UK prime minister Theresa May has said Britain will seek to lead the world in free trade after the Brexit vote as she sought to reassure the global economic elite her government would remain a force for liberalisation and globalisation after the EU referendum.
Addressing the annual World Economic Forum in Davos this morning, Ms May said Britain would “step up to a new leadership role as the strongest, most forceful advocate for free markets and free trade anywhere in the world” as it seeks to strike new trade agreements after the referendum.
Despite seeking to align herself with the Davos crowd, the prime minister also used her speech to rail against a “cult of individualism”, quoting conservative British philosopher Edmund Burke in favouring a pace of change that would still “conserve”, in remarks delivered to a subdued main congress hall.
Ms May said her government wanted the EU project to succeed reassuring the UK’s European counterparts they had no reason to feel Britain had “turned their back on them”.
She added the Brexit vote was a decision to “restore our parliamentary democracy and national self-determination. A vote to take control and make decisions for ourselves”.
There’s been lots of people asking about the time of May’s speech tomorrow
Livesquawk have just said that there’s a touted time of 11.45 GMT for this big speech of hers. That’s come from CNBC they say, so not taken for granted.
There’s a lot of furore about what she will say in this speech so perhaps the market is getting a little ahead of itself.
The speech itself is to an audience of diplomats in London so her comments might not be as detailed as the market expects. They certainly shouldn’t be more detailed than what she would say to parliament, and might even be a repeat of what she’s said previously.
It’s being built up into something big but it has all the potential of not delivering. That would be bad in the market’s eyes but potentially good for the pound, even though still not hearing about her plans is bad, which is bad for the pound but might be read as good. It’s all a mucking fuddle if you ask me.
Livesquawk have been bugging No.10 for a definitive time for the speech but they aren’t playing ball, so we’ll have to be on our toes.
What events and releases will impact trading in the week starting Jan 16th.
ECB interest rate statement. Thursday 7:45 AM ET/1245 GMT. ECB Draghi press conference to follow at 8:30 AM ET/1330 GMT. The ECB will meet next week and announce that rates will remain unchanged. The last meeting the ECB moved increase the types of bonds that could be purchased for QE purposes (read German notes). That included bonds with yields below the -0.4% deposit rate. In addition, they lowered the maturity requirement to one-year from two- years (read German notes). However, they also reduced the amount of QE purchases from 80B Euro to 60B Euro until the end of December. There will be no change in policy, nor change in QE. So the focus will be squarely on the comments from Draghi during his traditional prepared statement and then Q&A. Will he sway more toward the hawkish Germans or keep committed to the the same path..
Bank of Canada rate statement. Wednesday at 10 AM ET/1500 GMT. Press conference at 11:15 AM ET. The bank will also release its quarterly Monetary Policy Report (MPR) at 10 AM ET. Stephen Poloz and Senior Deputy Gov. Carolyn Wilkens will give a statement and hold a press conference. The rate is expected to remain unchanged at 0.5%. In their last MPR, they saw 2017 CPI at 1.9% and core CPI at 1.7%. That was down from earlier projections of 2.1% and 2.0% respectively. For GDP they estimate growth of 2.2% (up from 2.1%).
US CPI/Core CPI. Wednesday at 8:30 AM ET/1330 GMT. The US will release consumer price data for December with expectations for MoM rising by 0.3% (vs. +0.2% last month). The Ex Food and energy is expected to increase by +0.2% (vs +0.2% last). The YoY numbers are expected to rise to 2.1% from 1.7% and 2.2% from 2.1%. The core YoY ended 2015 at 2.1% with the high extending to 2.3% in Feb and again in August
Australia employment change. Wednesday at 7:30 PM ET/Thrusday 0030 GMT. The Australian employment report is expected to show employment change of 10.0K vs 39.1K last month. The gain last month was well above the estimate of 17.5K. The unemployment rate did move higher to 5.7% last month from 5.6%. The estimate is for the rate to remain at 5.7%. Last month full time employment rose by 39.3K. The part time employment fell by -0.2K.
UK Retail sales. Friday at 4:30 AM ET/0930 GMT. The November retail sales in the UK are expected to to dip by -0.1% vs. +0.2% estimate last month. Ex auto fuel a larger -0.4% decline is forecast. The YoY changes are expected to show healthy 7.2% and 7.5% gains respectively.
As 2016 draws to a close, a sense of unease is gripping many commentators as they look ahead. This year brought victories for Brexit and Donald Trump. The outcome of both votes were largely unexpected. What will 2017 bring? The EU is facing three, or even four, elections in major member states. The Netherlands, France, Germany and possibly also Italy will go to the polls. The outcome in all four elections is far from certain at this stage. Indeed, voting behavior seems to have become difficult to predict.
Economic and sociological research points to a number of different factors provoking these recent results. The debate is broadly about whether it is economic issues such as income inequality, cultural issues such as a rejection of equal rights for women, minorities and gay people, or factors relating to citizens’ perceived loss of control over their destiny that has driven people to support populist candidates and causes.
At first sight, the economic factors seem to have played a strong role. The vote for Brexit predominantly came from the countryside, where GDP per capita levels are significantly lower than in the cities. Moreover, income inequality levels are much higher in the United States and the U.K. than in continental Europe. And indeed, one can show that the Brexit vote is significantly affected by regional income inequality though the effect may not be very large.
The second explanation is a rejection of progressive cultural norms. An interesting study by Ingelhart and Norris emphasizes very much this aspect. They offer evidence that the recent protest votes are a cultural backlash against progressive values. And indeed, discourse especially on social media has totally changed. Unfortunately, it seems to have become widely acceptable to talk of white supremacy and engage in racist discourse.
The Bank of Japan revised its economic outlook for the first time in 19 months during the two-day policy meeting that ended Tuesday. But that is apparently the only step the central bank is taking at this time.
“The headwinds seen in the first half of this year have ceased,” BOJ Gov. Haruhiko Kuroda told reporters following the meeting. Markets were riled by heightened concerns directed at emerging economies at the beginning of 2016, only to be shocked in June by Britain’s referendum to exit the European Union. The BOJ was forced to loosen its policy in July, raising its target for exchange-traded fund purchases.
During the second half of 2016, the economic landscape has slowly brightened, beginning with U.S. readings. The Japanese economy has followed suit with increased exports and production. Consumption also recovered from a slump caused by a soft stock market and inclement weather at the beginning of the year.
“Japan’s economy has continued its moderate recovery trend,” the BOJ said in a statement published after the meeting. The central bank had previously qualified that view by highlighting sluggish exports and production.
The US decision to extend 1979 sanctions against Iran for another 10 years violates the nuclear deal struck by Iran with international powers, Iran’s President Hassan Rouhani said on Sunday.
“The path that the US has taken in regard to Iran will lead to a considerable drop in international trust in the American government,” Rouhani was quoted as saying at a meeting with International Atomic Energy Agency (IAEA) Director General Yukiya Amano by Mehr news agency.
He stressed that it was highly significant for all parties to the deal to comply with their commitments, arguing that the US recent decision to prolong Iran Sanctions Act (ISA) for another 10 years clearly violated the Iran nuclear deal.
On July 14, 2015, Iran and the P5+1 group of countries — the United States, Russia, China, France and the United Kingdom plus Germany — signed the Joint Comprehensive Plan of Action (JCPOA), ensuring the peaceful nature of Tehran’s nuclear program in return for the gradual sanctions relief. The US sanctions introduced against Tehran in 1979, however, were not mentioned in the document.
Former finance minister P Chidambram on Tuesday demanded the Reserve Bank of India should make public minutes of its November 8 meeting whose outcome empowered government to scrap specified notes of Rs 500 and Rs 1,000 denominations.
On November 8, the Narendra Modi government in a televised address announced it was abolishing the legal tender status of Rs 1,000 and Rs 5,00 currency notes.
These high value notes comprised a huge 86 per cent of total currency in circulation and the decision has led to severe cash crunch in country causing inconvenience to the citizens.
“RBI should publish the minutes of meeting on Nov 8, let country know who were the directors who attended the meeting,” Chidambaram demands.
The government had banned these specified notes through an executive order instead of passing a legislation in parliament as part of its drive to curb black money and prevent recurrence of fake currency incidents.
According to the RBI Act, 1934, the Central Board of the apex bank takes a call on legal tender, its validity or invaldity, in circulation in country and proposes government accordingly.
Italy and other EU states need to hold referendums on giving up the eurozone common currency, Vice President of Italy’s Chamber of Deputies Luigi Di Maio said Tuesday.
“We should not be taking the decision instead of the citizens, we should give them an opportunity to make the decision on the issue [of rejecting euro] themselves. I hope that it will be possible for the other states of the Eurozone to hold the referendum on euro’s further fate, too,” Di Maio, one of the leaders of the Italy’s opposition Five Star Movement (M5S) party, told RIA Novosti in an interview. The lawmaker stressed that since joining the Eurozone, Italy lost some 25 percent of national wealth. Di Maio added that Germany is the only state, which benefits from the existence of euro, whilst other EU members pretend not to be damaged by the common currency.
Even as the US breaks for Thanksgiving, there is much for investors to consider next week.
Here’s what to watch in the coming days.
The Federal Reserve in November said it would wait for “some further evidence” before raising interest rates. Since then, US labour market, GDP and retail sales data have all come in strong. Investors will now get to parse the minutes of the Fed’s meeting, even with federal fund futures currently implying a 100 per cent chance of a rate rise next month.
Moreover, the minutes of the meeting will be dated as more than a dozen Fed officials have delivered remarks this past week, including Fed chair Janet Yellen. Testifying before the Joint Economic Committee on Thursday, Ms Yellen said that an increase in short-term interest rates could “become appropriate relatively soon”. And on Friday, New York Fed president Bill Dudley said inflation expectations “certainly seem to be” well-anchored, helping cement expectations for a rate rise next month.
“That said, the balance of Committee members in favor of raising rates as soon as the next meeting will be closely watched,” analysts at TD Secirities said. “An overwhelming majority as well as more optimistic views over inflation should help further solidify December rate hike expectations.”