Ahmed Ibrahim’s Post

In Europe, attention on much stronger-than-expected UK GDP data amid service sector strength, which confirms signal from PMIs since start of the year. Takeaways from yesterday's BoE decision highlight potential for June rate cut if inflation and wage growth continue to ease. Governor Bailey also flagged possibility of more aggressive rate cuts data if data evolves in line with forecasts, which showed inflation below target in 2026 and 2027. More positive commentary on European equity markets amid expectations for European central banks to divergence from Fed policy in the summer. In political news, Spain PM Sanchez is aiming to wrest control of wealthy Catalonia in 12-May vote from separatists who wield outsized influence over Spanish politics. Another light day of economic releases in the US. UMich preliminary May consumer sentiment weaker, while inflation expectations beat forecasts. Nominally a big day of Fedspeak but only a few speakers may touch on monetary policy. Bostic repeated his forecast for only one cut to come later this year. Upbeat China market narrative continued. Backed up by foreign inflows, positive technicals and analyst upgrades for CSI 300 stocks for the first time in seven months. Two China provincial capital cities of Hangzhou and Xian lifted all home purchase restrictions to support the property market. Follows Politburo calls for more policy support to clear housing inventories. Threat of additional US trade frictions remains elevated on a report the Biden administration is poised to launch sweeping tariffs on Chinese imports including EVs, batteries and solar cells as early as next week. Elsewhere, Japan household spending was better than expected in March but Q1 remained sluggish. On the corporate front, press reports suggest AAL-GB South African shareholders open to improved takeover from BHP despite government concerns. Press reports suggest UK government made final order to conditionally approve merger between VOD-GB and Three UK. SAB-ES said documentation provided by BBVA violates tender offers rules and introduces incomplete information that may affect the market. EDP-PT reiterated FY recurring net income guidance of ~€1.3B vs FactSet €1.29B.

ECB: ECB's Lane says ready to respond to any surprises as it decides on its next policy steps amid uncertainty: Bloomberg reported that ECB chief economist Lane said the ECB is ready to respond to any surprises as it decides on its next policy steps amid uncertainty in the economy. Lane said the bank will be agile and will be ready if downside surprises materialize. ECB's Kazimir sees one more rate cut possible in 2024: Bloomberg reported that ECB official Kazimir expects one more interest rate cut in 2024, citing inflation risks from wage growth. He opposed a July rate change, suggesting the ECB should wait for September's economic projections before making further decisions. France: Hollande proposes coalition strategy as French election uncertainty looms: Bloomberg reported that former French President Hollande suggested readiness to build a new coalition if elections result in a hung parliament, aiming to prevent far-right National Rally from taking power. He's running for a National Assembly seat with the leftist New Popular Front, despite internal divisions and his past rivalry with far-left leader Melenchon. Geopolitics: EU applies 'emergency brake' on eggs and sugar imports from Ukraine signaling difficult membership talks ahead: FT reported that the EU is set to reimpose tariffs on Ukrainian sugar and egg imports, using an "emergency brake" to address farmers' protests across the bloc. This move, coming just after opening EU membership talks with Ukraine, highlights the challenges Kyiv will face in accession negotiations, particularly in the agricultural sector. Politics: Meloni challenges von der Leyen's bid for second term amid EU leadership negotiations: FT reported that Italian PM Meloni is leveraging her position to influence the reappointment of Ursula von der Leyen as European Commission president, demanding significant concessions in return for support. While von der Leyen technically doesn't need Meloni's endorsement, starting a new term without Italy's backing could be risky, especially as EU leaders aim for consensus on key appointments. Regulatory: EU watchdog warns of inflated AT1 bond values, issues new guidance: Reuters reported that the EU banking watchdog warns banks may be overvaluing high-risk AT1 bonds used for capital buffers. New guidance was issued to standardize information and accurately reflect bond worth, following controversies like the Credit Suisse AT1 write-down.

𝗪𝗲𝗲𝗸𝗪𝗮𝘁𝗰𝗵 - 𝟬𝟰/𝟬𝟯/𝟮𝟬𝟮𝟰 At a glance: - Positive news helped US and Japanese stocks finish February on a high, while much of Europe played the waiting game last week. - Tax planning may feel like a low priority for new business owners as you understandably focus on getting sales and operations off the ground. But optimising your tax position is just as valuable in a start-up as it is in larger organisations. “This will be a prudent and responsible Budget for long-term growth, tackling inflation, more investment, more jobs and that path to lower taxation as and when we can afford that.” UK Chancellor 𝗝𝗲𝗿𝗲𝗺𝘆 𝗛𝘂𝗻𝘁 explains what we can expect in his upcoming Budget. #weekwatch #financialplanning #markets #budget2024

ECB: ECB makes case for keeping balance sheet big: FT reported that the ECB's chief economist Lane urged against significant reductions in the bank's balance sheet, emphasizing the need for a larger balance sheet to encourage commercial bank lending, provide a liquidity buffer for future shocks, and offer flexibility in avoiding zero interest rates. Lane warned that aggressive reductions could leave banks vulnerable and risk financial instability. Germany: Germany agrees tax subsidies for industry worth up to €28B by 2028: FT reported that the German government has approved a €28B tax subsidy package for the manufacturing industry to counter high energy costs. This includes annual electricity tax relief of up to €12B for 2024 and 2025. The move, following a previous €7B subsidy, may face EU criticism for distorting the common market. Critics argue it's insufficient, while supporters stress quick implementation for production planning. Scholz promises longer-term boost to Germany military spending: Bloomberg reported that Chancellor Scholz committed Germany to sustained military expansion beyond the €100B defense fund, initiated after Russia's invasion of Ukraine. The fund, set to meet NATO's 2% GDP defense spending goal by 2023, will be succeeded by an "adjustment path" for ongoing military capabilities. Politics: Portugal to hold snap election in March after probe toppled PM Costa: Bloomberg reported that Portugal called for an early election on 10-March after PM Costa's surprise resignation amid a corruption probe. Costa's party, the Socialists, faces challenges in maintaining support amid corruption allegations and public discontent. The center-right PSD and far-right Chega parties emerge as strong opposition. Election fallout may impact TAP privatization, but fiscal discipline remains crucial with a debt ratio exceeding 100% of GDP. Spain's future hangs on Sanchez's ability to control his new Catalan partners: Bloomberg reported that Spanish PM Sanchez's agreed to amnesties for Catalan separatists in exchange for parliamentary support. The move has sparked outrage among Spanish conservatives, potentially reviving the separatist movement and deepening ideological divisions in Spain. The risk involves constitutional crises and increased tensions. Sanchez faces criticism for perceived hypocrisy, having ruled out amnesty just before elections. The situation has led to protests, clashes, and criticism from various quarters.

Really interesting article - Market Volatility Looms as UK Heads to the Polls How Could the Markets React to the General Election? "The UK elections may have increased stock market volatility in the short term, but it may have been reduced now as polls showing Labour as a clear winner offer certainty. While there are some correlations between political parties and Stock Market performance in the UK, the evidence suggests these may be coincidental rather than causal. Still, back in May, when Sunak announced the surprise elections, the FTSE 100 (UK 100) dropped by 0.3% as markets digested the news. In contrast, the British Pound (GBPUSD) gained against the US Dollar (UX) as the snap call provided some clarity to the markets. UK’s FTSE 100 index did rise around 5% in June, however, contrary to battered French stocks following President Macron's snap election. Analysts at JPMorgan (JPM) believe a Labour election victory will be a "net positive" for financial markets. MUFG analysts, a Japanese investment bank, also said that a Labour win could be "most positive for the pound." However, they did note that although it could end political instability, it would raise expectations of higher government spending. Specific stocks may react to the election outcome depending on Labour's policy announcements and potential impact on the industry and company. For instance, Labour pledged to build 1.5 million houses and upgrade another 5 million in 5 years, increase its green energy investments by £23.7 billion and boost its defence spending to 2.5% of GDP while deciding to expand windfall taxes on oil and gas producers. On the country level, if the ruling party proposes significant tax cuts or "fiscal profligacy", the UK's pound could weaken. Yet, most analysts believe whoever wins the election must show fiscal restraint, and only time will show how this might affect the markets." https://lnkd.in/enpX7EyU

What’s new in finance? Find out now! 🔵 Services in the Eurozone rebound in February, but manufacturing contraction deepens https://lnkd.in/dw-Waxk5 The economic fortunes of the Eurozone's two titans diverge: Germany faces challenges and continues to be under pressure, while France demonstrates signs of recovery. 🔵 Annual inflation down to 2.8 percent in euro area  https://lnkd.in/dPxh7tv6 The euro area’s annual inflation rate stood at 2.8 percent in January 2024, down from 2.9 pct in December. A year earlier the rate was 8.6 pct. 🔵 Fed officials expressed caution about lowering rates too quickly at last meeting, minutes show  https://lnkd.in/eEsFcbpp The discussion came as policymakers not only decided to leave their key overnight borrowing rate unchanged but also altered the post-meeting statement to indicate that no cuts would be coming until the rate-setting Federal Open Market Committee held “greater confidence” that inflation was receding. The meeting summary indicated a general sense of optimism that the Fed’s policy moves had succeeded in lowering the rate of inflation, which in mid-2022 hit its highest level in more than 40 years. However, officials noted that they wanted to see more before starting to ease policy while saying that rate hikes are likely over. Members cited the “risks of moving too quickly” on cuts. 🔵 Germany’s housebuilding sector is in a ‘confidence crisis’ as the economy struggles https://lnkd.in/dVcggsNJ Germany’s housebuilding sector is in a “confidence crisis,” Dominik von Achten, CEO of German building materials company Heidelberg Materials, told CNBC. The sector has gone from bad to worse in recent months with the latest economic indicators hitting all-time lows. It is questionable whether there is light at the end of the tunnel as pressures such as elevated interest rates continue to weigh on the economy.

Positive news helped US and Japanese stocks finish February on a high, while much of Europe played the waiting game last week. This was especially true in the UK, where the Government is due to announce its Budget on the coming Wednesday. With an election due later this year, and the Conservatives currently polling poorly, UK Chancellor Jeremy Hunt is widely expected to make some headline tax cuts to boost support. At the time of writing, many are predicting a cut to Income Tax of 1-2%. The UK economy has been struggling for growth lately, and it’s likely Hunt will be somewhat constricted in what he can promise. However, we won’t know for sure until the Budget is released. #budget2024 #incometax #taxcuts #inflation #ftse100

Positive news helped US and Japanese stocks finish February on a high, while much of Europe played the waiting game last week. This was especially true in the UK, where the Government is due to announce its Budget on the coming Wednesday. With an election due later this year, and the Conservatives currently polling poorly, UK Chancellor Jeremy Hunt is widely expected to make some headline tax cuts to boost support. At the time of writing, many are predicting a cut to Income Tax of 1-2%. The UK economy has been struggling for growth lately, and it’s likely Hunt will be somewhat constricted in what he can promise. However, we won’t know for sure until the Budget is released. #budget2024 #incometax #taxcuts #inflation #ftse100

Positive news helped US and Japanese stocks finish February on a high, while much of Europe played the waiting game last week. This was especially true in the UK, where the Government is due to announce its Budget on the coming Wednesday. With an election due later this year, and the Conservatives currently polling poorly, UK Chancellor Jeremy Hunt is widely expected to make some headline tax cuts to boost support. At the time of writing, many are predicting a cut to Income Tax of 1-2%. The UK economy has been struggling for growth lately, and it’s likely Hunt will be somewhat constricted in what he can promise. However, we won’t know for sure until the Budget is released. #budget2024 #incometax #taxcuts #inflation #ftse100

The Monetary Policy Committee (MPC) discusses the economic and monetary developments and the monetary policy stance at least on a quarterly basis. The analysis in the September 2023 Monetary Policy Report was used to support the committee in its discussions of the most recent developments and monetary policy stance.   In summary: Following an expansion of 3.5% in 2022, global economic growth is expected to decelerate to 3.0% on the back of sluggish growth in the advanced economies, lagged effects of the US dollar appreciation in 2022, and rising trade barriers. In addition, central banks have signaled a prolonged path of tighter monetary policy aimed at bringing inflation in line with their mandates.   Economic growth is projected to ease across the monetary union in 2023. In Curaçao, real GDP is expected to grow by 3.8%. Curaçao’s real GDP growth is set to decelerate slightly to 3.4% in 2024. Sint Maarten’s real GDP is projected to grow by 3.9% in 2023, while the real GDP is set to grow by 2.7% in 2024.   The current account deficit of the balance of payments as a percentage of GDP is expected to drop from 19.4% in 2022 to 13.5% in 2023. External financing into the monetary union as percentage of GDP is projected to drop from 14.3% in 2022 to 10.9% in 2023. The import coverage is expected to drop from 4.7 months in December 2022 to 4.6 months in December 2023. The deficit on the current account of the balance of payments of the monetary union is projected to drop from 13.5% of GDP in 2023 to 12.1% in 2024.   In response to the increase in the Fed funds rate in July and to avoid that the CD-rates exceed the pledging rate, the MPC decided to increase the pledging rate by 25 basis points to 5.75% during its last meeting held on September 14, 2023. Furthermore, the policies with regards to the reserve requirement, the CD auctions, and the investment rule have not been adjusted as the projected economic developments, gross official reserves and import coverage remained broadly in line with the previous outlook.   The MPC will continue to monitor the implications of new data on the economic and monetary developments in the monetary union and will adjust the monetary policy stance if required.   Click the link for the September 2023 Monetary Policy Report: https://lnkd.in/eCsHkjQJ   #cbcs #curacao #sintmaarten #economicgrowth #pledgingrate #monetarypolicy #monetarypolicycommittee #mpc