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

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.

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.

Hello, Kalyeena here, taking over to cover Mr Powell’s Jackson Hole speech expected in less than 10 minutes’ time.

Meanwhile, we have the full story detailing China’s retaliatory tariffs on $75bn worth of US goods.

Wall Street has fallen at the opening bell in the wake of the Chinese tariff announcement.

The S&P500 benchmark index lost 0.45%, the Dow Jones industrial average lost 0.5%, and the tech-heavy Nasdaq lost 0.56%.

Donald Trump is awake, putting more pressure on Powell to cut rates.

The next decision isn’t due until 18 September, but it is pretty clear what the US president wants to see.

Monetary policymakers like Powell have little room for manoeuvre when it comes to adjusting to shocks like the trade war, writes Nouriel Roubini, a professor of NYU’s Stern School of Business and former White House adviser.

Central bankers do not have the tools to deal with the trade war – and the associated geopolitical battle for supremacy in technology.

It is easy to imagine how today’s situation could lead to a full-scale implosion of the open global trading system. The question, then, is whether monetary and fiscal policymakers are prepared for a sustained – or even permanent – negative supply shock.

Governments should gird themselves for “countercyclical fiscal easing to prevent the recession from becoming too severe” if growth slows dramatically, he writes.

You can read his column here:

The timing of the announcement could barely be more difficult for Powell, who is due to speak in 90 minutes’ time.

The central bank chief will have carefully thought through his wording on the trade war, with Trump’s White House breathing down his neck. He will have little time to think through adjustments this morning, despite it representing a major development adding to one of the biggest risk factors to the global economy.

The tariffs will hit a large proportion of the goods not already covered in the trade war between China and the US.

The Stoxx autos index, measuring the share prices of Europe’s carmakers, has fallen by 1.8% after the revelation that cars will be in the crosshairs.

As well as giving Jerome Powell a major headache, the tariff announcement has meant that European stock markets have made an abrupt u-turn.

Germany’s Dax, heavily dependent on exports, has fallen by 0.9% today, while the broader Stoxx 600, which looks across Europe, has lost 0.3%.

The FTSE 100 is now down by 0.1%, after earlier rising.

...and for those who drink at lunch on a Friday, here’s a great dispatch from the G7 in Biarritz, where a tariff on French wine could be in the offing after Emmanuel Macron targeted US tech firms with new levies.

French wine-makers are increasingly concerned about Donald Trump’s threats to introduce high tariffs on French wine in retaliation for Emmanuel Macron’s tax on global technology giants, writes the Guardian’s Angelique Chrisafis.

Trump is a proud teetotaller, but he recently told reporters he had “always liked American wines better than French wines even though I don’t drink”. He explained why: “I just like the way they look.”

Perhaps you’ve already had your lunch, but if not here’s more to whet your appetite: the prospect of vegan doughnuts on a high street near you.

Here’s the full story on the Greggs revelation that it is working on even more vegan products:

But here is a good illustration of the challenge facing Powell as he tries to balance supporting the economy with his desire not to raise rates prematurely: a strong suggestion that China is intending to retaliate to US tariffs.

China will “take further countermeasures” in the trade war, including retailiatory tariffs, after the US imposed levies on goods worth $300bn, according to Hu Xijin, the editor of China’s Global Times, a state-controlled newspaper.

The $300bn tariffs caused markets to panic at the start of the month, after the shock decision from Donald Trump, the US president.

Ominous words from the Global Times:

China has ammunition to fight back. The US side will feel the pain.

There has also been some hawkish language from US rate-setters, which might suggest the Federal Reserve does not want to cut rates too quickly.

More from Deutsche Bank:

Fed officials already descended on Jackson Hole yesterday, and we got an interesting trickle of comments from some regional presidents. Overall, the tone was on the hawkish side of expectations.

Kansas City’s George said that she is not ready to provide more policy accommodation, Dallas’s Kaplan said “I’d like to avoid having to take further action,” and Philadelphia’s Harker said “I think we should stay here for a while and see how things play out.” And yes, he was talking about interest rates, not the beautiful resort in Wyoming.

Powell certainly appears to be getting into the swing of things at the Jackson Hole resort. Just look at those relaxed zip-off trousers from the central bank chief last night. Not sure what message that sends on monetary policy.

Markets were this morning pricing in 57 basis points (0.5 percentage points) of cuts this year and another 47bps in 2020, meaning Powell has a high bar for markets to read a dovish message into today’s comments.

The last month has seen new trade war tensions, global growth slowdown fears and further steep drops in bond yields, so Powell’s speech “couldn’t come soon enough”, said analysts at Deutsche Bank led by Craig Nicol.

Recession concerns are “crystalising today”, as evidenced by the inverted yield curve, Nicol said.

The immediate focus of Powell’s speech will likely be whether he affirms that the current easing is a ‘mid-cycle adjustment’ as per the FOMC minutes or align more closely to market pricing.

The Deutsche Bank view is:

If Powell sticks to the old language, as is most likely, it would affirm that he is still confident that the strength of consumption, in combination with modest Fed easing, will be sufficient to keep the recovery broadly on track.

That would represent a slightly more hawkish message than markets are currently pricing, they reckon.

So what will Powell do?

In July the Federal Reserve chair described the interest rate cut as a “mid-cycle adjustment” of monetary policy, rather than the start of a proper cutting cycle. That comment could come back to haunt him if the US enters a recession – as markets are pricing – but in the short term investors will be keen to see whether he repeats this message.

Lee Hardman and Fritz Louw, analysts at MUFG Bank, expect a stronger dollar after he speaks:

We think he will likely stick with this theme, but highlight increased concern over the global economic outlook and the potential impact this could have on the US economy going forward.

Even though we expect a dovish overall message from Chair Powell, it will likely fall short of the capitulation demanded by the market and US President Trump. The dollar will likely be supported on the back of this.

As we approach midday in London, stock markets remain on the rise across Europe, with investors awaiting Federal Reserve chairman Jerome Powell in three hours’ time.

The FTSE 100 is up by 0.6%, while the FTSE 250 increased by 0.9%. The Stoxx 600 has also risen by 0.4%, but shed some of its earlier gains.

Rising bond yields – as investors position for a slightly more hawkish message from Powell – have boosted the US dollar. Higher government bond yields generally suggest that investors expect tighter monetary policy, making the country’s currency more attractive.

The dollar index, which measures the greenback against a trade-weighted basket of currencies, has risen by 0.3% today.

While central bankers are meeting at Jackson Hole, the leaders of the world’s largest advanced economies have their own shindig: the G7 summit in Biarritz, in the south of France.

Prime Minister Boris Johnson is there. Brexit is predictably on the agenda, for the British at least. You can follow the twists and turns today on the politics live blog.

However, the start of the summit has been dominated by the reaction to wildfires in the Amazon. Emmanuel Macron, the French president, called for emergency talks on the subject at this week’s G7 summit.

Scientists have called for international pressure on Brazil’s president, Jair Bolsonaro, who has pursued a policy of developing the Amazon. Deforestation is thought to contribute directly to global heating.

You can read more here:

Huawei, the Chinese tech giant at the heart of the geopolitical dispute with the US, said on Friday its business has been less impacted by trade restrictions than initially feared.

The $100bn company is “fully prepared” to live and work with US sanctions, it said.

In June Huawei founder and chief executive Ren Zhengfei said US trade restrictions would dent revenue by $30bn this year.

Eric Xu, Huawei’s deputy chairman, was at a news conference earlier to introduce new artificial intelligence chips at its headquarters in Shenzhen. He said via Reuters:

It seems it’s going to be a little less than that. But you have to wait till our results in March.

Washington said this week that it will extend by 90 days a reprieve that permits Huawei to buy from US firms in order to supply existing customers, but it also moved to add more than 40 of Huawei’s units to its economic blacklist.

Greggs is planning to roll out more vegan products, after the stunning marketing success of its vegan sausage roll.

Chief executive Roger Whiteside said the company is looking at new products replacing meat with Quorn, in an interview with LBC radio station.

Greggs sales topped £1bn for the first time last year, and the launch of the vegan sausage roll at the start of the year helped it to buck the struggles of the high street.

Whiteside said:

We are working away at trying to see if we can come up with a vegan version of all our top-selling lines. Obviously people want a vegan option.

If we can succeed in doing that and produce something that tastes just as good as the meat version, then that will sell very successfully. That’s what’s been shown with the vegan sausage roll.

RBS and Santander may be smarting from the competition regulator’s telling off this morning, but in a neat one-two punch the Financial Conduct Authority (FCA) has now criticised the claims management companies (CMCs) who have profited so immensely from the PPI scandal.

The FCA on Friday said it has “found widespread poor-practice in CMCs” using misleading adverts.

CMCs make complaints on behalf of their customers – often taking fees as high as 30% of any compensation won. Regulators say they help people claim who otherwise would not be able.

However, the FCA found a litany of abuses, including failing to tell users they can easily claim themselves, appearing to say customers would be better off using a CMC, and using misleadingly high compensation examples in adverts.

New rules from the FCA require CMC firms to:

• identify themselves as a claims management company
• prominently state if a claim can be made to a statutory ombudsman / compensation scheme without using a CMC and without incurring a fee
• include prominent information relating to fees and termination fees which the customer may have to pay if a firm uses the term ‘no win, no fee’ or a term with similar meaning

The regulator took over regulation of CMCs on 1 April 2019, after the previous regulator was widely criticised as toothless.

While the PPI deadline on 29 August will deprive CMCs of a their most valuable income stream, the industry has moved on to other areas in its search for new revenue – notably in the payday loans sector. The Guardian previously reported an avalanche of spurious complaints from some firms.

After something of a flurry of company news (particularly for a Friday in late August), here’s a round-up of markets.

The FTSE 100 is up by 0.7% to 7,180 points, boosted by the weaker pound. The mid-cap FTSE 250 is up by about 1% – boosted by Peppa Pig owner Entertainment One.

Across Europe it was a sea of green, with all of the major indices gaining.

Sterling has lost 0.4% against the US dollar, with one pound buying $1.2204. Against the euro the pound had lost 0.2%.

The euro is down by 0.1% against the dollar, with the trade-weighted dollar basket up by 0.2% as investors await a speech by Federal Reserve boss Jerome Powell.

And news from Harland and Wolff, the shipbuilder whose yellow cranes dominate the Belfast skyline: administrators have extended a temporary lay-off period to give more time to find a buyer.

The historic Belfast shipyard that built the Titanic fell into administration at the start of the month, threatening the end of centuries of shipbuilding in the city.

BDO NI, the administrators, have extended the unpaid temporary lay-off position to 30 September to try to find a buyer, the company said in a statement on Friday.

The company has received a “healthy level of interest” from potential purchasers who could preserve the existing jobs.

This has resulted in a number of non-binding offers for the business, assets & employees on a going concern basis. There are also other interested parties who are in constructive discussions with the administrators which may result in further offers.

An update from Ryanair, whose pilots are currently striking over pay and conditions: flights from British airports are operating as usual today, with no disruption to its schedule expected.

A judge rejected an application on Wednesday for an injunction against the British Airline Pilots’ Association (Balpa), which would have forced pilots to return to work.

Hong Kong is gripped by protests and the backlash by government, and the airport will likely be disrupted again this weekend – raising concerns of a recession hitting the city.

Hong Kong is a free marketer’s dream. The tiny island has a GDP bigger than many industrialised countries, low tax and abundant cheap labour, and is a world-class financial centre boasting a stock market with a total value of more than £2.5tn, write the Guardian’s Martin Farrer and Erin Hale in Hong Kong.

No wonder then that the city’s most powerful vested interests are showing signs of nerves after 11 weeks of street protests that have paralysed the city, prompting its biggest political crisis since the handover to China in 1997 and threatening to push it into recession.

Even worse, some observers believe the standoff could destroy Hong Kong’s cherished entrepot status and send it on a journey of no return into China’s orbit.

You can read more here:

Here’s a chart that tells a story: shares in Woodford Patient Capital Trust since 2015.

The shares are down by 6% today, to 41p, but earlier hit an all-time low of 38.1p – a far cry from levels above 90p at the start of the year, before the investor stampede to the exit from Woodford’s investments.

If you take a look at the list of troubled Eddie Stobart Logistics’ biggest shareholders, one stands out: Woodford Investment Management.

Woodford, run by prominent but by now bedraggled investement manager Neil Woodford, owns 23% of Eddie Stobart, whose shares have now been suspended. When it rains, it pours.

Investors are currently blocked from withdrawing money from his equity income fund, but shares in the listed Woodford Patient Capital Trust today hit a record low after a separate announcement that it must reduce the valuation of its stake in IH Holdings International Limited.

That is the parent company of Industrial Heat, a North Carolina company trying to use “low-energy nuclear reactions” as an energy source. The FT described Industrial Heat’s central idea (£) as “on the fringes of modern physics”.

Woodford Patient Capital Trust’s statement said:

The valuation adjustment reflects a reassessment of the current progress of the business.

Sterling went on a bit of a tear yesterday as Angela Merkel, the German chancellor, appeared to strike an emollient Brexit tone. It gained 1% yesterday, but is back down 0.4% today.

France’s Emmanuel Macron perhaps reminded traders last night that, to coin a phrase, nothing has changed on the UK’s departure from the EU so far.

The FTSE 100 is up by 0.5% in early trading – in part thanks to the weakness of the pound, which has lost 0.4% this morning against the US dollar.

Germany’s Dax and France’s Cac 40 indices are both up by 0.5% as well.