Global Financial News Recap for August 5, 2019
This Little Piggy Went to the Doctor
Swine flu is spreading throughout Europe like wild fire. This threatens the pork industry there and poses great economic risk. The outbreak has been growing in Romania and if infected, causes the pigs to die. Good news is that it isn’t harmful to humans. This virus originates in Africa and has spread to Asia as well where it is wreaking havoc. The goal now is to prevent the virus from spreading from Eastern Europe to the major producers: Germany, France and the Netherlands. Ways the EU is tackling the issue is by increasing border security, raising awareness, and culling the infected pigs.
Bracing for Brexit
As a no deal Brexit is looming, the EU is advising businesses and specifically financial services to ready themselves for the British exit. The EU has already taken initiatives to curb financial threats and set up legislation. A major threat for EU businesses is that they might be unable to use UK based clearing houses after a temporary extension expires. This would cause firms to see higher costs and less ability to hedge.
Less Bonuses at Barclays
In an effort to achieve profitability targets, Barclays has slashed their bonus pay out by 23%. This will mean that their bankers in London and NYC will see less year end incentives. Bonuses have been a hot topic at Barclays where the old CEO left due to his opinions on the cuts and profitability. An issue they firm is that if they cut their bonuses too much, then top talent will leave. As things stand now, with the cuts, the bank is riding on the fact that the tough job market will keep staff there.
Buffett of Money
Profits at Berkshire Hathaway are up 17%, I think Warren might treat himself to two big macs or whatever he gets at McDonalds. With this bottom line jump, Berkshire’s cash pile is at $122 billion. When asked about it, Warren said that company values are sky high and thats why the firm hasn’t made any acquisitions. Investors have voiced their frustrations with this strategy but I personally think that they are being smart.
Trade War to Continue
The market has been hit hard in the last couple of days. First, the interest cut and now growing tensions between the US and China. The increased tariffs were in an effort to expedite China’s cooperation and we will see how they respond this week. Two areas that are moving ahead are intellectual property and industrial policy. The US hopes that their tactics will strong arm the Chinese in a way, China’s economy has slowed down to a pace not seen in 30 years. In response, China’s has made efforts to stimulate the economy with tax cuts and increased infrastructure spending. If things go on, stimulus might increase causing the RMB to depreciate against the dollar. It is an escalating situation that is hurting manufacturers and consumers in both countries, hopefully a resolution will be reached soon.
Deforestation in Brazil
President Bolsonaro is under scrutiny for his attention to the environment. Since being elected, the nation has seen a forest the size of Luxembourg be destroyed. Those upset are the indigenous people, land grabbers, and environmentalists. The Amazon rainforest plays a crucial role in regulating carbon dioxide levels and as those sky rocket it is best to keep this natural regulator around. Bolsanaro has threatened to leave the Paris Climate accord and argued the validity of the statistics showing the area lost. I believe he isn’t too keen on maintaining the environment due to the economic benefits and businesses that would benefit from this razed land.
Hong Kong Strikes
Things are escalating in Hong Kong. Before, there were a small amount of protests going on. Now, there is a general strike. All industries will be involved and it is in effort to showcase the working people’s discontent with the government. Remember, this all started with an extradition bill and now has morphed into calls for political and police reform. Exact numbers for those attending are unknown but publicity for the event can be seen throughout the city. Not only are the protests drawing attention, they are causing economic disruption with some analysts reducing their forecasts for growth.
In other News:
The US saw two deadly mass shootings this weekends, talks of a Renault merger are back into talks, and Kristalina Georgiva is a favorite for the IMF nomination. Crude oil prices are under pressure, you’ll be able to track your vaping with the new Juul, and the China and US are competing for India’s digital payment market.