Global Financial News Recap for Aug 1, 2019
The EU is Slowing
Economic growth in the European Union is slowing raising questions over monetary policy. Some believe a large stimulus is coming in the form of rate cuts or bond buybacks. The slowdown is evidenced by minimal expansion brought on by weaker global demand. The European Central bank will meet on September 12 to make their decision. Growth as a whole is being slowed by France’s, Spain’s, and Italy’s economy’s. Other reasons are the slowdown in manufacturing due to global trade issues, on a more rosy note: unemployment rates are low.
Tensions continue between the US and China
China is accusing the US and Trump of being pushy during trade talks after Trump said they weren’t being cooperative. Battery salesman, Robert Lightizer, just kidding the US trade rep and Steve Mnuchin finished their meetings in Beijing yesterday. The meeting was fruitless and another attempt will occur in the US in September. Issues of discussion included intellectual property, American agriculture, and of course, the tariffs. Essentially, China doesn’t buy American agricultural products if the American’s don’t buy their industrial products. It seems like things are at a standstill and hopefully the issues get resolved.
Controversy over Eurozone Budget
France’s Europe Minister stands by Macron’s plan to have a common Eurozone budget. Although other EU members are opposed, Amelie (the minister) says that the European commission president agrees as well. Either way the union will need to tackle issues that arise from immigration, Brexit, and climate change. Nations that remain most skeptical of this plan are northern Europeans who might not see the French as the most ambitious. I personally think that there would be benefits if they adopted a common budget and rules pertaining to issues they all face. However, I think that cultural differences among the nations would lead to more issues than benefits.
UBS imposes negative interest rates
Those with more than $2m dollars in savings at UBS will soon be charged a negative interest rates. The rate will be -.75% and is an effort to curb ultra-loose monetary policy in Switzerland. This follows suits with other Swiss banks like Julius Baer and Pictet charing clients as well. Credit Suisse is also evaluating the idea and might also charge wealthy individuals. A way to get around this for them would be to put balances into fiduciary call deposits.
Germany Doesn’t want to go Swimming
Germany is being urged to join the conflict in the Gulf by the US and the UK. It further shows the demand for the nation to step up in global affairs. Despite this, they have elected to focus on de-escalation and diplomatic efforts rather than engagement. Although the French and Germans have agreed that shipping in the gulf must be protected, it seems as if they don’t really want to get involved. Those involved in Germany’s foreign relations and industry have also urged the government to get involved in order to protect their export heavy economy. As is now, it seems that the US will be tasked with handling the issue.
Taiwan and China Drama
The Chinese government has suspended issuance of visas for Chinese people wishing to visit Taiwan. This comes before a major election in Taiwan and may be an effort to influence the outcome. Of the two candidates, one is pro-china and one is pro-independence. Of course, the Chinese would like the pro-China guy to win . Although Taiwan has been independent since 1949, China still deems it to be one of their territories. These travel bans aren’t the first instance as the Chinese did this to Korea in 2017. They view it as a way to take away tourism revenue and hinder the other’s economy.
My Mixtape made it to Siberia
There is a terrible fire running through Siberia. It is so bad that the Russian’s have gotten involved. A forest the size of Belgium is engulfed after extreme heat and bad conditions. Initially, the Russians didn’t seem to concerned and it was only till the pubic demanded they do something that they did. This inferno raises further questions about climate change and how to protect the environment. Russia is in a sticky situation since they export so much oil but have been experiencing these issues. Temperatures in Siberia are far above their averages and the smoke and carbon dioxide from this fire is only making things worse for the ice caps.
In other News:
There’s more cocaine being produced globally, the Fed cut rates, and Alphabet has more cash than Apple now. Mexico almost slipped into a recession, North Korea is firing off missiles, and Silicon Valley is expected to live on.