EU’s Malmström Against Trump’s Tariffs The European Union is trying to convince the countries Canada, Japan, and Mexico to work together against the aggressive trade policies imposed by US President Donald Trump, according to European Commissioner for Trade Cecilia Malmström today. Malmström further stated that EU is reaching out various countries to form alliances and arrange a trade union who believe in international laws. Last week, the EU announced levying retaliatory tariffs up to €2.8 billion-worth of U.S. exports, which includes peanut butter and motorboats. While Canada, India, Japan, and Mexico will do the same thing. The European Commissioner described Trump’s tariffs on steel and aluminum as “not legitimate” The Swedish Commissioner also cautioned regarding the potential risk towards the global economy. Both the United States and Europe set up the international policy and organizations to govern trade, but the US broke the rules that is why the EU has to take necessary action, Malmström said.
SNB Keeps an Ultra Loose Monetary Policies The Swiss National Bank announced the decision to maintain an ultra-loose monetary policy on Thursday and analysts expectations matched from the survey by Reuters giving a unanimous answer. They reiterated the fragility or exchange rates after the strengthening of the Swiss franc in the past few weeks and began low this year. At the same time, Chairman Thomas Jordan said that it would be too early to raise rates in Switzerland amid low inflation. Another issue is the political uncertainty in Italy which will affect the eurozone in the future and it is important for the central bank to be heedful in this situation, according to an analyst. Forty experts expect the SNB to maintain the target range to be 1.25 percent to minus 0.25 percent in three months on the offered rate of London Interbank, which has been the ongoing target for the past three-and-a-half years. Also, they expect a negative interest rate of 0.75 percent deposits to be sustained where the commercial bank held a certain value as one of the important tools used by the bank. Changes in the LIBOR target range is anticipated to happen soonest at the end of the year based on the UBS, while the median consensus deems to set at the end of next year. Analyst of Credit Suisse initially thought the central bank to raise their rates as early as 2019 based on the economic strength of Switzerland, with a forecast growth of 2.2 percent this year. The Global Head of Investment Strategy & Research at Credit Suisse Group AG, Nannette Hechler-Fayd’herbe said, “Our base case scenario is where the ECB is considering a first interest rate increase themselves by mid-2019, and the SNB could move a quarter before.” Connoting the reaffirmation of central bank’s decision. However, she added that these two would move together as they are ‘economically interlinked’. Her expectation is a gradual increase of rates until it reached around 1.20 against the euro in a year.
France’s Economic Growth Sharp Decline in 2018 The economy of France dropped from 2.3 percent to 1.7 percent this year, according to the forecast of National statistics, which is another financial problem of President Emmanuel Macron in reducing costs of the government. Macron’s administration aims to reduce spending and maintain the deficit targets of the European Union with 2.0 percent target growth for 2018. Growth has been steady and there are no particular concerns, remarked by Finance Minister Bruno Le Maire on Monday. However, statistics agency through that the government would fail to meet the target as it would be pulled lower by a strong euro and increasing oil prices as some of the influential factors. Gross Domestic Product increased by 0.3 percent in the second quarter, higher than the previous quarter’s rate of 0.2 percent. Further increased by 0.4 percent in both the remaining two factors in twelve months with 1.7 percent. The Central bank of France revised lower their target growth of 1.8 percent in a year, following a bright year in 2017. It has changed as if covered by clouds in France and the eurozone as described by the head of Insee's economic outlook division Frederic Tallet. This includes external factors over which the nation has less control such as global trade war, higher costs of oil prices, a strong euro, as well as, political uncertainties in Europe, notwithstanding the new far right-eurosceptic coalition in power in Italy. Moreover, domestic concerns including sluggish household consumption and nearly three months of unabating train strikes that will likely bring down the second-quarter growth by 0.1 percentage points. The forecast says that the corporate investment will slow down from 4.4 percent to 3.1 percent over the year, while household investment would decline from 5.6 percent in 2017 to 1.6 percent. On a brighter side, good progress was seen on the trade and unemployment concerns. Unemployment will only decline slightly which is currently twice the value of Germany or Britain. The forecast rate is 8.8 percent at the end of the year from 9.0 9.0 percent at the end of last year. A slow start of exports in 2018 is expected to change in the second quarter with the help of large demand in the aviation and shipbuilding sectors, according to the agency. On the other hand, households will gain from the reduction in both of the residency and payroll taxes.
08.11. Gold shows worst indicators in two years Gold prices continue to show the worst performance over the past two years, responding to positive news on the settlement of trade differences between the US and China. Today, gold futures for December delivery fell to $1,457.10 per troy ounce, plummeting from the $1,493 area. Such lows were the biggest loss since 2017. The pressure on the precious metal was exerted by news about the mutual abolition of US and Chinese duties. The elimination of duties is one of the main conditions for concluding the first stage of a trade deal. Success in negotiations supports the full range of risky assets, and gold, as a rule, moves in the opposite direction from risk. Additional pressure on gold was exerted by the news that the People's Bank of China, being a constant accumulator of gold bullion, was not able to replenish its reserves again in October.
11.11. Oman believes non-OPEC will extend the deal to reduce oil production Oman’s energy minister Mohammed bin Hamad al-Rumhy said today, that OPEC and non-OPEC producers will probably extend a deal to limit crude supply, but the oil production will be kept at the current level (1.2 million barrels per day). The minister also noted, that oil demand was improving lately as trade tensions soften and that Oman was satisfied with current oil prices. The Organization of Petroleum Exporting Countries (OPEC), Russia and other allies have agreed since January to reduce oil production by 1.2 million barrels per day to maintain the market. Nowadays the experts see signs of improvement in the situation with balance of demand and supply in the oil market, fear of recession is getting lower, and optimistic signals about a trade agreement between the US and China make unnecessary the further reducing measures.
12.11. The world’s largest trade deal could be signed in 2020 After more than 6 years of negotiations, a group of 15 Asia-Pacific countries is going to sign the the world’s largest trade agreement in 2020. The deal is called Regional Comprehensive Economic Partnership (RCEP) and it will involve all 10 countries from the Association of Southeast Asian Nations (ASEAN) bloc and five of its major trading partners: Australia, China, Japan, New Zealand and South Korea. The United States are not to be the joiner to the RCEP. Initially India planned to join the mega-deal, but later decided to abstain from participation in trade pact over concerns that it would hurt domestic producers. In any case, the 15 member-countries make up close to one-third of the world population and global gross domestic product. So, the uniting within the RCEP would boost trade throughout the group by reducing tariffs, standardizing customs rules and procedures and expanding market access, especially among countries that have not concluded trade agreements.
13.11. The results of D. Trump’s speech at the Economic Club of New York Yesterday in a speech to the Economic Club of New York US President Donald Trump announced the «imminent» prospects of completing the first phase of the trade deal with China, but did not provide any new details about the talks. The president’s speech disappointed investors, as they awaited any important political statements to be made. But Trump didn’t announce the place and date of signing a trade deal with Chinese President Xi Jinping, as it was expected before. Instead of this American president threaten to «very substantially» raise tariffs on Chinese goods if China does not make a deal with the United States. Along with this Trump noted, that the US would only accept the deal if it served the interests of his country, American employees and companies. The biggest part of president’s speech was devoted to success of White House administration. Trump said his staff had worked hard to bolster the economy despite of «too many interest rate hikes by the Federal Reserve».
19.11. Global stocks hit two-year highs Today world stocks reached two-year highs, as investors still believe that the US and China will be able to close a deal and put an end to a destructive trade war. The two largest economies in the world are negotiating a deal, which must end the 18-month trade conflict that shook global markets, but at the same time Washington is intending to introduce additional duties on Chinese goods on December 15. Despite the lack of clarity on the progress of the talks, investors are encouraged by the growing hopes to reduce recession risks. Moreover, monetary easing by large central banks, such as China, has also helped to strengthen investors sentiment towards stocks. Thereby, the global MSCI index, which tracks stocks in 47 countries, added 0.1%, reaching the highest level since last January. European stocks also rose: Euro STOXX 600 added 0.4%, peaking since July 2015. Indices in Frankfurt (GDAXI) and London (FTSE) rose 0.4% and 0.5%, respectively. Futures on Wall Street (ESc1) also showed a positive start, adding 0.2%.
20.11. Trump says China tariffs will go «even higher» without deal On Wednesday, American futures fell after US President Donald Trump again threatened to increase duties on Chinese goods if the parties did not sign a trade deal in the near future. «If we don’t make a deal with China on our terms, I will raise the tariffs even higher», – Trump told reporters at the meeting in the White House. Trump’s message frightened investors and made them turn to defensive assets. Moreover the most of US futures showed decline. In particular, the Nasdaq 100 index fell 41 points or 0.5%, Dow futures lost 103 points or 0.4%, and S&P 500 futures fell 10 points or 0.4%. Urban Outfitters Inc shares fell 16.1%, Pacific Gas lost 4.7% at the premarket, while Micron shares declined by 1.3%.
21.11. Russia expects Nord Stream 2 to begin operations in mid-2020 Deputy Prime Minister Dmitry Kozak said that Russia’s Nord Stream-2 gas pipeline is expected to begin operations in mid-2020, despite opposition from some European countries and the United States. The States affirm that the gas project will increase Europe’s dependence on Russian gas, which runs counter to the interests of the White House. As a result, the United States were putting pressure on European countries to slow down the Russian project. For example, Denmark issued a permit to build a gas pipeline in the country's exclusive economic zone only at the end of October. Earlier, the Russian president called on the Danish authorities not to succumb to pressure from the United States and to defend their sovereignty. Recall that Nord Stream-2 will run along the bottom of the Baltic Sea from the coast of Russia to the coast of Germany. The throughput of the pipe is 55 billion cubic meters of gas per year. The project cost is estimated at 10 billion euros.
