Global Financial News Recap for July 29, 2019
Moscow Protests Halted
Over 1400 people were detained this weekend for taking part in a pro democracy protest. This is a clear indicator the Kremlin are not in favor of such demonstrations and are willing to go to great lengths to silence their opposition and even impose violence. Like discussed on the previous pod, the protests are occurring to show distaste towards certain politicians being barred from an upcoming election. Although most of the arrests were only temporary, this is the most in over a decade. President Putin has not made a comment on the events and was away on a submarine excursion over the weekend. Cue the Beatles remix “We all live in oppressive totalitarian state, oppressive totalitarian state.” A follow up on last week’s story where Navelny was arrested for organizing this protest. He suffered “an allergic reaction” while being detained. Maybe it was poison, maybe it was the Borscht.
Investors on the Defensive
Although the S&P has been absolutely crushing it, with gains of 20% alone this year. The best performing sectors are categorized as defensive- real estate, utilities, and consumer staples have lead the market. With such great growth and talks of tariffs, investors are growing apprehensive and cautious. They do not want to be caught off guard as in 2008. These defensive sectors should be bolstered by the expected interest rate cut as historically they’ve have outperformed cyclical stocks under these conditions.
African Voter Fraud
In Malawi, Peter Mutharika has been president for about 2 months. He is accused of rigging the votes and the two opponents are asking for a rerun. If it is to occur, this will be the 2nd time in all of African history where an election has been redone. Malawi is typically peaceful with smooth transitions of power but this year has been different. There have been protests, fires, and conflict with the police. This mirrors what happened in Kenya and when that occurred- they held another election. The hope is that these protest will build on Kenya’s experience and send the message the elections are not to be rigged or there will be consequences. These consequences are the economic instability, Malawi’s currency sputtering, protests, and a nation that remains divided. The opposition who lost has mixed feeling on the events happening- one candidate stating this is just the beginning and the other saying the people should relax. Nevertheless, the court has 24 days to decide.
Pfizer and Mylan Merger
Pfizer has agreed to merge its off patent drug business with Mylan accounting for a combined value of $9.5 Billion. The plan is to spin off a larger generics business which would sell drugs like Lipitor and Viagra. The deal will be all stock and Mylan shareholders will hold just above 40% of this new venture. This deal follows the trend in pharmaceuticals where drug companies sell off or buy other firms as their patents begin to expire. As of late, Mylan’s stock had been struggling and the company received criticism for increasing the prices of epi-pens.
Russian Pipeline Faces Delays
Russia’s Nord Stream 2 gas pipeline is facing hurdles towards its completion. Russia’s plan to pump gas through Europe is facing a roadblock if Denmark doesn’t approve plans for the pipes to go through their water. Most Baltic nations have approved Gazprom’s path but not the Danes . The plan is in place to divert the path around the Ukraine presumably because of the tensions between the two countries.
EIB Development Fund
EIB or the European Investment Bank has proposed a 60 billion Euro investment fund aimed at developing financial systems around the world. This plan goes against the EU’s original plan on how international lending should be handled. The EIB thinks that they will be more effective than national and multilateral rivals and plan on implementing this fund in 18 months. Members of the EU on the other hand remain skeptical. They are the biggest financiers of development projects but have struggled because of the lack of coordination between institutions and banks. It sounds like the issue is who will have the power and say over where money goes. This arm outside the EU; EIB, or will it remain with the EU nations.
In other News:
China’s vehicle sales are plummeting, those fired at Deutsche Bank had their email after being fired, and the Feds are probably going to cut interest rates for the first time in a decade. Hong Kong warns of the negative economic impacts the protests will make, No Deal Brexit Funding Increases, and China’s ICBC is stepping in to help a Hong Kong lender.