Friday, August 25
WILL HE SIGNAL?
The EU’s top banker speaks at Jackson Hole amid QE drawdown
US and EU central bank chiefs will deliver closely watched speeches at a gathering of global financial leaders in Jackson Hole, Wyoming today.
In 2014, European Central Bank President Mario Draghi used the gathering to argue Europe should spend its way out of trouble, rejecting austerity measures and signalling the start of quantitative easing in the Eurozone.
QE involves central banks buying bonds in order to inject cash into the market, thereby lowering interest rates, boosting inflation and (hopefully) stimulating spending. Such programs were instituted in the US following the 2008 financial crisis. After spending some $4.5 trillion, the US halted its program in late 2014, but the EU has continued at pace and will have spent $2.4 trillion by years end.
But with a buoyant Eurozone economy—inflation is up from 0.4% to 2.2% since Draghi’s Jackson Hole speech three years ago, while economic growth has doubled—it’s no secret that QE is drawing to a close, probably in a year’s time. This is likely to end an era of cheap loans, risking a market shock.
Investors will watch today for hints of how and when this will be done, although insiders have tamped down expectations of a “big monetary policy speech”.
ALT-RIGHT ON TRIAL
Alleged Charlottesville killer makes court appearance
Today is the second court appearance of James Fields, who was arrested for allegedly driving his car into counter-protestors during the August 12 “Unite the Right” rally, killing one activist.
The deadly clash highlighted a growing schism in American politics that runs far deeper than the traditional partisan divide. The alt-right movement, which many of the Charlottesville protesters align with, is not a not a united political group, but rather a loose coalition of far-right activists.
By supporting Donald Trump’s presidential campaign, the group managed to elevate itself from the status of a fringe movement to a political force. While the President has benefited from this alignment, he also took heavy criticism from Democrats and Republicans alike for not condemning the Charlottesville protesters, who he morally equated with the counter-protestors.
Expect Trump’s position to cause further strife within the Republican Party, jeopardising key proposals such as tax reform or the construction of a wall on the US-Mexico border. Yet, despite these self-inflicted wounds to his agenda, Trump shows little sign of abandoning his alt-right supporters.
HAPPENING ELSEWHERE…
Angola’s election result, truce in Ukraine, Yingluck sentenced
Unofficial results are expected to be released in Angola’s historic election. The ruling MPLA is widely tipped to clinch victory, although the margin is likely to be closer than in 2012. Stay up to date with all the developments in the southern African oil-producer here.
The latest in a long line of ceasefires in Ukraine will go into effect.
Thailand’s former Prime Minister Yingluck Shinawatra is expected to be sentenced for her role in a corrupt rice subsidy scheme. Ms Yingluck is a politically divisive figure who faces up to 10 years in jail. Despite the former PM requesting supporters stay away from the court precinct, small-scale protests and scuffles with security services outside court are likely.
Samsung Chief Jay Y Lee will learn his fate. South Korean prosecutors are seeking a 12-year jail sentence for the powerful billionaire, who stands accused of bribing a confidante of disgraced former President Park Geun-hye. Samsung’s electronics business continues to boom despite Mr Lee’s six-month detention.