“The US Health Care Bill….”

The US Health Care Bill

On Monday Republicans in the US Congress were in chaos after a second attempt to pass a health care bill collapsed as two republican senators did not support the latest version of the bill. President Trump is calling for an outright repeal of Obamacare and others seeking a change in direction toward bipartisanship.  This was a setback for the Republicans despite having control on chambers of Congress and the White House.  Senate Majority Leader Mitch McConnell said in a statement, “Regretfully, it is now apparent that the effort to repeal and immediately replace the failure of Obamacare will not be successful”.  In the US this latest setback was a major blow for Trump who did not manage to win major legislative initiative in the first six months of his tenure.  Furthermore it creates uncertainty for Trump’s agenda of tax reform and infrastructure.    Thirty-two million Americans would lose their health insurance by 2026 if Obamacare is scrapped without an alternative in place according to a report by non partisan Congressional Budget Office, while 17 million will become uninsured next year.  Furthermore, premiums on individual insurance plans would increase by 25 percent next year and double by 2026.  At the meeting Trump said, “We can repeal, but we should repeal and replace, and we should not leave town until this is complete”.  An important moment is when the administration that has threatened to let Obamacare fail is scheduled to make its next monthly subsidy payment to insurers in just two days under the Affordable Care Act (ACA).  These subsidies were created by Obamacare to help low-income people afford to use medical services.

US – Appointment of Lawyer Ty Cobb

The Whitehouse announced the appointment of veteran Washington lawyer Ty Cobb to oversee the legal and media response to the expanding probe into the Russian meddling in the 2016 campaign.

China

Gross domestic product in the second quarter increased by 6.9 percent from a year earlier matching the same expansion in the first quarter and highlights the expansion of the Chinese economy irrespective of policy makers trying to reduce excessive and speculative borrowing leading to a slowdown in money supply growth.  Industrial output rose 7.6 percent in June from a year earlier while fixed-asset investment increased 8.6 percent in the first half of this year.  Furthermore retail sales jumped 11 percent from a year earlier in June.  Consumption contributed 63.4 percent to the growth in GDP in the first half of the year whilst services accounted for 54.1 percent of GDP value.

Japan

The Bank of Japan has announced that it was maintaining its monetary policy decision as it pushed back the projected timing to reach 2 percent inflation for a sixth time. It expects to hit its 2 percent inflation target around the fiscal year in April 2019 a year later than previously projected.  The BOJ asset purchasing of Japanese government bonds has swelled its balance sheet to nearly the same size as Japan’s economy.The central bank raised its growth forecasts slightly for this year and the following year, however, noted in its policy statement that the risks to inflation and growth are downwardly skewed.

UK – Brexit talks Resume

On Monday UK Brexit Secretary David Davis returned to Brussels to resume Brexit talks with the European Union on priority issues including the rights of EU citizens in the UK, and the financial obligations of the UK. The EU has taken the position on the issues to be discussed in particular issues related to citizens’ rights and financial obligations before moving to a future trade arrangement.  The decision taken by Theresa May three months ago to activate the EU’s exit clause means that the UK will leave the bloc with or without a deal in March 2019.

UK

According to the Office for National Statistics the inflation rate fell to 2.6 percent which is the first drop in the annual rate since October. The main contributors to a lower inflation rate are motor fuels and recreation items such as games.  Core inflation which excludes volatile food and energy prices fell to 2.4 percent from 2.6 percent in May.  The pound has fallen 12 percent since the UK voted to leave the European Union and has helped to pick up fuel prices.  On the 3^rd August the Bank of England will announce its next policy.  Governor Mark Carney said that he will be looking at how consumers react to higher price gains in determining whether to support tighter monetary policy.

ECB

In an ECB meeting held on Thursday the governing council repeated that it expects the borrowing costs to remain at current levels for an extended period of time and it is also prepared to increase the size or the duration of the asset-purchase program should the economy take a turn for the worse. The ECB kept the deposit rate at -0.4 percent, and the main refinancing rate at zero.  Furthermore, the commitment to buy Eur 60 billion of debt a month until at least the end of the year was maintained.

Oil

Ecuador which forms part of OPEC has taken the step of increasing production and will not meet the commitment of lowering output by 26,000 barrels a day to 522,000 a day as was agreed with OPEC last year. OPEC and other non-member countries agreed from January 2017 to reduce output by almost 1.8 million barrels a day, reduce global inventories and boost prices.   According to oil minister Carlos Perez, “There’s a need for funds for the fiscal treasury, hence we have taken the decision to gradually increase output.” Considering the size of the global oil market the exit of Ecuador will not have a major impact however, it creates a precedent in the OPEC and could open the door for other perhaps bigger members to follow suite.  Furthermore, there is worry over weakening demand  in China which is the world’s biggest buyer of overseas crude.  There are efforts to cut pollution and drivers turning to alternative modes of transport such as cars fired up by natural gas.

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