November 13th – The BESA Times
Twenty-sixth Edition - Sunday, November 13th
Every week, a complete snapshot of what happened around the world in the past seven days
The 2016 United States Presidential Election concluded this week with Donald Trump of the Republican Party being voted President-elect with 290 electoral college votes over main rival Hillary Clinton of the Democratic Party with 228, to the surprise of most mainstream media outlets. The Republican Party also got the majority in the House and Senate elections. Current President of the United States Barrack Obama congratulated Donald Trump and met with him to discuss a smooth transition of cabinets. On the other side of the globe, Russia’s Vladimir Putin announced that Russia wants and is ready to restore fully fledged relations with the United State.
The global economy reacted in interesting ways since the election results. The dollar surged the most since the Brexit results, the S&P 500 and Dow Jones indexes increased by 1.3% and 4.8% respectively compared to the previous week as of November 11, Asian currencies strongly declined in concern of capital outflows with the Chinese yuan hitting a 6 year low, along with gold hitting a 5 month low by decreasing more than 6% this week.
U.S. Treasury yields went through a big repricing, with yields reaching their highest four-day advances in 6 months, 3 years and 7 years for the 2-year, 10-year and 30-year bonds respectively, amid anticipations of Trump’s lowering of taxes and increasing of spending to lead America further into debt.
In other news, India’s Narendra Modi declared the banning of some high-denomination rupee notes which have caused bank runs and ATMs across India to run dry. Reuters reported that over half of India’s 202,000 ATMs were shut on Friday and those that operated quickly ran out of new notes.
What to remember of last week's news?
The European Union had been considering changing financial market access rules, particularly equivalency, which as a result could harm the U.K. in negotiating a favourable deal with regards to Brexit.
China intervened and prevented two Hong Kong lawmakers from taking seat after they favoured separatism and independence of Hong Kong during their taking of oath, on the grounds that it went against the “one country – two systems” configuration currently in place. Chinese officials severely discouraged similar behaviour in the future while protests sparked across Hong Kong. United States officials frowned upon the intervention
Understand in pictures...
What does it mean to “beat the market”? How does it relate to information asymmetries? How does the pricing system relate to information?
A week in the financial markets
Our Homemade Article
What to expect for next week?
In the process of transitioning governments, now President-elect of the United States Donald Trump will soon announce the full composition of his executive cabinet team, the suggestions for which have been assigned mainly to his Vice-President-elect Mike Pence. It will be interesting to see whether Janet Yellen will remain the head of the Federal Reserve.
The results of the election are expected to lead to increased volatility both in the short run as in the long run, so keep your eyes open on big market movements.
Did you know?
Public Choice economists have applied economic reasoning to political science and, among other topics, have argued that market failure applies no differently in the services government provides, termed government failure, and that more often than not governments attempts to correct market failures are less effective than the corrections of the market itself.
WRITTEN BY YIANNIS KONTINOPOULOS THE BESA RESEARCH TEAM
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