“Donald Trump’s Meeting with Vladimir Putin …”

Donald Trump’s Meeting With Vladimir Putin

On Monday Donald Trump met Vladimir Putin in Helsinki, Finland to confront him over the meddling in the 2016 election. Amongst the topics that were mentioned for discussion included listing trade, the military, nuclear weapons and China. The special prosecutor investigating allegations that Russia interfered to help Trump win the 2016 presidential election indicated 12 Russians on Friday for stealing Democratic Party documents. Russia denies interfering in the US presidential election. US lawmakers from both parties criticised President Donald Trump for failing to issue a stern warning to President Vladimir Putin about meddling in American elections, calling the message of Trump to Putin a weak and missed opportunity. Vladimir Putin on Thursday accused forces in the US of trying to undermine the success of his first summit with US President Trump, however, he said the leaders had begun to improve US-Russia ties anyway. Speaking to Russian diplomats from around the world Putin said that the summit was overall successful and led to some agreements. The nature of the agreements were not disclosed.

Donald Trump In The UK

Donald Trump made his first visit to the UK since he became US president and attacked the Brexit policy. In an interview with the Sun newspaper the president said that the prime minister’s plans for a soft exit from the European Union would likely end hopes of a trade deal with the US.

NATO Summit

Donald Trump did not win the concession when he asked his partners to increase their share of NATO military spending. French President Emmanuel Macron said the allies simply reaffirmed the 2 percent of gross domestic product target which was agreed in 2014.

US Credit Market Fires Warning About Recession

The US economy still remains healthy in terms of low unemployment, strong exports, a resilient housing market and sky-high consumer and business confidence. There are however, concerns amongst investors about the escalating global trade tensions. Inflation in the US remains low, removing the pricing power of businesses while benchmark interest rates are rising and the federal deficit is ballooning after massive tax cut revenues. The risk premiums on investment-grade corporate bonds over comparable Treasuries have been rising since February. These premiums are getting the attention of some fund managers and analysts. Investors are watching for signs of whether the end is near for the second longest US expansion. The corporate bond market has grown into the $9 trillion. Some are concerned that the yield curve has flattened, with yields on long-term bonds getting close to those of short-term government debt. A situation where a curve inverts is when long-term yields go below those of short-term debt, which is seen as the most reliable indicator of a recession. Although wider credit spreads and a flattening yield curve are red flags, some fund managers reckon that a solid US economy and a cautious Federal Reserve should keep a recession away for at least another year.

US Retail Sales

US retail sales rose solidly in June as households boosted purchases of automobiles and a range of other goods, placing high expectations for robust economic growth in the second quarter. According to Fed Chairman Jerome Powell, “over the first half of this year, overall economic activity appears to have expanded at a solid pace”. The US central bank raised interest rates in June for the second time this year and has two more rate hikes in the pipeline by the end of 2018. The Commerce department said on Monday, that retail sales increased 0.5 percent last month. Data for May was revised to show sales rising 1.3 percent, the biggest increase since September 2017, instead of the previously reported 0.8 percent gain. Meanwhile, excluding automobiles, gasoline, building materials and food services, retail sales were unchanged. Consumer spending that accounts for more than two-thirds of US economic activity slowed in January to March, growing at its slowest pace in nearly five years. In addition to the solid retail sales data, a sharp narrowing of the trade deficit in April and May has created expectations of a strong GDP reading for the second quarter. However, the trade war that the US has with other partners amongst which are China, Canada, Mexico and the European Union are starting to have an impact on both consumer and business confidence.

EU Pushes China On Trade

On Monday European Commission President Jean-Claude Juncker said that China could open its economy if it wished with the European Union calling on countries to avoid a trade war although pressure is increasing on Beijing over its industrial policies. The Chinese Premier Li Keqiang stressed the need to uphold free trade and multilateralism as the United States and China is evolving in a trade dispute. As President Trump warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods, to prevent Beijing’s trade abuses. China has meanwhile promised to retaliate at each step. Being long accused of protectionist tactics that makes it a difficult place for foreign firms, China is trying to reverse that narrative amid the trade wars by approving huge investments such as a $10-billion petrochemicals project by Germany’s BASF. According to Juncker that move showed that “if China wishes to open up it can do so. It knows how to open up”. At the business event the Chinese Premier invited executives from European companies operating in China to share their problems. Amongst the companies that put forward their complaints were Airbus and BMW. Furthermore, Li asked companies to tell him about complaints related to the “theft of intellectual property” in order for him to take “great measures”. Tusk urged China, the United States and other countries to avoid trade wars and to reform the World trade Organisation, equipping it to combat forced technology transfers and government subsidies, and complaints underpinning Trump’s tariffs.

Yields In Europe

Most government yields in the Eurozone declined on Friday from complaints about the escalating trade tensions between major economies. According to analysts as trade activity thins over the summer months, investors are either parking their cash in safe-haven markets such as Germany or taking advantage of higher yielding bonds such as Italy. On Friday, bond yields in higher rated Eurozone issuers such as Germany, France and the Netherlands fell 1-2 basis points. Germany’s Benchmark Bund yield was 0.32 percent heading towards recent six-week lows. Meanwhile Italian bond yields were 6 to 9 basis points higher across the curve recovering from this week’s fall. Reassuring comments from Italian politicians on the euro, the European Central Bank’s promise to keep rates low for some time and a slowdown in bond supply in the weeks ahead have increased Italian bonds this week pushing yields down. However, this morning, Italian bonds went through a sell-off after a report emerged about a rift between the leaders of the populist coalition government and Finance Minister Giovanni Tria leading to speculation he may be forced to step down. The bond yields remained high even after the country’s treasury office called the claims “pure invention”.

Warning From IMF

On Monday the International Monetary Fund warned that the escalating and sustained trade conflicts following the actions by the US over tariffs could threaten to derail economic recovery and depress medium-term growth prospects. It further added that it could reduce annual global economic output by 0.5 percent from projections for 2020, that translates to nearly $500 billion in lost annual output.

China Economy

The Chinese economy grew 6.7 percent in the second quarter from a year earlier, the slowest pace since 2016. Although the headline number is in line with expectations, some of the underlying data such as individual output was weaker than projected. The continued efforts of deleveraging, a slowdown in investment growth and the risks arising from the trade war with the US means headwinds for the second largest economy. Concerns are growing about the prospects for a global expansion.

Malta: Harmonised Index Of Consumer Prices (HICP), June 2018

In June 2018, the annual rate of inflation as measured by the Harmonised Index of Consumer Prices was 2 percent up from 1.7 percent in May 2018. The Harmonised Index of Consumer Prices measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. The HICP is based on rules as specified in a series of European Union Regulations as developed by Eurostat in conjunction with the EU Member States. The largest upward impact on annual inflation was measured in the Restaurants and Hotels Index, while the largest downward impact was recorded in the Recreation and Culture Index.

Malta: Economic Update 2018

The Central Bank of Malta has issued its latest Economic Update based on information available up to 16th July 2018. In June the Bank’s Business Conditions Index (BCI) remained unchanged over the previous month, and continued to suggest above-average conditions. Economic sentiment edged down slightly, as lower sentiment within the construction, services and retail sectors offset higher confidence within industry and among consumers. In May, tourism activity continued to grow at a strong pace in annual terms whilst industrial production and retail trade contracted. Labour market conditions remained favourable with the number of unemployed declining further and the unemployment rate falling to a new historical low. The annual rate of change of Maltese residents’ deposits and the annual growth in credit to residents accelerated to 7.7% and 2.4% respectively. The cash-based Consolidated Fund recorded a surplus in contrast to a deficit in May 2017.

Malta Stock Exchange And Blockchain-based Exchange

The Malta Stock Exchange yesterday announced it was setting up a subsidiary geared towards creating a block-chain-based exchange. In a press conference Malta Stock Exchange chairman Joseph Portelli said the new subsidiary known as MSX would be one of the most forward-looking and innovative exchanges in the world. He further added that MSX would be the world’s first in blockchain and cryptocurrency exchanges. The aim is to create a regulated and decentralised global stock exchange for listing and trading tokenised securities alongside crypto-assets. Furthermore, Finance Minister Edward Scicluna said that the MSE signed two memoranda of understanding with leading companies in the digital asset and blockchain sector, Neufund and OKEX.

Oil Prices

Oil prices fell on Monday as concerns about supply disruptions eased and Libya ports reopened. Meanwhile market watchers kept an eye on any potential supply increases by Russia and other oil producers. Supply outages in Libya, labour dispute in Norway and unrest in Iraq all helped to push oil prices higher late last week, although prices still fell for a second straight week. According to Russian Energy Minister Alexandek Novak, Russia and other oil producers could raise output by 1 million barrels per day or more if there are shortages in the market. The dispute in Norway was about a Norwegian union for workers on offshore oil and gas drilling rigs that stepped up a six-day strike on Monday that has hit oil output. In Iraq two protestors died on Sunday in clashes with security forces amid anger in southern cities over public services and corruption. Investors are also edgy over the impact the trade dispute between the United States and its big trading partners. Trump showed his dissatisfaction about oil prices being on the high side, and asked OPEC to lower prices.

Google Is Hit With EUR 4.3 billion EU Antitrust Fine

EU antitrust regulators hit Google with a record EUR 4.34 billion fine for using its Android mobile operating system to squeeze out rivals. It represents just over two weeks of revenues for Google parent Alphabet Inc and would barely dent its EUR 88.3 billion reserves. It could however add to the trade war between Brussels and Washington. Google said it would appeal the fine.

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