Last week, headlines highlighted significant declines in US and European stock markets. However, the overall performance across major asset classes painted a more nuanced picture, as reflected in various exchange-traded products.
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White House prepares for potential government shutdown: LA Times
China tightens control over economic data as its economy shows signs of weakness: SCMP
US criticizes China’s ‘unfair competitive practices’ on Monday: Reuters
Saudi Arabia condemns US Senate resolutions regarding Khashoggi and Yemen: Reuters
Eurozone inflation eased more than initially estimated in November: MW
ConocoPhillips expresses support for a tax on carbon emissions: Axios
US private-sector output in November increased, but at the slowest pace since May 2017: IHS Markit
Increase in US inventories for October might contribute to Q4 economic growth: Reuters
US industrial output in November recorded its strongest gain in three months: MW
All major investment markets have declined in 2018: NY Times
US retail spending growth year-over-year dipped to 4.2% in November:
Considering the current situation, it appears the UK’s best option may be to take advantage of the “get-out-of-Brexit-free” card presented by the European Court of Justice (ECJ). Last week, ECJ judges ruled that Britain has the right to unilaterally reverse its Brexit decision. While this may conflict with the 2016 referendum outcome favoring a 52%-to-48% leave result, it is indeed permissible for the UK to revoke its exit plans and commit to pursuing a revised Brexit strategy moving forward. Ideally, this new strategy would achieve support from both Parliament and Prime Minister Theresa May (or possibly her successor). Then, whenever the time allows, Britain can present this revised plan to the EU and initiate fresh negotiations with Brussels.
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By Francisco Louçã and Michael Ash
Summary via publisher (Oxford University Press)
The 2007-08 financial crisis caught many economists and the general public off guard. But what led to its occurrence, why was it so severe, and why has the recovery been slow and arduous? Many narratives of the crisis focus on fringe activities within lesser-known financial sectors. Shadow Networks challenges this prevailing narrative and illustrates how the shadow finance that triggered the crisis is closely intertwined with, and highly advantageous for, traditional bank-based finance. The collapse was not an unforeseen event; rather, it was deeply ingrained in the financial architecture from the outset. Shadow Networks delves into the intricate connections that precipitated the crisis and vividly portrays the key players involved in the quarter-century leading up to 2007, clarifying how this lingering crisis took shape.
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Last week, the estimate of financial stress in US markets rose to its highest point since April 2016, as indicated by the St. Louis Fed Financial Stress Index (STLFSI). While the index remains significantly below zero—which indicates a lower-than-average level of stress—recent upward trends suggest that financial conditions may be shifting toward a less favorable environment for both markets and the economy as 2019 approaches.
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China’s retail and industrial sectors experienced significantly slower growth in November: Reuters
Eurozone growth slows to its lowest rate in over four years, according to PMI surveys: IHS Markit
The EU provides no concessions to the UK PM concerning the Brexit deal: CNBC
The ECB announces the termination of its bond-buying program: CNBC
White House delays tariff hikes on Chinese goods until March 1: Bloomberg
A survey reveals economists expect the Fed to increase rates next week: Bloomberg
US import prices in November reflected the largest decline in three years: Reuters
US jobless claims saw a substantial decrease last week, nearing 50-year lows once again: MW
The tenth anniversary of Lehman Brothers’ collapse this past September triggered a flurry of commentary, including some misconceptions. One notable misunderstanding is the assumption that the fall of Lehman Brothers caused the Great Recession. In truth, the downturn had already commenced several months earlier in the US, as documented by NBER’s recession dates. However, there is debate over whether allowing Lehman’s failure to unfold contributed to escalating what might have been a minor downturn into a significant contraction, the most severe since the Great Depression.
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Pelosi secures agreement to assume the Speakership: Slate
Developments in the Mueller investigation revive discussions of impeachment among Democrats: Fox
UK Prime Minister survives a leadership challenge: CNBC
Amid challenges, the British Prime Minister seeks assistance from Brussels: Reuters
IEA reports that US influence in the global oil market is set to grow: CNBC
Tensions between the US and China over the South China Sea escalate fears of conflict: SCMP
Critiques surrounding indexing continue to be unpersuasive: Barry Ritholtz
US consumer inflation rate (headline) dipped to 2.2% annually in November: MW
With less than three weeks left until the final trading session of the year, equity markets in the Middle East appear poised to report the strongest—and potentially the only—gains for 2018 among major global regions, based on a collection of exchange-traded products.
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Trump indicates he may consider a government shutdown over the border wall issue: Bloomberg
The CFO of China’s tech giant Huawei is released on bail in Canada: CNN
China detains a former Canadian diplomat: SCMP
Trump describes a Fed rate hike as ‘foolish’: Reuters
Vanguard’s founder suggests buying bonds to hedge against an ‘unstable’ US government and Brexit: FN
Global equity valuations have fallen to five-year lows: WSJ
UK Prime Minister Theresa May faces a no-confidence vote today: WSJ
Protests in France threaten to undermine Macron’s economic reforms: NY Times
Despite high optimism, US small businesses are growing more cautious about the outlook: CNBC
