The big news was the rally in the equity markets, that began earlier in the week on a global scale. This was in response to the decision made by the United States Federal Reserve Bank (Fed) not to raise interest rates at this time. It is becoming increasingly unlikely that levels will increase at all in 2016, due to declining economic data.
All three market exchanges in the United States (U.S.) saw gains reversing losses from last week The Dow Jones Industrial Averages is now at the 18,300 level again. The Standard & Poor 500 has increased 2% from last week and the NASDAQ technology composite reached a new all time at 5,342.88.
The unimpressive U.S. August retail sales, lack of inflation in producer prices and weaker than expected industrial production, is likely to forestall a hike in U.S. interest rates this year.
The United States Congress is preparing for a vote to override a presidential veto of legislation, that permit the families of 09/11 victims to sue Saudi Arabia for any role in the 2001 terrorist attacks.
International News Saudi Arabia has offered to lower its total oil production, if Iran agrees to cap their output at the current level of 3.6 million barrels a day. This action if agreed to, would provide a support level for crude prices keeping oil near the $50.00 USD (United States Dollar) a barrel level.
The issuance of global bonds is now increasing at the fastest pace in nearly a decade. Countries, agencies and corporations are accumulated debt at an enormous rate. They are taking advantage of the excessively low cost of borrowing. A total of $4.88 trillion USD, has been issued in 2016 so far.
The Paris climate deal is moving closer to taking effect later this year as 30 more nations ratify the accord in a special session of the United Nations General Assembly. However, the specifics of each country’s plans are voluntary and there are no sanctions for failing to limit pollution at present.
According to the Organization for Economic Cooperation and Development (OECD), the global economy remains in a low growth trap. The projection is for reduced growth into 2017 for the advanced economies. The anticipated overall rate for this year is only 2.9%, the lowest level since the financial crisis.
Europe Business activity in the Euro-zone expanded in September at its weakest pace since the start of 2015. On the positive side, for the first time in 2016, firms have stopped cutting prices. The end result is, there is little additional economic growth expected for the rest of the year.
Chancellor Angela Merkel from Germany was stung in another electoral defeat for her conservative party in state elections. The CDU suffered it slowest voter support since 1990 in the regional state election of Berlin. More voters are turning to the Alternative for Germany, an anti immigrant party.
In the United Kingdom, Prime Minister Theresa May is now separating herself from comments made by Foreign Secretary Boris Johnson concerning Brexit. Mr. Johnson has hinted that formal talks will begin early next year.
Legislative elections in Russia, saw the United Russia Party maintain its majority in the parliament. Allied to President Putin the party won 54.2% of the vote, with near 90% of the ballots to the Duma already counted.
Latin America In Colombia the Revolutionary Armed Forces of Colombia (FARC ) is witnessing a gathering of delegates and leaders across the country to stage a conference. The purpose of the meeting, is to ratify the peace accord recently reached with the government.
In Brazil, a judge overseeing the massive scandal at the giant state oil company Petrobas, has accepted corruption charges against the popular former President Luiz Inacio Lula da Silva. It is another blow to the Workers Party that lost the presidency with the impeachment and conviction of former President Dilma Rousseff. She was the protege and successor to Lula da Silva.
Middle East A U.S. lead supply relief convoy was attacked by either Russian or Syrian aircraft this week. This comes on the heels of a mistaken U.S. attack on a Syrian army base. The present ceasefire is about to be undone. There is evidence that the Syrian government is making plans for an assault on the strategic city of Aleppo.
In related news, Turkey is planning to create a 2,000 square mile safety zone in northern Syria. It will provide protection to the border area and a place for refugees from the area to be protected.
Asia The central bank of Japan (BOJ) decided to keep the key interest rate unchanged at -0.1%. The BOJ did announce other modifications to its expansive monetary policy, that will provide more stimulus to the economy.
In China the world’s biggest IPO for the year in Hong Kong. Postal Savings Bank Of China was intent on raising between $7 and $8 billion USD. Three quarters of the shares are going to just six main investors. The institution is the 5th largest bank in China, with 40,000 branches and 505 million customers.
The Bank of International Settlements (BIS) (central bank of central bankers) is warning excessive credit growth in China, is increasing the risk of a banking crisis in that country. It is also cautious about the recent rise in equities and questioning whether market conditions justify present valuations.
Following the 5th nuclear test in North Korea, President Obama from the United States and Premier Li Keqiang have agreed to increase cooperation with each other in the United Nations Security Council.
Business News Shares of Amazon breached the $800 level for the first time this week. This more than doubles the price of the stock in 17 months. Market capitalization now exceeds $388 billion making it the 4th most valuable company in the United States. Only Apple, Google and Microsoft remain larger.
Being labeled as the biggest cyber data breach in history, American based Yahoo acknowledges the theft of information from over 500 million accounts. The event took place in 2014 and has been blamed on a state sponsored actor.
Facebook is dealing with the publicity that it vastly overestimated viewing time for video ads on its platform for two years. The metric is supposedly exaggerated by between 60% to 80%. Big ad buyers and marketers are disturbed at the news.
United States based Apple may be investigated by Japanese regulators. The claim is the company violated anti-trust rules, that helped it to dominate the nation’s smartphone sales.
Marriott has completed its purchase of Starwood Hotels and Resorts for $13 billion USD. It has pledged to keep all 30 brands. The new combined company will operate or franchise more than 5,700 properties and 1.1 million rooms. It more than doubles its presence in Asia and the Middle East.
European based Airbus and American based Boeing have now received U.S. licenses to sell planes to Iran, in a deal estimated to be worth $50 billion USD.
Indonesia is planning to pursue Google for 5 years of back taxes. If the effort is successful in proving tax avoidance, the company will need to pay $400 million for 2015 alone.
According to the International Energy Agency (IEA) the global demand for oil is slowing faster than expected. The long predicted rebalancing that was to take place in the second half of 2016, will be postponed for investors. A gain of only 1.3 million barrels is now projected, a further reduction of 100,000 barrels per day.
Earlier today American priced oil exceeded $46.00 USD a barrel and Brent at nearly $48.00 USD, but is now pulling back. The decline for today is 4.15% and 3.82% respectively.
American West Texas Intermediate (WTI) has increased from $42.93 USD a week ago, to $44.40 USD. This is an increase of 3.42% in a week. International Brent during the same period went from $45.82 USD to $45.83 USD. That indicates a negligible change in the price.
Gold had been declining of late, after reaching a high of $1,370.80 last month. A reversal took place this week. The price is now listed at $1309.60, a increase of $30.00 USD from last week. Gold is still up over 20% in 2016. The price for silver also increased to $19.86 USD, a +5.13% rise for the week.