October 30th – The BESA Times

Twenty-fourth Edition - Sunday, October 30th

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

 

Notable Headlines


The US Economy grew 2.9% for the third quarter of 2016, as reported by the United States Department of Commerce. This constitutes the largest jump in two years and comes as questions as to the pace of the US recovery are underscored by the presidential election. The driver of this growth would appear to be exports which expanded at a 10% annualised rate. The new data will feed speculation of a December rate rise.


The Comprehensive Economic and Trade Agreement, CETA, between the EU and Canada has broken through its recent impasse and is to be signed on October 30. Doubt was cast upon the deal after the Belgian region of Wallonia posed objections. Marathon negotiations led to higher protections for farmers facing new competition from Canadian imports. The revised agreement has its needed unanimous support. Still, the rockiness with which this deal was finalized underscores increased difficulty in executing European trade policy – deals like CETA were once considered very standard.


On Thursday following a two-day policy meeting, ECB Chief Mario Draghi said that no discussion was had on tapering quantitative easing. On this development the Euro slid further, as it has for Q3 so far. Most economists expect stimulus to continue and perhaps even expand until ECB officials reach their target of 2% inflation.


Apple and Microsoft both unveiled new PCs this week (the Macbook Pro and Surface Studio) in what seemed like a revival of innovation in the professional laptop space. Microsoft CEO Satya Nadella emphasized the company’s newfound focus on empowering “builders and makers” with technically adept professional computers and tablets. The highlight of the new Macbook: the Touch Bar, a strip of touch-screen above the keyboard which can perform a range of new functions as well as make old ones quicker.

 

Understand in pictures...

Japan’s central bank has long been very accommodative as the country recovers from an extended deflationary cycle following its famous asset price bubble in the 1980s. Negative interest rates are fresh on the mind to Europeans nowadays, so here is a concise explanation of the Japanese case from the Financial Times: Watch here

 

A week in the financial markets

 

Our Homemade Article

Crude oil prices: at a rebound? by Larissa Valentina Chanduvi Kozlova for BESA

 

What to expect for next week?

Little is yet known of the newest wave of Hilary Clinton Emails made from a private server, which the FBI came upon coincidentally during the investigation of former congressman Anthony Weiner, but the revelation of their existence has played against her on the campaign trail. Donald Trump seized on this development, calling it the “biggest story since Watergate”. The announcement of this re-opening was made by FBI director James Comey, who stated that the significance of the new emails remains unknown. Clinton called for the full release of the evidence obtained from them; “Let’s get it out”, said Clinton, whose campaign has strengthened after a decisive third debate victory. The result of this investigation and the extent of its fallout remains to be seen before election day, November 8th.

The policy board of the Bank of Japan (BOJ) meets on October 30th and November 1st to assess its current yield-control program. While it is expected by the majority of economists that no action will be taken, the meeting will be decisive in gauging the board’s thinking on the current monetary policy focus: targeting interest rates as opposed to controlling the money supply. Japan was one of the first economies to experience negative interest rates and the BOJ still holds commercial bank reserves with negative .1% interest. The current efficacy of this policy will indicate whether the country is on the way to monetary normalcy.

The Basel Committee on Banking Supervision will hold a key meeting in November to decide upon new regulations in Europe. US regulators are calling for heightened supervision and tighter controls in the style of the US banking system, while European banks have pushed back, citing fundamental differences between European and US risk-taking. Facing an environment fraught with bad debt and a profitability squeeze, European officials fear that an increase in reserves would unnecessarily make European banks less competitive and threaten an already-slow European recovery. The results of this meeting will surely affect sentiment about the banking system in Europe.

 

Did you know?

3,800 deaths have been recorded in the Mediterranean this year, making 2016 the deadliest year for migrants on record. As Turkey has toughened its stance on immigration, thus closing the so-called “Balkan route”, smugglers are stepping up cross-ocean operations, often using debilitated and dysfunctional boats. Rescue teams are overworked as the number of weekly operations has skyrocketed, and as the North African political climate remains toxic, there is no end in sight. Southern European countries, especially Italy, are forced to confront this issue disproportionately.

 

WRITTEN BY EVAN OLINER FOR THE BESA RESEARCH TEAM

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

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#USElection #UnitedStates #EuropeanCentralBank #Europe #MarioDraghi #BankofJapan #Japan

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