“Macron’s Visit To The US …..”

Macron’s Visit To The US

In a three day visit to the United States the French President Emmanuel Macron urged the United States to reject narrow nationalism and engage the world.  He said to US law makers that modern economic and security challenges must be a shared responsibility.  On Tuesday French President Emmanuel Macron pushed US President Donald Trump to salvage the Iran nuclear deal.  Trump has criticised the deal harshly.  He is against the nuclear accord between Iran and world powers as he says it does not address Tehran’s rising influence in the Middle East or its ballistic missile program.  He would like to create a new approach that will incorporate other US and European concerns.  Although both leaders pledged to seek stronger measures to contain Iran, Trump did not make any commitments to stay in the 2015 nuclear deal.  He further threatened Tehran with retaliation if it started its nuclear programme.  Macron hopes to leverage his friendship with Trump not only on Iran but to exempt Europe from steel tariffs and protecting the 2016 Paris Climate accord.

Armenia – Protests In The Streets

Tens of thousands of people took the streets in Armenia against the ruling elite and the acting Prime Minister.  Protests reached a higher level when on Monday Serzh Sarksyan, who is the main reason for the fury, resigned as prime minister.

“ERA of Peace”

Kin Jong Un was the first North Korean leader to cross the border to hold talks over his nuclear weapons programs.  He called for more meetings.  Kim made the offer to South Korean President Moon Jae-in as the two met on Friday for the first summit between the rival governments in 11 years.  Kim declared “a new history” and an “era of Peace” while Moon said the “weight on our shoulders is heavy”.  The pair were expected to announce agreements later Friday on plans for formally resolving their 68 year conflict and lessen the dispute.  The meeting which is the third between leaders of the nations since the Korean War and the first since 2007 will go a long way in determining whether Kim can eventually strike a deal with US President Donald Trump.

ECB

The European Central Bank has kept its policy unchanged on Thursday.  With the 19 nations economy expanding for 20 straight quarters and millions of new jobs created the main debate among policy holders is about when the stimulus will be withdrawn.  Although the stimulus has failed to lift inflation, the ECB’s EUR 2.55 trillion bond purchase programme has cut borrowing costs and kick-started growth.  With the decision taken on Thursday the bond purchases program by the ECB will continue at 30 billion euros a month at least until the end of September, or beyond if needed to prop up inflation.  The bank’s primary interest rate tool, the deposit rate, will remain at -0.40 percent while the main refinancing rate will be unchanged at 0 percent.

Europe’s Business Climate

The business morale of the three biggest economies, Germany, France and Italy has deteriorated in April as a stronger currency and capacity constraints limited output.  Whilst the Eurozone was one of the best performers among major economies last year, surveys suggest that growth has steadily slowed since January on fears of trade war between China and the US and the strength of the Euro.   According to the Ifo Institute German business confidence fell for a fifth consecutive month in April to reach the lowest level in more than a year, suggesting the economy is losing some steam.  The Munich based Ifo institute said that its new business climate index, which for the first time included responses from the services sector, fell to 102.1 from 103.3 in March.  This was the lowest reading since March 2017.  Likewise, separate data from the national statistics of France showed that industrial morale in the Eurozone’s second biggest economy dropped to 109 points in April, down from a revised figure of 110 points for March.  In Italy, the third largest economy, business morale also fell due to the inconclusive elections seven weeks ago.  The surveys contradicted IHS Markit composite flash Purchasing Manager’s Index (PMI) for the Eurozone which was released on Monday and showed that private sector growth held steady in April.  Business morale in Germany’s manufacturing deteriorated for the third consecutive month but remained at a high level according to Ifo survey, which is now based on the responses of 9,000 firms.

China 

China’s leaders are giving their strongest signal since 2015 that growth in the second largest economy could slow.  They are prepared to improve their policy if trade or financial risks threaten a sharp deceleration.  Although growth remained robust in the first quarter, forecasters still see the economy slowing this year as trade tensions with the US and the strategy to clean up the financial sector remain a downside factor.  The Politburo (a larger decision-making body which includes the Politburo Standing Committee) statement mentioned the need to boost domestic demand for the first time since 2015 and dropped a reference to deleveraging.  Investors are interpreting the change in tone as a signal that the government may ease off tightening measures if the need arises.  Stocks in Shangai increased the most in two months.  Friction with the US intensifies over developing high- technology industries from biotechnology to robotics.  The Politburo also called for breakthroughs in developing core technologies and support for new industries and businesses.  Last week the People’s Bank of China cut its reserve-requirement to be reduced for some lenders.  The purpose of the move was to smooth potential disruptions of liquidity levels.

Rise in Yields

The American 10 year Treasury yield rose above the three per cent for the first time since 2014. Mid-week the same yield remained above the 3 percent, trading at 3.0165 percent.  Analysts are not expecting the rate to move higher from this level.  On Wednesday, the Treasury issued $35 billion of five-year notes.    The rise in yields has been partly fuelled by the increase in crude oil prices, which on Tuesday hit the $75 boosting energy shares.  The oil and gas index was the biggest sectoral gainer up one percent at its highest level in around three years.

Brexit

The EU is hoping that Britain will change its stance on the ties the country wants after Brexit.  Diplomats and officials in Brussels see little progress with the Brexit negotiations since the last meeting of the EU leaders in March.  This is because Brussels and London have so far outlined conflicting stances on their new deal after Brexit.  Britain is stating that it will be dropping out of the EU’s single market and customs union after Brexit.  Meanwhile, the EU says that these red lines mean that the only possible framework for future cooperation between the EU and Britain is a trade deal.   The House of Lords last week challenged Ms May’s refusal to remain in a customs union with the EU after Brexit and the Lower Chamber is expected to hold a follow-up vote next month.  According to May’s spokesman the Prime Minister is absolutely clear that Britain is leaving the Customs Union and will be free to strike their own trade deals around the world.

Oil

Cut in supplies, steady growth in demand, geopolitical tensions and a favourable structure in the futures market have all played a pivotal role in attracting record investment in oil this year.  On Thursday the price of oil rose supported by expectations of renewed US sanctions on Iran, declining output in Venezuela and continuing strong demand. Venezuela’s crude production has fallen almost 2.5 million barrels per day in early 2016 to around 1.5 million bpd due to a political and economic crisis.  The reduction in Venezuelan output Brent crude oil futures were up at $74.90 a barrel while US West Texas Intermediate crude futures increased to $68.71 per barrel.  The oil price has risen by 15 percent in the last four weeks due to expectations that the United States will reimpose sanctions on Iran, a major oil producer and member of the OPEC.  On 12 May Trump will decide whether to restore US sanctions on Tehran, which will probably reduce Iranian oil exports.

Facebook

Facebook shares rose on Wednesday after the surprisingly strong 63 percent increase in profit and an increase in users with no sign that business was hurt by the scandal over the mishandling of personal data.  Shares traded up 7.1 percent after the bell at $171.  The share stock had fallen after Facebook’s disclosure in March that consultancy Cambridge Analytica had harvested data belonging to millions of users.  The Cambridge Analytica scandal has affected up to 87 million users and the Chief Executive Mark Zuckerberg apologised on several occasions.  Furthermore there were calls for regulation and for users to leave the social network.  Advertisers however did not change their spending immediately.  The results show a brighter picture amid months of negative headline news about the handling of personal information, and its role in elections.  It has been nearly two years since Facebook shares rose seven percent or more during a trading day.

BMW unveils Electric SUV

BMW AG is laying the ground work to start exporting from its biggest market China, to buyers around the world including North America.  The company plans to start producing its first all-electric sport utility vehicle, in 2020.  The iX3 project makes BMW the first major luxury-car maker to ship high-tech vehicles from China.

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