Among the countless Puerto Rico neighborhoods battered by Hurricane Maria is one named after another storm: Villa Hugo. The illegal shantytown emerged on a public wetland after 1989’s Hurricane Hugo left thousands homeless.

About 6,000 squatters landed here, near the El Yunque National Forest, and built makeshift homes on 40 acres that span a low-lying valley and its adjacent mountainside. Wood and concrete dwellings, their facades scrawled with invented addresses, sit on cinder blocks. After Maria, many are missing roofs; some have collapsed altogether.

Amid the rubble, 59-year-old Joe Quirindongo sat in the sun one recent day on a wooden platform — the only remaining piece of his home. Soft-spoken with weathered skin and a buzzcut, Quirindongo pondered his limited options.

“I know this isn’t a good place for a house,” said Quirindongo, who survives on U.S. government assistance. “Sometimes I would like to go to another place, but I can’t afford anything.”

Villa Hugo reflects a much larger crisis in this impoverished U.S. territory, where so-called “informal” homes are estimated to house about half the population of 3.4 million.

Some residents built on land they never owned. Others illegally subdivided properties, often so family members could build on their lots.

Most have no title to their homes, which are constructed without permits and usually not up to building codes. The houses range in quality and size, from one-room shacks to sizable family homes. Many have plumbing and power, though not always through official means.

The concentration of illegal housing presents a vexing dilemma for local and federal authorities already overwhelmed by the task of rebuilding an economically depressed island after its worst natural disaster in nine decades.

Puerto Rico Governor Ricardo Rosselló has stressed the need to “build back better,” a sentiment echoed by U.S. disaster relief and housing officials. But rebuilding to modern standards or relocating squatters to new homes would take an investment far beyond reimbursing residents for lost property value. 

It’s an outlay Puerto Rico’s government says it can’t afford, and which U.S. officials say is beyond the scope of their funding and mission. Yet the alternative — as Villa Hugo shows — is to encourage rebuilding of the kind of substandard housing that made the island so vulnerable to Maria in the first place.

“It’s definitely a housing crisis,” said Fernando Gil, Puerto Rico’s housing secretary. “It was already out there before, and the hurricane exacerbates it.”

In Puerto Rico, housing is by far the largest category of storm destruction, estimated by the island government at about $37 billion, with only a small portion covered by insurance.

That’s more than twice the government’s estimate for catastrophic electric grid damage, which was made far worse by the shoddy state of utility infrastructure before the storm.

Puerto Rico officials did not respond to questions about how the territory estimated the damage to illegally built homes.

Maria destroyed or significantly damaged more than a third of about 1.2 million occupied homes on the island, the government estimates. Most of those victims had no hazard insurance — which is only required for mortgage-holders in Puerto Rico — and no flood insurance. Just 344,000 homes on the island have mortgages, according U.S. Census Bureau data.

Officials at the U.S. Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) acknowledged the unique challenges of delivering critical housing aid to Puerto Rico. Among them: calculating the damage to illegal, often substandard homes; persuading storm victims to follow through on application processes that have frustrated many into giving up; and allocating billions in disaster aid that still won’t be nearly enough solve the island’s housing crisis.

By far the most money for Puerto Rico housing aid is expected to come from the U.S. Department of Housing and Urban Development (HUD).

HUD spokeswoman Caitlin Thompson declined to comment on how the agency would spend billions of dollars in disaster relief funds to rebuild housing, or how it planned to help owners of informally built homes. Two HUD officials overseeing the agency’s Puerto Rico relief efforts, Todd Richardson and Stan Gimont, also declined to comment.

But the disaster aid package currently under consideration by the U.S. Congress would provide far less housing aid than Puerto Rico officials say they need. Governor Rosselló is seeking $46 billion in aid from HUD, an amount that dwarfs previous allocations for even the most destructive U.S. storms.

That’s nearly half the island’s total relief request of $94 billion.

The U.S. House of Representatives instead passed a package of $81 billion, with $26 billion for HUD, that still needs Senate and White House approval. The money would be divided between regions struck by several 2017 hurricanes — including Maria, Harvey in Texas and Irma in Florida — as well as the recent California wildfires. Congress could also decide to approve additional aid later.

‘My mother is scared’

A generation ago, Maria Vega Lastra, now 61, was among the estimated 28,000 people displaced by Hurricane Hugo. Neighbors helped her build a new home in what would become Villa Hugo, in the town of Canóvanas.

Her daughter, 34-year-old Amadaliz Diaz, still recalls her older brother grinning as he sawed wood for the frame of their self-built, one-floor house, with a porch and three bedrooms.

Now, Vega Lastra’s roof has holes in it, and her waterlogged wooden floorboards buckle with each step.

Vega Lastra has been staying with her daughter, who lives in Tampa, as the family waits on applications for FEMA aid. The agency initially denied her application in December, saying it could not contact her by phone, Diaz said.

Vega Lastra is returning to her home this week, uncertain if its condition has gotten worse. Her daughter bought her an air mattress to take with her.

“My mother is scared,” Diaz said. “I hope the government helps her. I work, but I have three kids to take care of.” The island’s housing crisis long predated the storm.

According to Federal Housing Finance Agency data, Puerto Rico’s index of new home prices fell 25 percent over the last decade, amid a severe recession that culminated last May in the largest government bankruptcy filing in U.S. history.

Legal home construction, meanwhile, plummeted from nearly 16,000 new units in 2004 to less than 2,500 last year, according to consultancy Estudios Tecnicos, an economic data firm.

A 2007 study by environmental consultant Interviron Services Inc., commissioned by the Puerto Rico Builders Association, found that 55 percent of residential and commercial construction was informal. That would work out to nearly 700,000 homes.

That figure might be high, said David Carrasquillo, president of the Puerto Rico Planning Society, a trade group representing community planners. But even a “every conservative” estimate would yield at least 260,000 illegally built houses, he said.

Generations of Puerto Rican governments never made serious efforts to enforce building codes to stop new illegal housing, current and former island officials said in interviews. Past administrations had little political or economic incentive to force people out of neighborhoods like Villa Hugo.

Former Governor Rafael Hernandez Colon, in office during Hurricane Hugo, said he tried to help informal homeowners without policing them. 

“Our policy was not to relocate, but rather improve those places,” Hernandez Colon said in an interview.

Subsequent administrations advocated similar policies; none made meaningful headway, partly because of Puerto Rico’s constant political turnover.

Today, informal communities provide a stark contrast to San Juan’s glittering resorts and bustling business districts. San Juan Mayor Carmen Yulin Cruz pointed to poor barrios like those near the city’s Martín Peña Channel, hidden behind the skyscrapers of the financial hub known as the Golden Mile.

“It’s not something I’m proud of, but we hide our poverty here,” Cruz said in an interview.

Recovery dilemma 

The task of rebuilding Puerto Rico’s housing stock ultimately falls to the territory government, which has no ability to pay for it after racking up $120 billion in bond and pension debt in the years before the storm. 

That leaves the island dependent on U.S. relief from FEMA, the SBA and HUD.

The SBA offers low-interest home repair loans of up to $200,000. FEMA provides homeowners with emergency grants, relocation assistance and other help. HUD is focused on long-term rebuilding efforts, working directly with local agencies to subsidize reconstruction through grants. 

FEMA’s cap for disaster aid to individuals is $33,300, and actual awards are often much lower. Normally, FEMA eligibility for housing aid requires proving property ownership, but the agency says it will help owners of informal homes if they can prove residency.

How exactly to help gets complicated. For example, someone who builds their own home with no permits on land they own is more likely to be treated as a homeowner, said Justo Hernandez, FEMA’s deputy federal coordinating officer. Squatters who built on land they didn’t own, however, would likely only be given money to cover lost items and relocate to a rental, he said.

Several Villa Hugo residents said they received money from FEMA, but many didn’t know what it was for and complained it wasn’t enough.

Lourdes Rios Romero, 59, plans to appeal the $6,000 grant she got for repairs to her flooded home, citing a much higher contractor’s quote. Neighbor Miguel Rosario Lopez, a 62-year-old retiree, showed a statement from FEMA saying he was eligible for $916.22, “to perform essential repairs that will allow you to live in your home.”

Without money for major changes, most homeowners said they planned to combine the aid they might get from FEMA with what little money they could raise to rebuild in the same spot.

FEMA does not police illegal building. Code enforcement is left to the same local authorities who have allowed illegal construction to persist for years.

Quirindongo is planning to buy materials to rebuild his Villa Hugo home himself with about $4,000 from FEMA. It will be the third time he has done so, having lost one home to a 2011 flood, another to a fire.

“I just want to have something that I can say, ‘This is mine,’” Quirindongo said.

Giving up

Many others appear to have given up on FEMA aid because the agency’s application process is entangled with a separate process for awarding SBA loans to rebuild homes.

FEMA is legally bound to assess whether applicants might qualify for SBA loans before awarding them FEMA grants. If an applicant passes FEMA’s cursory eligibility assessment, they are automatically referred to SBA for a more thorough screening.

Applicants are not required to follow through on the SBA process — but they cannot qualify for FEMA aid unless they do.

FEMA only provides a grant when the SBA denies the applicant a loan.

FEMA said it has referred about 520,000 people out of 1.1 million total applicants so far to the SBA. But as of Monday, only 59,000 followed through with SBA applications. Of those, some 12,000 later withdrew, SBA data shows.

“As soon as people see SBA they say, ‘I give up, I don’t want a loan — I can’t afford a loan,’” FEMA’s Hernandez said.

SBA spokeswoman Carol Chastang said the agency is working with FEMA to educate flood victims on available benefits and the application process, including sending staffers to applicants’ homes.

330,000 vacant homes

Before the storm hit, Puerto Rico already had about 330,000 vacant homes, according to Census Bureau 2016 estimates, resulting from years of population decline as citizens migrated to the mainland United States and elsewhere. Puerto Ricans are American citizens and can move to the mainland at will.

Puerto Rico and federal officials have considered rehabilitating the vacant housing for short- and long-term use, along with building new homes and buying out homeowners in illegally built  neighborhoods, according to Gil and federal officials.

Rosselló, the Puerto Rican governor, has said the rebuilding plan must include a fleet of properly built new homes. Gil, the housing secretary, said the administration would like to build as many as 70,000 properties.

HUD officials declined to comment on whether the agency would finance new housing. Its Community Development Block Grant program allows for local governments to design their own solutions and seek HUD approval for funding.

The cost of constructing enough new, code-compliant properties to house people displaced by Maria could far exceed the available federal aid. Making them affordable also presents a problem.

Puerto Rico’s subsidized “social interest housing,” geared toward low-income buyers, typically provides units that sell in the mid-$100,000 range, with prices capped by the government.

That’s beyond the means of many displaced storm victims.

Gil offered little detail on a solution beyond saying it will include a mix of new development, buyout programs for owners of illegally built homes and other options.

The answer will come down to how much Washington is willing to pay, he said. He invoked the island’s territorial status and colonial history as a root cause of its poor infrastructure and housing stock before the storm.

“It is precisely because we have been neglected by the federal government that the island’s infrastructure is so weak,” he said.

Many Puerto Rico officials continue to advocate for bringing relief and legitimacy to squatter communities like Villa Hugo, rather than trying to relocate their residents.

Canóvanas Mayor Lornna Soto has been negotiating with island officials to provide property titles to Villa Hugo’s population.

The vast majority still don’t have them.

“It’s long overdue to recognize that they are not going anywhere and their communities need to be rebuilt with proper services,” Soto said.

Diaz said she supports her mother’s decision to return to Villa Hugo, regardless of what aid the government ultimately provides.

“I grew up there,” Diaz said. “Everyone knows us there.”
…

Asia’s benchmark stock indexes collapsed Tuesday, as Monday’s massive selloffs on Wall Street rolled across the globe. 

Japan’s Nikkei 225 index lost as much seven percent of its value at one point during the trading session, before closing at 21,610 points, a loss of nearly five percent. Hong Kong’s Hang Seng index followed suit, dropping just over five percent in its worst trading day since August 2015. 

The benchmark indexes Australia and South Korea also suffered serious losses.

In early Europe trading London’s FTSE 100 was down 3.5 percent at 7,081 points.

Asian markets were caught in the ripple effect of Monday’s 1,175-point loss on the Dow Jones Industrial Average, marking the biggest point decline in history. The S&P (Standard and Poor’s) 500 also had a bad day, losing just over four percent to finish at 2,648 points. 

The stock market has now lost about a trillion dollars in value since Friday, when the Dow lost 666 points. That drop followed a solid jobs report that showed the U.S. economy adding 200 thousand jobs and wages rising at the fastest pace in a decade. The tighter labor market and rising wages prompted investor fears of higher inflation and the possibility that the U.S. Federal Reserve would raise interest rates faster and higher than they have in recent years. 

Analysts who spoke with VOA had been expecting a stock market “correction” (a decline of about 10% from recent highs) as a result of the record run up in stock prices this year.
…

As U.S. stocks plunged on Monday, President Donald Trump was speaking at an event in Ohio but noticeably not taking credit for the market despite doing so repeatedly when stocks were rising.

The stark contrast was a sign that Trump may be absorbing a tough message, underscored by former White House advisers, that American presidents traditionally have avoided commenting directly on Wall Street’s fickle trends.

Gene Sperling, a top economic adviser to Democratic former presidents Bill Clinton and Barack Obama, said Trump erred in recent months by focusing so heavily on the stock market.

“Even though the stock market tripled under Bill Clinton, his view was that you should always focus your policies and your public messages on bread-and-butter kitchen table issues … and that focusing on the stock market would take your eye off the real economy,” Sperling said.

White House spokesman Raj Shah, in an adjustment to the administration’s message on stocks, told reporters aboard Air Force One en route to Trump’s speaking event in Ohio, “Look, markets do fluctuate in the short term. We all know that … But the fundamentals of this economy are very strong and they’re headed in the right direction.”

Throughout a speech at a factory in Blue Ash, Ohio, Trump made no mention of stock markets. That departed sharply from past practice.

In his State of the Union address last week, Trump said, “The stock market has smashed one record after another, gaining $8 trillion and more in value in just this short period of time.”

‘Tremendous Benefits’

On Jan. 7, he wrote on Twitter, “The Stock Market has been creating tremendous benefits for our country in the form of not only Record Setting Stock Prices, but present and future Jobs, Jobs, Jobs. Seven TRILLION dollars of value created since our big election win!”

Three days before that, he tweeted, “Dow just crashes through 25,000. Congrats! Big cuts in unnecessary regulations continuing.” He had sent similar tweets for months.

The Republican president told Reuters in a Jan. 17 interview he has been getting kudos from people grateful for increased 401(k) retirement plan values and he believed the rise would not have happened if his Democratic opponent Hillary Clinton had won the 2016 presidential election.

“If the Democrats won the election, the stock market would have gone down 50 percent from where it was, and now look at the percentage increase. It’s a record increase,” Trump said.

Once the markets closed, the White House issued a statement saying Trump’s focus is “on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment, and increasing wages for American workers.”

“The president’s tax cuts and regulatory reforms will further enhance the U.S. economy and continue to increase prosperity for the American people,” White House spokeswoman Sarah Sanders said.

The benchmark Dow Jones industrial average soared 42 percent between Election Day 2016, when Trump won the presidency, and its historic peak a week ago above 26,400.

On Monday, the Dow fell to below 24,000 but regained some of its midday losses to close at 24,345. In the past five trading days, the index has erased all its gains since late November.

The benchmark S&P 500 has pulled back more than 6 percent from a Jan. 26 record high.

The “Trump rally,” as some traders have dubbed it, has coincided with a sweeping tax code overhaul approved in December, which slashed corporate taxes, and a deregulation push.

The S&P 500 rose 34 percent from Trump’s election to its recent high.

But stocks have been climbing since March 2009, when Obama inherited a serious financial crisis and the worst economic recession since the Great Depression of the 1930s. At that time, the Dow was trading at around 6,500.

Trump has also criticized his predecessor Obama’s effect on markets. In November 2012, Trump tweeted, “The stock market and U.S. dollar are both plunging today. Welcome to @BarackObama’s second term.”

The S&P 500 rose 126 percent from Obama’s 2008 election to his final day in office in 2017.

Former Obama press secretary Jay Carney on Monday tweeted, “Good time to recall that in the previous administration, we NEVER boasted about the stock market — even though the Dow more than doubled on Obama’s watch — because we knew two things: 1) the stock market is not the economy; and 2) if you claim the rise, you own the fall.”

Doug Holtz-Eakin, president of the American Action Forum and a former economic adviser to 2008 Republican presidential nominee John McCain, said, “The president shouldn’t comment about the stock market. Indeed if anyone is going to make major pronouncements about economic data, it should be the Treasury secretary or the agency releasing the data, so if they get it wrong you can get rid of them. You don’t want the president owning those things.”
…

Federal officials will take another look at the historic Alaska community of Nome as a possible port serving ships heading for the Arctic.

The U.S. Army Corps of Engineers announced it has signed an agreement with the city of Nome to examine whether benefits justify costs of navigation improvements, said Bruce Sexauer, chief of civil works for the Corps’ Alaska District.

“The study will look at economic and social reasons to see if expanding the port is in the federal interest,” he said.

The study process generally takes three years and could culminate in a Corps’ recommendation to Congress to authorize port improvements, Sexauer said.

Alaska lacks deep-water ports along most of its west and northwest coast. The nearest permanent U.S. Coast Guard station is Kodiak more than 800 miles (1,287 kilometers) away.

Arctic marine traffic continues to grow and Nome, though south of the Arctic Circle, is well situated south of the Pacific chokepoint to the Arctic, the Bering Strait, Sexauer said.

A joint federal-state study started in 2008 looked at alternatives for Arctic ports in the Bering and Chukchi seas. Nome became the top choice because of infrastructure already in place, including an airport that handles jets, a hospital and fuel supply facilities.

“It just needed to be bigger and deeper,” Sexauer said

However, economic justification for the port diminished in late 2015 when Royal Dutch Shell PLC drilled a dry hole in the Chukchi Sea and suspended its U.S. Arctic offshore drilling program.

“The benefits for a project at Nome went away, at least the oil and gas benefits,” Sexauer said. The Corps paused its study with the state and officially terminated it last month, Sexauer said.

The study with the city will again look at how a Nome port would aid marine traffic for petroleum development, mining and regional delivery of fuel and other products.

Federal law changed in 2016 to allow the Corps to also consider social benefits, such as support of search and rescue operations, national security and aid to communities to help them be sustainable.

The Port of Nome remains too shallow to handle large ships. Fuel tankers stay anchored in deep water and fuel is lightered to Nome.

Nome’s inner harbor in 2014 was just 10 feet (3 meters) deep and its outer harbor was less than 23 feet (7 meters) deep. The Corps that year looked at constructing docks up to 1,000 feet (305 meters) long and dredging to 35 feet (10.7 meters).

The Corps in late April has scheduled a planning meeting in Nome to detail the scope of the new study.
…

Digital currencies such as bitcoin demand increased oversight and may require a new federal regulatory framework, the top U.S. markets regulators will tell lawmakers at a hotly anticipated congressional hearing on Tuesday.

Christopher Giancarlo, chairman of the Commodity Futures Trading Commission, and Jay Clayton, chairman of the Securities and Exchange Commission, will provide testimony to the Senate Banking Committee amid growing concerns globally over the risks virtual currencies pose to investors and the financial system.

Giancarlo and Clayton will say current state-by-state licensing rules for cryptocurrency exchanges may need to be reviewed in favor of a rationalized federal framework, according to prepared testimony published on Monday.

Reporting by Michelle Price.
…

Jerome Powell has been sworn in as the 16th chairman of the Federal Reserve in a brief ceremony in the Fed’s board room. In a short video message, Powell pledged to “support continued economic growth, a healthy job market and price stability.”

Powell took the oath of office from Randal Quarles, the Fed’s vice chairman for supervision, in a ceremony that was attended by Fed staff and Fed board member Lael Brainard.

Powell succeeds Janet Yellen, the first woman to lead the nation’s central bank in its 100 year history. President Donald Trump picked Powell after deciding to break with recent tradition and not offer Yellen a second four-year term.

In his video message, Powell did not mention the current turbulence in financial markets which sent stocks plunging on Friday.
…

When Jerome Powell is sworn in Monday as the new chairman of the Federal Reserve, the pride of the moment may be tempered by Powell’s recognition of the risks that lie ahead.

A ferocious sell-off on Wall Street on Friday — with stocks tumbling and bond yields rising after the January U.S. jobs report suggested higher inflation ahead — served as a blunt reminder of the challenges Powell’s Fed will face.

At his Senate confirmation hearing, Powell stressed his intention to carry on the cautious approach to interest rate hikes that his predecessor, Janet Yellen, pursued in four years as Fed chair. Yellen was able to oversee a gradual rate policy because inflation posed no threat: It ran below even the Fed’s 2 percent annual target throughout her tenure.

The Powell era could be entirely different. The job market is tighter. Wages are up. Federal debt will likely rise. Tax cuts could accelerate growth.

All of which seems likely to drive up inflation, which is what spooked investors Friday. The main question, is by how much? For weeks, investors have been demanding higher bond yields. On Friday, after the government said average pay rose year-over-year in January at the fastest pace in more than eight years, the 10-year Treasury yield reached 2.84 percent, a four-year high.

The Powell-led Fed would be pleased to see inflation finally reach its 2 percent goal. The problem would be if it were to surge well above that level. The Fed would face intense pressure to accelerate its rate hikes to tighten credit and curb inflation.

That’s where the risks come in: If the Fed tightened credit too little, inflation might surge out of control. If it tightened too much, a recession could result. Steering a safe middle ground has proved tricky for the Fed throughout its history. It has sometimes miscalculated how fast to raise rates and triggered an economic downturn.

In December, the Fed predicted that it would raise its benchmark short-term rate three times in 2018, just as in 2017. Yet some economists now foresee four increases. And those rate hikes would coincide with the Fed’s continued paring of its bond holdings — action that puts upward pressure on rates for long-term consumer and business loans.

“The next phase of managing the economy may not be as easy,” said Diane Swonk, chief economist at Grant Thornton, who expects four rate increases in 2018. “The Fed may have to raise rates more quickly because the economy is stronger.”

For now, the economy that Powell’s Fed will preside over shows strength and resilience. Unemployment is at a 17-year low. The economic expansion, already the third-longest in U.S. history, appears to be improving after a long stretch of subpar growth. On the surface, it might seem that all the Powell Fed needs to do now is serve as caretaker for a high-flying economy.

But the Fed has always felt compelled to respond to threats before, not after, they arise, while there is time to prevent high inflation or an economic slowdown.

“Everything points to a more aggressive Fed under Powell,” said Mark Zandi, chief economist at Moody’s Analytics.

No less an authority than Alan Greenspan, who led the Fed for 18{ years until 2006, expressed worries last week that dangerous bubbles might be forming in the financial markets, in part because of high federal debt resulting from increased benefit spending as baby boomers retire and the $1.5 trillion in tax cuts now taking effect.

“We are dealing with a fiscally unstable long-term outlook in which inflation will take hold,” Greenspan said in an interview on Bloomberg Television.

The two most recent U.S. recessions were caused by bursting asset bubbles. The pricking of the dot.com bubble led to a brief recession in 2001. And the collapse of the housing bubble ignited the 2007-2009 downturn, the worst since the Great Depression of the 1930s.

The current recovery began in June 2009. If it lasts until June 2019, it would tie the longest expansion on record  — the one that lasted from March 1991 to March 2001.

Though the expansion has been marked by slow economic growth, that very trait might ensure its durability: Plodding growth has kept inflation low and prevented the economy from overheating.

“I don’t think a recession is on the horizon,” said Sung Won Sohn, an economics professor at California State University, Channel Islands. “We have had one of the slowest periods of economic growth on record, and I think slow means it will go for a longer period.”

For that forecast to prove correct, the Powell Fed will need to manage its rate policy with exceeding care. Friday’s jobs report showing wages rising 2.9 percent over the past 12 months — the biggest such jump since the recession ended in 2009 — suggested that the Fed may be entering an era of higher inflation and a need for higher rates.

With Yellen’s departure, the seven-member Fed board will have only three members. President Donald Trump has nominated Marvin Goodfriend, an economics professor who has long urged the Fed to raise rates more quickly, for one vacancy. Goodfriend awaits Senate confirmation.

But the president hasn’t yet nominated anyone for the three other vacancies. Those selections will be critical in determining the Fed’s pace of rate hikes and in carrying out Trump’s desire to loosen bank regulations. Powell’s responsibility will be to forge a consensus among the board members and the 12 regional Fed bank presidents who help set monetary policy.

Powell will be the first Fed leader in three decades without a Ph.D. in economics. But David Jones, the author of several books on the Fed, said that Powell, with his background as an investment banker, reminded him of the longest-serving chairman, William McChesney Martin, who led the Fed from 1951 to 1970. Martin also lacked a doctorate in economics but had extensive knowledge of Wall Street.

“Powell, like Martin, understands markets, and I think he will be as plain-spoken as Martin,” Jones said, citing Martin’s famous summation of the Fed’s job: “To take away the punch bowl just when the party gets going.”

 
…

Recent losses on global financial markets, including those in the U.S., have some investors concerned about expectations for their holdings and plans for the future.

The Dow Jones Industrial Average declined 2.5 percent Friday, its largest percentage drop since Britain’s decision in June 2016 to leave the European Union.

The Dow and the broader U.S. Standard & Poor’s 500 Index ended the week roughly 4-percent lower, their biggest weekly drops since early 2016, amid fears of inflation and disappointing quarterly corporate earnings results.

Key stock indexes in Europe also fell Friday. Germany’s DAX index dropped 1.7-percent, while France’s CAC 40 Index declined 1.6-percent.

In Asia, Japan’s Nikkei 225 Index slid nearly 1-percent and South Korea’s Kospi fell 1.7-percent.

Meanwhile, U.S. bond yields climbed and contributed to the sell-off after the U.S. government reported that wages grew last month at their fastest pace in eight years.

The wage data helped stoke investor concern that the Federal Reserve, the U.S. central bank, will respond to higher inflation by hiking its key interest rate more quickly than anticipated.

Darrell Cronk, head of the Wells Fargo Investment Institute, said an extended period of low interest rates has helped create the uncertainty.

“We’ve enjoyed low interest rates for so long, we’re having to deal with a little bit higher rates now, so the market is trying to figure out what that could mean for inflation.”

The yield on the benchmark 10-year U.S. Treasury notes rose to 2.852-percent, its highest level in more than four years. The rise in bond yields hinders stock performance in two ways: it makes corporate borrowing more expensive and it makes bonds more attractive to investors compared to riskier stocks.

Bond strategists were unwilling Friday to predict what lies ahead for interest rates this week after the markets’ unusual volatility in the past week.

Investors may get a hint of the direction of interest rates when trading resumes in Asia early Monday, and possibly more insight after the U.S. Treasury’s $66 billion in auctions of 3-, 10- and 30-year bonds from Tuesday to Thursday.
…

Over the last decades, growing economic hardships forced people in cities and villages around the world to leave their hometowns to find work in other countries. Dreaming of returning one day and enjoying a better life where they grew up, many invested most of their savings buying houses back home. But often, these houses remain empty, making many communities look like ghost towns. Faiza Elmasry has the story. Faith Lapidus narrates.
…