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Powell to markets: Fed is flexible and aware of risks

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ATLANTA/NEW YORK (Reuters) – Federal Reserve Chairman Jerome Powell on Friday sought to ease market concerns that the central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year.

U.S. Federal Reserve Chairman Jerome Powell speaks at the American Economic Association/Allied Social Science Association (ASSA) 2019 meeting in Atlanta, Georgia, U.S., January 4, 2019. REUTERS/Christopher Aluka Berry

Speaking after months of volatility in world bond and stock markets, Powell avoided some of the communication missteps that in the past have roiled rather than calmed investors. He also pledged to stay in his job even if asked to quit by President Donald Trump, who has been critical.

Echoing a more sympathetic tone recently espoused by some of his colleagues, Powell said the Fed was “listening” to markets and would balance the steady flow of strong economic data against the array of risks – from slowing global growth to worries about the U.S.-China trade war – that have spooked investors.

The message was heard on Wall Street, where major stock indexes surged about 3.5 percent to a more than two-week high. The market bounce came after a volatile December selloff in which traders grew increasingly skeptical of the Fed’s upbeat forecasts and plans to keep hiking interest rates in 2019.

“Particularly with the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell told the American Economic Association in Atlanta.

The Fed, which hiked rates four times last year including in December, is however not on a preset path and could pause the policy tightening as it did in 2016 when global growth concerns led to doubts about the U.S. economic recovery, he said.

“We are always prepared to shift the stance of policy and to shift it significantly” if needed, Powell said, speaking on a panel alongside former Fed chiefs Janet Yellen and Ben Bernanke. That flexibility, he added, applied as well to the monthly reductions to the Fed’s balance sheet.

The Fed chief stressed that the economy remained on track and that the job market was quite strong, and he did not address Fed forecasts from December that sketched out two more rate rises this year. But, combined with the messages of Fed presidents who in recent days downplayed that tightening plan, he delivered the sort of temperate message investors had hoped to hear.

In response, Treasury yields rose and futures traders began pricing in a small chance of a rate hike this year, versus no chance seen before Powell began speaking.

Compared to comments he made after the Fed raised rates last month, “it’s not that he’s changed his message … but that he explained it more patiently and in greater detail,” said Lou Brien, market strategist at DRW Trading in Chicago.

Powell’s appearance in Atlanta was his first since last month’s rate increase and a public lashing from Trump, who according to sources asked aides about his power to fire the Fed chairman.

The head of the Fed, once confirmed by the Senate, can only be removed “for cause”, not a policy disagreement. Powell responded with a terse “No” when asked if he would resign if Trump requested him to do so.

SENSITIVE FED

The recent market turbulence has posed a dilemma for the Fed, as a seeming loss of confidence in financial markets about the U.S. economy’s prospects was offset by upbeat data from the real economy, including a strong December jobs report.

The Labor Department reported on Friday that 312,000 jobs were created last month, well above market expectations. Wages and labor force participation both rose, signaling sustained economic strength.

Powell called the jobs report “very strong,” with U.S. data “on track to sustain good momentum into the new year.”

The world’s biggest economy expanded well above potential last year and, along with U.S. consumers, is expected to remain strong through this year. Yet signs are growing that Trump’s tit-for-tat trade war with China is taking a toll: this week, tech giant Apple and grains trader Cargill warned about weaker sales in China.

Dallas Fed President Robert Kaplan said on Thursday planned rate hikes should be halted for now, while on Friday Loretta Mester, the hawkish head of the Cleveland Fed, said she sees only one or two rate hikes this year. A third Fed president, Thomas Barkin of Richmond, said he is hearing more concerns about economic risks and trade.

“The markets are feeling better that the Fed is not strangling the overall economy and perhaps forcing it into a recession, and that removes a monetary policy concern that has been hanging over the market for the past few months,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC.

The Fed’s tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion in assets. Powell said he did not think the latter was having much impact on markets, but that the strategy would be changed if it started interfering with the central bank’s broader goals of maintaining strong employment and stable inflation.

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While not a change in policy, it was a nod to market concerns that the Fed had a key decision on “auto-pilot,” as Powell put it last month, even as it pledged to be dependent on economic data.

“The markets are pricing in downside risks … and they are obviously well ahead of the data, particularly if you look at this morning’s labor market data,” Powell said.

“I’ll just say that we are listening carefully to that … listening sensitively to the message that markets are sending and we are going to be taking those downside risks into account as we make policy going forward.”

Reporting by Howard Schneider, Jonathan Spicer and Ann Saphir; Additional reporting by Amy Caren Daniel and Karen Brettell; Editing by Chizu Nomiyama and Paul Simao

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Future of Ottawa: Coffee with Francis Bueckert

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Francis Bueckert: When it comes to the current landscape of coffee-roasting companies and independent cafes in Ottawa, I think we are at a really interesting moment in time. There are more local roasters that are doing artisanal small-batch production—with more attention to the quality and origin of the beans.

With larger corporations such as Starbucks closing locations, it has opened a bit of space for local players to grow. We have been lucky to work with many folks in the coffee-roasting community, and we have found that there is a willingness to collaborate among different coffee roasters. For example, when Cloudforest started back in 2014, we were roasting our coffee at Happy Goat and it was the expertise of their head roaster Hans that helped me learn how to roast. Other companies such as Brown Bag Coffee have also lent a hand when we needed extra roasting capacity. There are others, such as Lulo, Mighty Valley Coffee, Bluebarn, The Artery, and Little Victories that are also part of the growing local coffee community. It’s small roasters like these who have shown me what a coffee community can look like, and that we can help to elevate each other, rather than being locked in competition.

If you care to make a prediction… What’s happening to the local café industry in 2021?

We believe that there is hope and that 2021 can be a big pivot year for small roasters and cafes.

This year will not be ideal from a business point of view. However, it could create a shift in people’s attitude toward where they get their coffee. We are holding out hope that people will support the roasters and cafes that are local to help them economically survive what is in all reality a very difficult time.

It all depends on where consumers decide to go this year. People are starting to recognize that supporting large corporations at this moment will be at the cost of the local roasters and cafes. There is the growing realization that a future where there is only Amazon, Walmart, and Starbucks would be pretty bleak. So we have an opportunity this year to support the kind of local businesses that we want to see thrive.

In your wildest dreams, what will the landscape for local coffee roasters and cafés look like in your lifetime?

In my wildest dreams, all of the coffee roasters and cafés would be locally owned and independent. They would all be focused on direct trade and artisanal coffee. Each different coffee roaster and café would know exactly where their coffee came from. Ideally, each company would be a partnership between the farmers who grow the beans and the people here selling them. There would be a focus on how to cooperate and collaborate with the farmers in the countries of origin to share the benefits around. We would all work together and share orders of cups, lids, and other packaging so that we could get better bulk pricing. In this way, we would make our local coffee community so efficient that the large corporate coffee companies wouldn’t even be able to compete.

We would also like to see people use coffee as a way to create social good. For example, we started Cloudforest as a way of helping support farmers in Ecuador who were taking a stand against large mining companies. This remote community stood up to protect their environment, so that they could have clean drinking water and soil for the next generation. They started an organic coffee cooperative to help show that there are other models of development, and we are doing our part year after year to help support their vision. They have a vision of development that does not include mass deforestation and contamination, and organic coffee is a key (among others) to show that another way forward is possible.

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Special events in the Ottawa Valley dominate annual OVTA tourism awards

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The Ottawa Valley Tourist Association hopes that its annual tourism awards will provide a little sunshine during what is a dark time for local tourism operators because of the pandemic.

The Ottawa Valley Tourism Awards are presented annually by the Ottawa Valley Tourist Association (OVTA) to individuals, businesses, and events that recognize the importance of working together for the growth of the local tourism industry, as well as offering exceptional visitor experiences.

“After a year that saw a lot of businesses in the hospitality and tourism industry being challenged like never before, the annual Ottawa Valley Tourism Awards represent a bit of light on the horizon” said Chris Hinsperger, co-owner of the Bonnechere Caves.

The Ottawa Valley Tourist Association’s (OVTA) Awards Committee co-chairpersons, Meghan James and Chris Hinsperger, said they were very pleased with the recent nominations received, especially in the Special Events category. Submissions were received for The Farm to Fork Dinner Series at the Whitewater Inn; Light up the Valley; The Eganville Curling Clubs’ Rock the Rings; The Ontario Festival of Small Halls ; The Bonnechere Caves On-line Underground Concert Series; The Opeongo Nordic Ski Clubs’ Ski Loppet; The Tour de Bonnechere — Ghost de Tour 2020; and The Bonnechere Caves Rock ‘n Roll Parking Lot Picnic.

“During a time when communities were challenged, it is nice to see that people still made an effort to get together and celebrate, albeit under certain conditions. It just shows the creativity and resiliency of our tourism Community here in the valley” said Meghan James, director of sales at the Pembroke Best Western.

There are three Award categories: The Marilyn Alexander Tourism Champion Award, The Business of Distinction and The Special Event of the Year.

Hinsperger, is excited about this year’s awards.

“During this pandemic the hospitality and tourism industry was the first to be hit, was the hardest hit and will be the last of our industries to fully recover. As Valley entrepreneurs we owe it to ourselves, to our businesses and to our communities to be an active part of that recovery. Our livelihood and economic recovery depends on our efforts. And we will get back to welcoming people from all over the world to share a little bit of the place we are privileged to call home. This awards process leaves myself and others fully optimistic about our positive outcomes.”

Award winners will be announced at the Ottawa Valley Tourist Association’s virtual annual general meeting on Monday, May 31.

The OVTA is the destination marketing organization for the Upper Ottawa Valley and proudly represents more than 200 tourism businesses, comprised of attractions and outfitters, accommodation, food, beverage and retail establishments, artists and galleries, municipalities, as well as media and industry suppliers. The OVTA is supported by the County of Renfrew, Renfrew County municipalities and the City of Pembroke.

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Future of Ottawa: Farming with Jeremy Colbeck

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Jeremy Colbeck: Well first, let’s talk about what we mean by farming. Although farms, and farming as an occupation, are in decline across Canada, they are still a major part of our rural landscape. That’s even more true for a strange city like Ottawa which includes a LOT of rural areas and whose urban boundary takes, what, three hours to cross? About 40 per cent of the rural land in Ottawa is farmland. Most of that farming is corn and soybean cash-crop, as well as some dairy and livestock farming. That’s mostly conventional farming (the kind that is profitable but not exactly where you take your kids on a Saturday).

There are also a lot of agri-tourism businesses in Ottawa, which give you that oh-so-good Saturday spot for family donkey-petting and apple-picking. And it’s totally understandable from a business perspective, but sometimes surprising to find out, that even though they grow some of the Christmas trees they sell, they might also be reselling some that come from much larger farms far away. The farmland around Ottawa is also inflated in price because of its proximity to the city, where it is in demand by would-be hobby farmers—folks who want to do some farming on their property in their spare time but make their money (to subsidize their small-scale farming habit) elsewhere. Unfortunately, many of these properties will have large mansions built on them, which will then make them completely unaffordable for the average farmer

There’s also a segment of small-to-medium-sized Ottawa farms that grow “premium” (artisanal, unique, extra-fresh, ecologically- or organically-grown etc…) products that they sell directly to local eaters via farmers’ markets or other direct marketing channels, including on-farm stores and farm stands. That’s where BeetBox fits in.

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