5 things to start your day

[Bloomberg]( China has trade-deal doubts, investors digest Fed cut, and the earnings deluge continues. Doubts and data Chinese officials are [casting doubts]( about reaching a comprehensive long-term trade deal with the U.S. In private conversations with visitors to Beijing and other interlocutors in recent weeks, officials have warned they won’t budge on the thorniest issues and that they remain concerned about President Donald Trump’s impulsive nature. Stocks and U.S. equity futures dropped on the news, which is understandable because as the trade war drags on, the global economic warning signals are mounting. On Thursday a gauge of the outlook for China’s manufacturing sector dropped to the [lowest level since February](. Spain’s economy settled down into a [slower pace of growth](, reflecting a broader malaise in the euro area. U.K. consumer confidence [slumped](to match a six-year low. Hong Kong’s economy [contracted sharply]( as it entered a recession, exceeding economists’ worst estimates of the damage from months of protests. Taiwan was a rare bright spot: its economy grew at the [fastest pace]( since the second quarter of last year. The morning after Jerome Powell and the Federal Reserve seem to have successfully walked the line on Wednesday, delivering their third insurance cut of the year while signaling [that may be it](. It was all very much as expected, and the markets [took it in stride](. The message that policy makers are in [no rush to tighten policy]( was a minor flourish that sent stocks to another record and gave Treasuries a little boost. The hawkish-but-dovish-but-kind-of-hawkish cut was at odds with the Bank of Japan, which this morning [strengthened the wording]( on its policy pledge on interest rates. It flagged the possibility that they could go lower as the central bank grapples with the effects of a global slowdown and limp inflation. Oh and it’s Mario Draghi’s last day as head of the ECB, so please sign the card in the break room if you get a chance. There will be cake around 3 p.m. Sponsored Content by Quad Amazon is still No. 3 as a digital ad venue, behind Google and Facebook, but it’s growing fast. Learn about the opportunities Amazon offers and how to make them part of an effective consumer product marketing mix. [Get the Story.](  Earnings roll in Investors are not only digesting the China news, Fed messaging and subsequent deluge of analysis, they also have some pretty big corporate results to chew on, too. After the bell yesterday Facebook Inc. reported revenue for the third quarter that was 1.7% [above the average analyst estimate](, while Apple Inc. [projected](fiscal first-quarter revenue that beat analysts’ estimates. This morning BNP Paribas SA posted a [third straight gain](at its fixed-income trading business, outshining its Wall Street and European peers. Nintendo Co. reported fiscal second-quarter profit that [beat analyst estimates](. British Airways owner IAG SA reported a [drop]( in third-quarter earnings after the U.K. carrier’s first pilot strike since 1979. Royal Dutch Shell Plc said the worsening economy could [slow the pace of returns]( to shareholders, even as it delivered a strong third-quarter performance. In other corporate news, rival carmakers PSA Group and Fiat Chrysler Automobiles NV [unveiled their plan]( to combine. And Ford Motor Co. reached a [tentative agreement]( with the United Auto Workers union on a new labor contract. Markets :-( Overnight the MSCI Asia Pacific Index rose 0.4%, with Japan's Topix index edging higher by 0.1%. In Europe, the Stoxx 600 Index fell 0.7% at 6:07 a.m. Eastern Time as China's doubts over the prospect of a long-term trade deal reverberated through markets. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 1.74% and gold rallied above $1,500. Coming up… Friday’s jobs data looms large, but before that we have a few other things to get through. The Fed’s preferred inflation metric, the core PCE deflator, will land at 8:30 a.m. alongside personal income and spending numbers and initial jobless claims. Stick around after that for Bloomberg’s consumer comfort reading and the MNI Chicago Business Barometer at 9:45 a.m. If you haven’t had enough earnings, there are more coming. But it’s a somewhat B-list day compared to the rest of the week, with Kraft Heinz Co. (before the open) arguably the standout name.  What we've been reading This is what's caught our eye over the last 24 hours. - Nationals’ World Series [final-out baseball]( is worth $500,000. - A [secretive family]( landing a $4 billion haul has everyone guessing. - [Leading maggot farmer]( to expand from Cape Town to California. - Dark for days, a wealthy Bay Area town is [hit by climate reality](. - Wildly popular [Japanese manga]( storms U.S., with wine in tow. - Magic [internet money](. - Conan the dog, injured in Baghdadi raid, gets [White House visit](. And finally, here’s what Joe's interested in this morning Going into yesterday's Fed meeting the expectation was for a rate cut and then a pause. And that's [basically what got delivered](. But then during the press conference, Powell [offered something a little extra](. In speaking about the prospect for future rate hikes, he said the Fed would need to see "a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.” Markets immediately reacted to this line, with the S&P 500 jumping by about five points. Why? Traders interpreted it as Powell raising the bar for future hikes, because in the past they've increased rates even without a significant, persistent upward move in inflation. Thus this statement was treated as de facto easing. Think about it this way. Let's say that at the next meeting, the Fed announced that it was raising its inflation target from 2% to 4%, and let's suppose traders found that to be a credible promise (i.e. that the Fed wouldn't backtrack on it if inflation hit 3%). Now you'd have one group of people immediately scoffing, saying: "They can barely hit 2% and now they think they can hit 4% inflation!" And they'd have a point. But the market would still likely interpret this as easing, as rate hikes would be taken off the table for the foreseeable future, even if the economy really gathered steam, since nobody thinks 4% inflation is coming anytime soon. While the Fed isn't likely to dramatically raise its inflation target anytime in the near future, there are still two immediate implications from this thought experiment. The first is that investors did interpret Powell as offering a modest increase in the inflation target (hence the rally). The second is that while there's a lot of fretting about the Fed having limited "bullets" to fire before getting rates to zero again, they may have more flexibility than people fully appreciate to ease monetary policy without actually cutting rates. 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