November 20th – The BESA Times

Twenty-seventh Edition - Sunday, November 20th

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

 

Notable Headlines

To the surprise of many, US shares rose for the second week since Donald Trump sealed his presidential election victory, however they lost some momentum as they neared record-high levels. On the other hand, the rally for the US dollar accelerated, which made large gains against the euro, Japanese yen and the Australian dollar, enabling the dollar index to head for its biggest weekly gain in a year.


Negative results of the upcoming Italy’s constitutional referendum could definitely hinder Premier Renzi’s political future. As the final rush of public opinion polls showed, voters are leaning toward turning down the constitutional reforms. From the four surveys which were published on Friday all showed the “No” camp to be in the lead, reinforcing a trend that has been predominant for several weeks.


Mr. Trump’s victory in this month’s US presidential election has upended the Obama administration’s plans for a Trans-Pacific Partnership with Japan and ten other countries and, at the very same time, opened the door to Chinese rivals. Pacific Rim leaders pledged, during the last week, to resist a new wave of protectionism as US President-elect loomed over the opening of the 21-country Asia-Pacific Co-operation summit. It was emphasized by many, that any new surge in protectionism would only hinder efforts to get the global economy out of its current low-growth rut.

 

What to remember of last week’s news?

EU leaders, accompanied by the US President Barack Obama, agreed on Friday to keep the economic sanctions imposed on Russia over the Ukraine crisis as they put on a show of transatlantic unity on the US leader’s farewell trip to Europe. The agreement came with the support of Mr. Renzi, who has previously questioned the sanctions regime.


Facebook announced that the board has just approved the share buyback which is planned to commence in the first quarter of 2017. What is more surprising, the company unveiled that they will repurchase up to $6bn of its stocks which was followed by a sharp fall in the stock price, as it warned investors that revenue growth could stagnant next year.


 

Understand in pictures…

It gets more and more popular for the companies in the US to carry out a buyback, i.e. to purchase its outstanding shares in order to reduce the number of its stocks available on the open market. But is it always a good idea, especially if the operation is performed using the firms cash? Here is a concise explanation by Financial Times of how illusory the operation may be:


 

A week in the financial markets

 

Our Homemade Article

Algorithms & Commodities - A Perilous Duo

by Sergiusz Nowak for BESA

 

What to expect for next week?

Even though The Federal Reserve representatives said in November that they will wait for “some further evidence” before raising interest rates the action may take place in the nearest future as, since then, US retail sales, GDP and labor market have all come in strong. What is more, Ms Yellen delivered remarks this past week, during a testimony before the Joint Economic Committee, and stated that an increase in short-term interest rates could “become appropriately relatively soon”. Additionally, Bill Dudley, New York FED president, said on Friday that inflation expectations “certainly seem to be well-anchored”, helping to cement expectations for a rate rise during the following FED & FOMC meeting.

 

Did you know?

Tesla sealed a $2bn SolarCity deal and formally moved beyond vehicles in order to became a clean-energy company. The deal itself is estimated to integrate the producer of all-electric cars and batteries with the installer of rooftop solar panels. The situation is definitely a win for Musk’s vision of Tesla operating as a one-stop shopping for consumers eager to became independent on fossil fuels. Nevertheless, the task of integrating two companies that have a track of fleeting profits and frequent fundraising needs won’t be effortless.

 

WRITTEN BY KACPER ŻYTKOWICZ FOR THE BESA RESEARCH TEAM

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

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#DonaldTrump #USElection #Italy #TransPacificPartnership #Russia #Commodities #FederalReserve #JanetYellen

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