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German recession fears weigh on stocks after relief rally
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German recession fears weigh on stocks after relief rally

German recession fears weigh on stocks after relief rally
Photo Credit: AP Photo/Eugene Hoshiko
In this Aug. 9, 2019, photo, a man looks at an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo. Asian shares were mostly higher Wednesday, Aug. 14, 2019 after the U.S. said it would hold off on tariffs of Chinese imports of mobile phones, toys and several other items typically on holiday shopping lists. (AP Photo/Eugene Hoshiko)

German recession fears weigh on stocks after relief rally

Fears that Germany could slip into a recession weighed hard on European stock markets Wednesday, a day after a modest relief rally prompted by the U.S. decision to delay some tariffs on Chinese imports.

The key downward driver in markets on Wednesday was news that Germany, Europe's biggest economy, contracted 0.1% in the second quarter of the year from the previous three-month period as global trade conflicts combined with troubles in the auto industry.

"The relief rally inspired by the Trump administration delaying tariffs on some Chinese imports was short lived - blink and you missed it," said Fiona Cincotta, senior market analyst at City Index.

"Data showing that the German economy contracted in the second quarter reignited fears of a global recession, dampening demand for riskier assets such as equities."

In Europe, Germany's DAX was down 1.5% at 11,575 while the CAC 40 in France fell 1.4% to 5,288. The FTSE 100 index of leading British shares was 1% lower at 7,181. Wall Street was poised for similar declines at the bell with Dow futures and the broader S&P 500 futures down 0.9%.

On Tuesday, stocks had one of their better days recently after the Office of the U.S. Trade Representative said it would delay the tariffs on some products, including popular consumer goods, until Dec. 15. A few other products were removed altogether, including certain types of fish and baby seats.

Craig Erlam, senior market analyst at OANDA, said the decision takes the "heat out of the situation" and raises the possibility for more talks.

"There's little reason for optimism on this, given how recent meetings have gone, but we have to hope that eventually common sense will prevail," he said. "It's just a case of how much pain both sides are willing to take and inflict on others in the meantime."

Figures overnight showed how China is suffering from the trade conflict with the U.S. Chinese factory output, retail spending and investment weakened in July, suggesting the world's second-largest economy faces downward pressure on growth. Factory output rose 4.8% over a year earlier, a marked decline from June's 6.3%. Retail sales growth slowed to 7.6% from the previous month's 9.8%. Investment in real estate and other fixed assets also weakened.

The markets have been in a spin cycle since President Donald Trump announced on Aug. 1 that he would impose 10% tariffs on about $300 billion in Chinese imports, which would be on top of 25% tariffs already in place on $250 billion in imports. The threat dashed hopes that a resolution may come soon in the trade war between the world's two largest economies, and investors have grown increasingly concerned that it may drag on through the 2020 U.S. election.

Earlier in Asia, Japan's Nikkei 225 added nearly 1.0% to finish at 20,655.13, while Australia's S&P/ASX 200 rose 0.4% to 6,595.90. South Korea's Kospi gained 0.7% to 1,938.37. Hong Kong's Hang Seng was little changed but inched up less than 0.1% to 25,284.96. The Shanghai Composite edged up 0.4% to 2,808.91.

ENERGY:

Benchmark U.S. crude fell $1.36 to $55.74 a barrel while Brent crude, the international standard, fell $1.20 to $60.10.

CURRENCIES:

The euro rose 0.1% to $1.1182 while the dollar declined 0.9% to 105.78 yen.

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  • A federal judge has placed the man at the center of the John Grisham book 'The Innocent Man' on the path to potential freedom. Karl Fontenot’s story was also made into a Netflix documentary series. U.S. District Judge James Payne, of Muskogee, ruled there is reasonable doubt that Fontenot should have been convicted in 1988 in the kidnapping and killing of Ada convenience store clerk Denice Haraway in 1984.  Judge Payne's opinion discusses alleged misconduct by police, investigators and prosecutors. Fontenot and co-defendant Tommy Ward were convicted in Haraway's murder in part due to a recording of them talking about dreams they had about her murder.
  • On a day of big losses on the stock markets sparked first by China levying new tariffs on imports from America, President Donald Trump wasted no time Friday afternoon in announcing higher import duties against the Chinese, plunging the two countries even deeper into an economic standoff which could have negative worldwide ramifications. 'China should not have put new Tariffs on 75 BILLION DOLLARS of United States product,' the President tweeted about an hour after the close on Wall Street, where the Dow Jones dropped over 600 points. 'Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%,' the President wrote.  'Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%,' he added. The President also called on American companies to take their manufacturing businesses out of China, arguing that the United States was the victim of an 'unfair Trading Relationship.' 'Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,' Mr. Trump tweeted. The White House did not provide any explanation as to how the President would have the power to force U.S. companies to abandon their manufacturing operations in China. Economic experts and businesses were worried by the days events. “(T)his is a major risk as it's the economy - households and businesses - that are in play,” said Gregory Daco of Oxford Economics. “The administration's approach clearly isn't working, and the answer isn't more taxes on American businesses and consumers,” said the National Retail Federation. “Where does this end?'  “These added tariffs will ratchet up consumer prices, stall business investment, escalate uncertainty and cost American jobs,” said the pro-free trade group Tariffs Hurt the Heartland. “In just the past three years, U.S. soybean exports to China have fallen nearly 80 percent, and once these tariffs kick in, things are likely to get worse,” said Roger Johnson, the head of the National Farmers Union.  The standoff with China was a far cry from President Trump's prediction in March of 2018, when he wrote on Twitter that trade wars are 'easy to win.' As for Democrats - even though many of them would like to see the United States be more forceful with China - their answer is not retaliatory tariffs and a trade war. “Our economy is showing signs of weakening due to the president’s trade war, and these back-and-forth tariffs will only make things worse,” said Sen. Dianne Feinstein (D-CA). “The facts are clear: President Trump's destabilizing and reckless trade war is undermining growth,” said Rep. Alan Lowenthal (D-CA). “Your tariffs are hurting our country badly,” said Rep. Don Beyer (D-VA). “There's nothing funny about tanking people's retirement accounts with a failed trade war,” said Sen. Mark Warner (D-VA).
  • The Trump campaign has a message for its female supporters: It’s time to come out of hiding. “There’s a lot of people that are fearful of expressing their support, and I want you ladies to know it’s OK to have felt that way, but we need to move past that or the Democrats win,” said Tana Goertz, a Trump campaign adviser, at an Iowa “Women for Trump” event on Thursday. The Iowa event, held in the back room of a barbecue joint in a Des Moines suburb, was one of more than a dozen in battleground states nationwide as part of a push to make the president’s case on the economy and train volunteers. The move is a recognition of the president’s persistent deficit with women — an issue that has the potential to sink his chances for reelection. Over the course of his presidency and across public opinion polls, women have been consistently less supportive of President Donald Trump than men have. Suburban women in particular rejected Republicans in the 2018 midterm by margins that set off alarms for the party and the president. Trump himself called into a gathering of hundreds in Tampa, Florida, and insisted, to cheers: “We’re doing great with women, despite the fake news.”
  • With the United States set to slap a new 10 percent tariff on billions of dollars in Chinese goods coming into the U.S. on September 1, the Chinese government officially retaliated on Friday, announcing its own new tariffs on American products, and denouncing President Donald Trump's get-tough actions on trade. 'The US measures have led to the continuous escalation of Sino-US economic and trade frictions, which have greatly harmed the interests of China, the United States and other countries,' the Chinese Minstry of Finance announced. The documents released by China today apply to over 5,000 categories of items imported from the United States, covering everything from diapers to pipes and cigarette holders, to a range of agricultural products like barley, wheat, oats, corn, sorghum, soybeans, peanuts, cotton, covering about $75 billion in U.S. goods. Much like a 122 page list of targeted items put out by the United States earlier this month, China issued over 100 pages of products which would face new import duties. The reaction from Congress and business groups was negative. 'This trade war is not holding China accountable,' said Sen. Mark Warner (D-VA). 'It's hurting farmers and small business owners all over the country who are just trying to earn a living.' “The fact of the matter is that nobody wins a trade war, and the continued tit-for-tat escalation between the U.S. and China is putting significant strain on the U.S. economy, raising costs, undermining investment, and roiling markets,” the U.S. Chamber of Commerce said in a statement. As for President Trump, he has not wavered in his public statements about taking on china, tariff for tariff, as one of his Friday tweets caused some shock on  the markets. “Our great American companies are hereby ordered to immediately start looking for an alternative to China,” the President wrote. “Here’s the thing: Somebody had to take on what China was doing to the United States economically,” the President told reporters this week. “We’re winning big. I took it on. And it should have been done by previous Presidents,” he added. And on Twitter Friday morning, the President expressed no concerns about the Chinese response. Asked by reporters earlier this week about the trade war with China, Mr. Trump said he was the only President who had decided to actually confront Beijing. “I am the chosen one,” the President said, as he looked skyward.

Washington Insider

  • On a day of big losses on the stock markets sparked first by China levying new tariffs on imports from America, President Donald Trump wasted no time Friday afternoon in announcing higher import duties against the Chinese, plunging the two countries even deeper into an economic standoff which could have negative worldwide ramifications. 'China should not have put new Tariffs on 75 BILLION DOLLARS of United States product,' the President tweeted about an hour after the close on Wall Street, where the Dow Jones dropped over 600 points. 'Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%,' the President wrote.  'Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%,' he added. The President also called on American companies to take their manufacturing businesses out of China, arguing that the United States was the victim of an 'unfair Trading Relationship.' 'Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,' Mr. Trump tweeted. The White House did not provide any explanation as to how the President would have the power to force U.S. companies to abandon their manufacturing operations in China. Economic experts and businesses were worried by the days events. “(T)his is a major risk as it's the economy - households and businesses - that are in play,” said Gregory Daco of Oxford Economics. “The administration's approach clearly isn't working, and the answer isn't more taxes on American businesses and consumers,” said the National Retail Federation. “Where does this end?'  “These added tariffs will ratchet up consumer prices, stall business investment, escalate uncertainty and cost American jobs,” said the pro-free trade group Tariffs Hurt the Heartland. “In just the past three years, U.S. soybean exports to China have fallen nearly 80 percent, and once these tariffs kick in, things are likely to get worse,” said Roger Johnson, the head of the National Farmers Union.  The standoff with China was a far cry from President Trump's prediction in March of 2018, when he wrote on Twitter that trade wars are 'easy to win.' As for Democrats - even though many of them would like to see the United States be more forceful with China - their answer is not retaliatory tariffs and a trade war. “Our economy is showing signs of weakening due to the president’s trade war, and these back-and-forth tariffs will only make things worse,” said Sen. Dianne Feinstein (D-CA). “The facts are clear: President Trump's destabilizing and reckless trade war is undermining growth,” said Rep. Alan Lowenthal (D-CA). “Your tariffs are hurting our country badly,” said Rep. Don Beyer (D-VA). “There's nothing funny about tanking people's retirement accounts with a failed trade war,” said Sen. Mark Warner (D-VA).
  • With the United States set to slap a new 10 percent tariff on billions of dollars in Chinese goods coming into the U.S. on September 1, the Chinese government officially retaliated on Friday, announcing its own new tariffs on American products, and denouncing President Donald Trump's get-tough actions on trade. 'The US measures have led to the continuous escalation of Sino-US economic and trade frictions, which have greatly harmed the interests of China, the United States and other countries,' the Chinese Minstry of Finance announced. The documents released by China today apply to over 5,000 categories of items imported from the United States, covering everything from diapers to pipes and cigarette holders, to a range of agricultural products like barley, wheat, oats, corn, sorghum, soybeans, peanuts, cotton, covering about $75 billion in U.S. goods. Much like a 122 page list of targeted items put out by the United States earlier this month, China issued over 100 pages of products which would face new import duties. The reaction from Congress and business groups was negative. 'This trade war is not holding China accountable,' said Sen. Mark Warner (D-VA). 'It's hurting farmers and small business owners all over the country who are just trying to earn a living.' “The fact of the matter is that nobody wins a trade war, and the continued tit-for-tat escalation between the U.S. and China is putting significant strain on the U.S. economy, raising costs, undermining investment, and roiling markets,” the U.S. Chamber of Commerce said in a statement. As for President Trump, he has not wavered in his public statements about taking on china, tariff for tariff, as one of his Friday tweets caused some shock on  the markets. “Our great American companies are hereby ordered to immediately start looking for an alternative to China,” the President wrote. “Here’s the thing: Somebody had to take on what China was doing to the United States economically,” the President told reporters this week. “We’re winning big. I took it on. And it should have been done by previous Presidents,” he added. And on Twitter Friday morning, the President expressed no concerns about the Chinese response. Asked by reporters earlier this week about the trade war with China, Mr. Trump said he was the only President who had decided to actually confront Beijing. “I am the chosen one,” the President said, as he looked skyward.
  • Before the leaders of the G7 nations had even boarded their flights for the meeting in Biarritz, France, President Donald Trump was already stirring the political pot associated with the meeting of western allies, making it clear he wants to see Russia return to the group, after being exiled in 2014 over the seizure of the Crimea from Ukraine. 'We spend a lot of time talking about Russia at those meetings,' the President told reporters this week. 'And they're not there. I think it would be a good thing if Russia were there so we can speak directly.' Russia was a member of what was then known as the 'Group of Eight' - but Moscow was booted out in 2014 after Russia seized Crimea from Ukraine. 'President Obama thought it wasn't a good thing to have Russia in,' Mr. Trump said to reporters. 'But I think it's much more appropriate to have Russia in.' But there seems to be little chance of that happening in the current political environment in Europe, especially with Russian backed forces fighting in Ukraine. During a meeting with Vladimir Putin earlier this week, French President Emmanuel Macron made clear his opposition to such a move proposed by President Trump, arguing that Russia must first address Crimea - and the ongoing proxy war pushed by Russian backed forces inside Ukraine - before any such change is made. 'In effect, the resolution of this conflict is a magic wand that will open the door for Russia to return to the G7 club,' Macron said . With the two leaders seated before reporters, Macron labeled the Ukraine situation an 'irritant' in Russian relations with the West. 'It is obvious that the return to the G8 format and normal relations with the EU requires the settlement of the Ukrainian crisis,' Macron added. Last year, the 2018 meeting of world leaders from the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom, ended in odd fashion, when President Trump suddenly left the meeting early, refusing to endorse a joint communique by the leaders. In order to avoid a dispute along those lines in 2019, Macron has decided there will not be a joint communique issued by the G-7. It will be the first time since the meetings began in the 1970's that the group will not issue a statement of joint goals. White House officials previewing the President's trip said much of his focus at the G-7 will be on free, fair and reciprocal trade, as he has often criticized Canada and the European Union of unfair trade barriers to U.S. exports.
  • Back in their home districts on an extended summer break, the drip-drip sound Democrats hear is not coming from the watering the plants, but rather from the halls of the Congress, where more and more Democratic members of the House are publicly announcing their support for impeachment proceedings against President Donald Trump. A flurry of announcements were made on Thursday, as a series of Democrats said they would back an impeachment inquiry by the House Judiciary Committee, bringing the total number to 135 - more than a majority of Democrats in the House. 'I cannot ignore the call to defend our institutions, to safeguard our democratic norms, and to stand up for our democracy,' said Rep. Mark Takano (D-CA) on Thursday afternoon. A few hours earlier, Rep. William Keating of Massachusetts told his Bay State constituents that the Mueller Report left too many unanswered questions about the President, accusing the White House of stonewalling legitimate Congressional oversight. 'No person in America is above the law, including the President of the United States,' said Rep. Lauren Underwood, a freshman Democrat from Illinois. 'I support moving forward with an impeachment inquiry, which will continue to uncover the facts for the American people and hold this president accountable,' said Rep. Ben Ray Lujan (D-NM), the fourth ranking Democrat in the House.  'This is not a position I’ve reached lightly,' Lujan said earlier this week. When Democrats left town four weeks ago for their six week summer break, the number of lawmakers endorsing the start of an impeachment idea was nowhere near 100. But it's been creeping up on almost a daily basis - and more lawmakers seem likely to join in the weeks ahead.
  • Unlikely to qualify for the next debate among Democratic candidates for the White House, Gov. Jay Inslee of Washington State told supporters in an email on Wednesday night that he was dropping his bid for the Democratic Party's nomination for President, further thinning the field with just over five months until the first vote is cast. 'I want to share a tough decision with you,' Inslee said to supporters, as he cited his top priority of climate change. 'But I've concluded that my role in that effort will not be as a candidate to be the next president of the United States,' Inslee added. Earlier in the week, Inslee touted that his campaign had hit 130,000 donors - one of the qualifying requirements for the next Democratic debate in Houston. But Inslee had no chance to register at 2 percent or higher in four different polls, leaving him on the sidelines - and off the debate stage. 'As a result, I don't believe we can compete for the attention and exposure needed to have a reasonable shot at the nomination,' Inslee said. Inslee had tried hard to be the loudest voice in the party on climate change, bringing it up in both debates, and doing numerous events on the subject. But the former Congressman, and current Governor, was never able to break out of the lower tier of Democratic candidates. “I want to once again thank everyone who helped in this effort. We have so much to be proud of,” Inslee wrote to his backers.  “Make no mistake, we also have a lot more work to do.” On MSNBC Wednesday night, Inslee said it was clear this was the right choice. “I'm not going to be carrying the ball,” Inslee said in an interview.  “I'm not going to be the President, so I'm withdrawing tonight.”