Here’s our news story on Bank of England policy Michael Saunders’ hint that interest rates could be cut soon:

Heads-up: the US government is considering curbs on US investors putting money into China, according to CNBC.

The movewould intensify the trade war, so the report has knocked shares in Chinese companies listed in New York.

CNBC says:

The White House is considering limits on U.S. investment into China, aggravating the protracted trade dispute between the globe’s two largest economies....

One of those options includes limiting all U.S. investment in China. Though the person cautioned that the discussion was still in early stages, such an action could send shockwaves throughout financial markets and involve the billions of dollars in investments tied to major indexes.

Our latest health check on the UK economy is out:

The latest economic data out of America is a little mixed.

On the downside, consumer spending rose by just 0.1% last month, weaker than the 0.3% expected.

On the upside, Americans are more confidence about economic prospects, according to the University of Michigan.

The latest high-profile Wall Street flotation is going badly.

Peloton, which sells exercise bikes and treadmills that can stream online classes, joined the New York stock exchange yesterday - and promptly tanked by 11%.

Having brushed themselves down overnight, the company’s stock is... down another 7% in early trading today.

Peloton is one of those ‘hot’ companies, billing itself as a “social connection” firm. It’s premise is that health-conscious consumers can join classes remotely, creating a community buzz that encourages them to work up a sweat as they work out.

The problem, I suspect, is that investors have spotted that Peleton is loss-making, doesn’t expect to make a profit until 2023, and sells rather expensive kit (£1,990 for the bike!) - suggesting its potential market may not be huge...

There’s a lot of drama in the oil price today.

Crude prices fell sharply, following reports that Saudi Arabia has agreed to a partial ceasefire in Yemen, where it has been fighting Houthi militants since 2015.

This has bolstered hopes that tensions in the region could ease, following the attack on Saudi Aramco’s oil production site.

Iran’s president, Hassan Rouhani, also excited the markets, by claiming that the US had offered to remove all sanction in exchange for talks.

Rouhani said he hasn’t accepted the offer due to the current “toxic atmosphere”.

President Trump has firmly denied Rouhani’s claim, though.

Brent crude is 2% lower at $61.47, close to its levels before the Aramco attack two weeks ago.

The process to bring Thomas Cook’s holidaymakers home is continuing today.

By the end of the day, the Civil Aviation Authority expects to have returned another 16,000 people. That means 77,000 customers will have been repatriated since the company went into liquidation on Monday morning.

This isn’t much relief for the 9,000 Thomas Cook staff who are losing their jobs.

But there is some hope there too. Manchester Mayor Andy Burnham says a jobs fair has been organised at Manchester Airport next week:

Over in the eurozone, economic sentiment has tumbled to its lowest level in five years.

The European Commission reports that factories became even more glum this month, as trade war worries hit confidence.

This “substantial deterioration” in industrial confidence dragged its monthly gauge of economic measure down to just 101.7 points from 103.1 in August. That’s the weakest since 2014.

Michael Saunders’ speech has highlight the marked weakening of the UK economy over recent quarters, says Fiona Cincotta of City Index.

She points out that Brexit uncertainty will linger for a long time, so the BoE will be cautious about risking higher interest rates.

Even if the UK did manage to pull the rabbit out the bag and leave the EU with a deal, the elevated levels of uncertainty are unlikely to end there. Uncertainty over future trade agreements with the EU and other countries could leave companies in the lurch and unsure how to prepare for the different possible outcomes of those trade agreements.

The other scenario, that Brexit is once again extended, would also mean continued uncertainty over the future. As BoE Governor Mark Carney pointed out earlier this month, this scenario could also lead to a rate cut.

The Bank of England is right to keep interest rates low, argues Artur Baluszynski, Head of Research at Henderson Rowe.

Even if we avoid a no-deal Brexit, the last three years have done enough damage to the UK economy to warrant a ‘lower for longer’ approach to interest rates.

With a short average fixed-term period on their mortgages, UK households are very sensitive to any hikes in interest rates so unless we experience a currency crisis, the Bank of England should continue to keep the ‘cost of money’ reasonably low.”

Here’s another chart from the Saunders speech, showing the drop in business investment since the Brexit vote:

A no-deal Brexit could be very bad news for rural businesses, with fears that one in four could go bust.

Our environment correspondent Fiona Harvey explains:

Farmers are particularly vulnerable to a no-deal Brexit because tariffs would be levied on exports, imports of cheap food could flood the market, and because decisions must be made now which will have an impact for the next year. Arable farmers are putting crops in the ground now for spring, and livestock farmers are preparing to breed sheep and other livestock for next year.

Tim Breitmeyer, president of the Country Land and Business Association, said farms and the rural businesses that rely on them were not in a position to absorb the shock of Brexit, and estimates suggested a large number would be in danger.

Sebastien Clements, currency analyst at OFX, says Michael Saunders’ dovish speech has given the pound a jolt:

“Sterling had a rude awakening this morning, tumbling downwards after BoE member Saunders’ comments on the future of the British economy soured market sentiment.

“Saunders considers current monetary policy inadequate, and claims the BoE could conceivably cut rates, even if a no-deal Brexit is avoided.

“In a period of sustained market fickleness, we can expect the pound to reposition itself once further Brexit announcements are made.”

Michael Saunders is now taking questions from business people at the Barnsley & Rotherham Chamber of Commerce, having given his speech on the ‘shifting balance of risks’ created by Brexit uncertainty.

Saunders says he’s not a fan of negative interest rates, as they weaken the banking sector and threaten financial stability (Reuters reports).

He reckons the floor of UK interest rates is “close to zero”, but “marginally positive”. Bank rate is currently 0.75%, having hit a record low of 0.25% after the 2016 EU referendum.

He also says that the Bank could launch further asset purchases (ie, restart its QE programme), if rates hit rock bottom.

He also argues that the UK economy would be in its best position for several decades, if it wasn’t for Brexit uncertainty.

Bloomberg’s Lucy Meakin has more details:

Michael Saunders helpfully put the three key points from his speech at the top, presumably to make sure we didn’t miss them.

They are:

• With persistently high Brexit uncertainties and softer global growth, the UK economy has weakened markedly in recent quarters, opening up a modest amount of spare capacity.
• The economy could follow very different paths depending on Brexit developments. But in my view, even assuming that the UK avoids a no-deal Brexit, persistently high Brexit uncertainties seem likely to continue to depress UK growth below potential for some time, especially if global growth remains disappointing.
• In such a scenario – not a no-deal Brexit, but persistently high uncertainty – it probably will be appropriate to maintain an expansionary monetary policy stance and perhaps to loosen further. Of course, the monetary policy response to Brexit developments will also take into account other factors including, in particular, changes in the exchange rate and fiscal policy.

Chipmaker Micron has added to the gloom, by issuing disappointing profit guidance last night.

It blamed trade war tensions, and weaknesses in the global economy.

Micron also warned that sanctions on China’s Huawei are hurting business.

“We have applied for licenses with the U.S. Department of Commerce that would allow us to ship additional products, but there have been no decisions on those licenses to date.”

Worries about China’s economy have knocked the oil price.

Brent crude has fallen nearly 1% today to $62.22 per barrel.

Most Asia-Pacific stock markets fell into the red today, with Japan down 1.1% and South Korea losing 1.3%.

The fall in Chinese factory profits was one factor, but there’s also plenty of political anxiety.

The impeachment probe into Donald Trump’s conversations with the president of Ukraine is a particular worry for the markets, especially after a leaked conversation showed the president comparing the whistle-blower to a spy.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, says the markets are vulnerable to the next tweet from the White House.

The market’s destiny is at Donald Trump’s fingertips. A single tweet from Donald Trump could send equities rallying, as it could shatter the market sentiment. And Trump’s next move is anybody’s guess.

Jeffrey Halley of Oanda believes the inquiry will loom over us for a while:

“The impeachment of Trump will now become a drawn-out saga that feels like annoying supermarket music.”