As questions surface on whether the Brexit is even possible, and the U.S. election just around the corner, headlines have readers on the edge of their seats. Read more in this edition of Steady Investor’s Week…
Will Brexit Even Be Possible? – a very significant ruling was handed down by the U.K. High Court this week. They said that the newly formed government under Prime Minister Theresa May cannot start negotiations to leave the European Union without a vote from Parliament. So, apparently, the will of the people via the referendum was not enough. That could spell trouble for Britain in an effort to invoke Article 50, which will start proceedings to leave. This is a bigtime “wait-and-see” story.
European Governments Surviving Populist Onslaughts, So Far – Spain and Iceland became the two most recent countries to survive the rise of populist movements in government. Spain had been lacking a government for months now, but finally formed one after two inconclusive general elections and several failed deals. The Conservative leader, Mariano Rajoy, was elected for his second term as prime minister, but he will have to reach out to other parties in the country if he wants hope of passing reform legislation of any kind. Meanwhile, in Iceland, the Independence party survived a challenge by the populist, nonconformist Pirate Party. That’s right, Pirate Party. The Independence earned 29% of the votes compared to 14.5% for the Pirate Party. The strong showing for the Pirate Party may give them representation in the government that’s formed.
In an Increasingly Anti-Trade World, A Deal Gets Inked – the popular sentiment against the benefits of trade has been rising in recent years. We’re saw it with Brexit and the rise of populist movements in Europe, and the U.S. presidential election campaign has been rife with sentiment against trade deals, namely Trans Pacific Partnership (TPP). It is easy to pick on trade because of the effect of exporting jobs, but the reality is that it adds wealth to the global economy and allows participating countries. The economy of the future is going to be one based on high skill jobs, services, and consumption, and trade is a valuable resource to helping a country get there. Isolationism will likely do the opposite. Deals are having a harder time getting passed, but Canada and Europe recently made a free trade agreement, called CETA. The deal will remove 98% of tariffs, and officials anticipate it generate an increase in trade worth $12 billion a year. The U.S. has an ongoing negotiation with Europe known as the TTIP, but talks are basically frozen in light of the election.
Encouraging Growth in Q3 for Eurozone – growth in the European Union remained slow and steady in Q3, notching up +0.3%. That marks an increase of +1.6% year-over-year, which is modest but still positive given the remnants of fiscal austerity in the wake of the sovereign debt crisis. The year-over-year growth indicates that the region has not been immediately impacted by Brexit, and sentiment has not cratered. Inflation also saw a moderate rise last month, at about one half of one percent. The figure is still well below the European Central Bank’s target.
Could Apple Inc. Make a Bid for Time Warner? – the CEO of Apple Inc., Tim Cook, has apparently not ruled it out. He stated that he is open for acquisition business and that his team at Apple has “intense interest” in television. Rumor has it that Goldman Sachs has approached Apple to nudge them towards the deal, perhaps in response to being left out in negotiations between AT&T and Time Warner.
The Fed Holds Interest Rates Steady – the Federal Reserve should not have even bothered convening this week, as there was essentially zero chance they would raise rates ahead of a presidential election. As expected, they held rates steady, though their language did turn a bit more hawkish in their comments about the longer-term trend of inflation.
As the week comes to a close the one additional news story on everyone’s mind is the upcoming election. With the election, just days away, many investors are concerned about the overall state of the economy and what the future holds. Instead of getting caught up in the “what ifs,” stick to the facts. To help you do this, download our Stock Market Outlook report. This report can help guide your investment decisions as it offers insights into the current state of the economy. Download your copy of this report by clicking on the link below…
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