Global Financial News Recap for July 31, 2019
French Economy Slows
Despite the 3 year growth trend in France, President Macron struggles to placate protestors as the economy starts to slow. Although he’s been providing tax cuts and benefits to boost consumption, household spending has actually caused this down tick. Reasons they may be saving more is because their fear of unemployment. France’s unemployment rate is at a 10 year low but still double Germany’s. This is surprising as France has been doing better economically than Germany as of late. Furthermore, their national debt is ballooning and approaching the 3% of GDP limit imposed by the EU. The French are in luck though, decreasing bond yields have made it far less costly for debt servicing.
Japanese Interest
These days the Japanese are addressing their monetary policy. They’ve decided to hold their interest rate at a negative .1%, continue to buy government bonds up, and capped the 10 year bond at 0% yield. There is speculation that they’ve decided to not make any major changes till the Fed and ECB make their decisions. Lower interest rates would drive the Yen as foreigners are less inclined to hold dollars. This would hurt Japan because their exports would be more expensive creating less demand.
Trials in Tehran
The former Mayor of Tehran will be executed after murdering his wife. He had a promising future ahead of him with talks of him being a presidential candidate. This is problematic for Iran because many hoped he might lead political reform. Why did he kill her might you ask? Did she burn the Fesenjan? No, she was spying on him for the intelligence service- allegedly. Now there is hope for Mr. Najafi- he could pay off his “ex” wife’s family (which is allowed) or appeal the verdict. Either way, Iran executes the second most people in the world so changes might be slim. Naturally, there are conspiracy theories surrounding the case. Thats what I originally thought, the guy that is going to reform Iran and has a pretty good track record, randomly kills his wife? Ok.
South Africa Unemployment and Bail Out
South Africa’s unemployment rate is rocketing as President Ramaphosa struggles to rein in South Africa’s economy. Almost 30% of people are unemployed and their power company Eskom suffers huge losses. Things look bleak as Ramaphosa promised economic reform during the election and is failing to deliver. Furthermore, the South Africans will need to bail out Eskom which is set to create a national debt of 6% of GDP. This bailout is meant to reset the power monopoly and split the company into more manageable firms. As follows suit, the nation’s credit rating has been rated as junk by most.
Whaaa? Waii A Second
Although the US (team: iPhone) has imposed bans on Huawei cellphones the company has still increased their bottom line. Revenues increased due to an uptick in domestic demand, although it has put this segment in a precarious situation. America’s contention with Huawei’s devices lies in the center of the trade dispute between the US and China. There are fears that the Chinese might be “up to something” in terms of monitoring the US people. President Trump has stated that the US will allow certain components for their phones to be exported to China if they don’t pose any threats. Google and Qualcomm support such a decision- obviously.
Gambling with Visas
Crown Resorts, a large casino in Australia is under heavy scrutiny. There is an investigation underway looking into whether or not the casino was able to convince immigration authorities to give out expedited Visa’s to wealthy Chinese. This isn’t the first piece of drama the business faces. They’ve been accused of hiring travel operators tied to drug dealers to attract wealthy Chinese and also for laundering money. Of course, Crown denied these allegations, has agreed to help in the investigation, and stated it is an attempt to tarnish the company’s reputation. Their shares were down 2% on the news.
Tanzanian… Journalist?
Tanzania is being accused of compromising freedom within the nation’s borders. A freelance journalist has been detained in effort to silent the critic and 2 years ago another journalist also mysteriously disappeared. This “censored” state is becoming more common under the rule of President John Magufuli. His platform was to focus on corruption however, in the process he has been shutting down news outlets, silencing opposing parties and jailing advocates. This is troubling as Tanzania represents one of the strongest democracies in East Africa and is a symbol for the ideology. The Tanzanian government denies that the arrest of this journalist has to do with his commentary but rather his citizenship. Tanzania recently posted a growth in GDP of 7% however, the IMF has questioned the substantiality of this value.
In Other News:
Germany is opposed to monetary easing by the ECB, American markets suffered after Trade talks sour, and Bayer is getting accused of causing more cancer and Hong Kong’s rent prices are coming down. Mexico’s president has vowed to tackle corruption and poverty, the UK will probably cut rates, and the 2nd hand economy is booming in China, and contention between Japan and Korea is opening opportunities for Chinese semiconductors.