September 25th – The BESA Times


Twentieth Edition - Sunday, September 25th

Every week, a complete snapshot of what happened around the world in the past week

 

Notable Headlines

The Federal Open Market Committee voted 7 to 3 to hold off on raising rates in the September meeting. Fed officials noted the strengthened case for a rate hike but decided to wait for more data to confirm that notion. New language added in the statement suggests the committee is priming markets for a near-term move, which we expect will take place at the December meeting. The housing market dominated the data calendar this week, with housing starts, building permits and existing home sales all coming in softer than expected in August. Tight inventory of available homes continues to grip many U.S. housing markets.


German Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank in the coming year, a German magazine reported. The nation’s biggest lender has lost almost half its market value this year and may face large sanctions from the U.S. Justice Department in a probe tied to mortgage-backed securities.

The Argentine economy recorded a deep downturn in the second quarter battered by a very weak performance from real investment, one of the sectors the new Macri administration was counting on to boost economic growth. Meanwhile, the Brazilian recession deepened in the first month of the third quarter.

The Eurozone showed a better-than-expected manufacturing sector in September, according to the release of the manufacturing PMI number for the month, even as the service sector PMI was slightly weaker than expected.

 

What to remember of last week's news?

Goldman Sachs plans to cut about a quarter of its investment-banking jobs in Asia, excluding Japan, because of a slump in deal-making in the region. That would amount to a cutback of some 75 positions out of the company’s global workforce of about 35,000. Goldman faces its worst Asian ranking in managing stock offerings since 2008, slumping to 11th from second in 2015, according to data compiled by Bloomberg.

Jeremy Corbyn, 67, was re-elected as U.K. Labour Party leader with an increased share of the vote among more than 500,000 party members. That may give him a stronger mandate to unite Labour against Conservative Prime Minister Theresa May as the nation copes with fallout from its Brexit vote in June. The socialist held on to support from rank-and-file Labour voters keen on his “authentic” image and disdain for austerity policies.

President Barack Obama opened the Smithsonian’s National Museum of African American History and Culture, on Washington’s National Mall, with a sweeping address that reminded Americans the nation can move forward “even in the face of unimaginable difficulty.” He spoke as authorities in Charlotte, North Carolina, said they would release videos related to a fatal police shooting of a black man this week that has triggered large protests.

Malaysian billionaire T. Ananda Krishnan, 78, has investment interests ranging from oil and gas to newspapers, and soon he may see his face on a “wanted” poster after an Indian court issued arrest warrants for him and another official at Krishnan-controlled Astro All Asia Networks. At issue is a probe into alleged phone-license corruption. India wants Harvard-educated Krishnan, Malaysia’s fourth-richest person, to face court proceedings.

 

A week in the financial markets

 

Our Homemade Article

SOE Reform in China by Felix Lim for BESA

 

What to expect for next week?

Couple of Central Bank economic indicators to be released next week.


RBA's newly appointed Governor Philip Lowe will speak on Monday, 26th of September on monetary policy. Governor Lowe heads a major economy central bank that hasn't seen a recession in 25 years.


European Central Bank President Mario Draghi will make an Introductory Statement at the Quarterly Hearing before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels, Belgium.


Bank of Japan Governor Haruhiko Kuroda will hold a press conference about monetary policies in Tokyo. Mr Kuroda exercises general control over the Bank's business. He is in charge of the Internal Auditors' Office.

Federal Reserve Chair Janet Yellen will speak at a forum in Kansas City Missouri called "Banking and the Economy: A Forum for Minority Bankers". Dr. Yellen serves as Chairman of the Federal Open Market Committee, the System's principal monetary policy-making body and hints to Federal Reserve monetary policy are expected.

 

WRITTEN BY THE BESA RESEARCH TEAM

PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT

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