posting margin for derivatives transactions to September 2021.

White House steps into GM strike talks ... or not

A report from CNBC yesterday said White House advisors Larry Kudlow and Peter Navarro both inserted themselves into talks between General Motors (NYSE:GM) and the striking UAW. GM later denied the story, saying the company is only talking with the UAW. GM has some leverage over the UAW, with the union involved in a large corruption scandal, and the automaker importantly already announcing plans to build EVs and battery cells in the U.S.