Aurelia Butler

Asia’s corporate and macro calendars are remarkably light on Monday, allowing investors to look squarely toward three regional central bank policy decisions later in the week, and more importantly, Jackson Hole. Federal Reserve Chair Jerome Powell will deliver his keynote address at the Kansas City Fed’s two-day annual economic symposium at the Wyoming retreat on Friday. His highly anticipated speech on the economic outlook could signal how high U.S. borrowing costs may go and how long they will need to stay there to bring down soaring inflation.U.S. rates market pricing has the Fed raising rates to a peak around 3.65% early next year, little changed over the past fortnight. But traders have trimmed the amount of rate cuts they expect between March and December next year to 40 basis points from 60 bps.That said, some Fed officials recently have highlighted the dangers of raising rates too aggressively. Will Powell nod to the threat to growth from higher rates, or lean on the more customary inflation-busting rhetoric? (Graphic: U.S. implied interest rates – SOFR contracts: https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkbgyrvx/SOFR-Implied.png) In Asia, monetary policy is far less hawkish. The central banks of China, South Korea and Indonesia meet this week and only one, the Bank of Korea, is expected to raise rates.The People’s Bank of China is expected to lower its one-year loan prime rate by 10 bps to 3.60% on Monday, and its five-year rate by a bigger margin, as it battles to support a teetering property market and Covid-ravaged economy.The BOK should raise borrowing costs by 25 bps to 2.50% on Thursday, with inflation still above target, and it is a close call whether Bank Indonesia stays on hold at 3.50% or hikes by a quarter point.Important as these decisions are, all eyes are on Powell in Jackson Hole on Friday. More

Hello and welcome to the working week.Central bankers will be packing their bags ready for a few days in the great outdoors this week. But unlike the rest of us, their annual August getaway — to Wyoming — will be no holiday.The Jackson Hole Economic Symposium, which starts on Thursday, will be closely watched and for good reason. The beast of inflation has slipped its shackles and is running rampant around the world. Federal Reserve chair Jay Powell is the symposium’s headline act — he is due to speak on Friday — with the audience keen to hear guidance on the US rate-setting path. His comments are likely to be hawkish given recent data on the US jobs market and views from the Federal Open Market Committee — the July minutes revealed some uncertainty over the strength of US employment, but the committee still advocated a restrictive rate-setting policy to quell price pressures.The Fed is not alone among central banks in taking an aggressive stance. For instance, read the comments from the Reserve Bank of New Zealand when it raised its rate by 50 basis points last week.Further clarification appears to be needed for the US markets, however. As my colleagues on Unhedged have noted, traders have not been buying the hawkish line.The UK’s inflation problems will be brought into focus with the anticipated announcement from energy regulator Ofgem on the new (ie higher) gas and electricity price caps. Sadly for Britons, the indicators are that the pain of the domestic energy crisis has only just begun. There was an ominous sign last week when an Ofgem director quit in protest at the way changes to the energy price gave “too much benefit to companies at the expense of consumers”. Then there is Ukraine, where this Wednesday will mark six months since Russia’s full-scale invasion, a sombre occasion occurring on the same date as the country’s independence day — and only two days after Russia’s national flag day celebrations.And the good news coming up this week? Well, the Edinburgh Festival has been back on the streets of the Scottish capital this year and will celebrate a successful return with its traditional closing fireworks ceremony on Sunday — the same day that marks the anniversary of Martin Luther King’s “I Have A Dream” speech. A reminder that we can build a better future.Thank you for your continued feedback on The Week Ahead. Keep the emails coming to [email protected], or hit reply to the email of this newsletter. I am taking a week’s summer break, but The Week Ahead will be back next Sunday with my colleague Jennifer Creery in the writer’s chair.Last week, I wrote that Japan’s former prime minister Yoshihide Suga would be attending the commemorative ceremony to mark the end of the second world war, when it was, of course, the current prime minister Fumio Kishida. Apologies.Economic dataSurveys dominate the data schedule this week, notably the flash purchasing managers’ index reports and a rush of business and consumer confidence measures, giving an indication of relative economic strength across the globe.The US will also be supplying personal income, durable goods and house sales data, while Japan publishes inflation figures. On Thursday, we will get the minutes from the last European Central Bank monetary policy committee meeting.CompaniesThere is a post-lockdown theme to financial results this week. For some, such as pandemic darlings Zoom and Delivery Hero, it will about returning to earth as the world of hybrid work settles. Zoom fatigue is a thing, plus a combination of economic slowdown and the opportunity to eat out may temper demand for home deliveries in the coming months.Others are hoping that things (ie aeroplanes) are taking off again after two years of restrictions. We have a clutch of airlines reporting quarterly figures.Qantas attracted headlines this month for employing its managers as baggage handlers to relieve chaos at airport terminals. And it seems the flying kangaroo has rediscovered some bounce, forecasting a cut in net debt to about A$4bn ($2.8bn) by the end of the year, while delivering underlying profit growth of about A$500mn in the second half.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayUK high street retailer John Lewis ends its 97-year-old price pledge “never knowingly undersold”Results: Ampol H1, Zoom Video Communications Q2TuesdayEurozone, France, Germany, Japan, UK and US: S&P Global/IHS Markit composite (services and manufacturing) purchasing managers’ index (PMI) dataEU, flash consumer confidence figuresUK, CBI industrial trends surveyUS, July residential sales dataResults: Macy’s Q2, TAG Immobilien H1, Wood H1WednesdayBrazil, monthly inflation dataSouth Africa, monthly consumer price index (CPI) figuresResults: Costain H1, Delivery Hero H1, Nvidia Q2ThursdayEU, minutes of July’s European Central Bank governing council meetingFrance, business confidence dataGermany, Ifo monthly business confidence index plus Q2 GDP figuresMexico, Q2 GDP dataUK, Society of Motor Manufacturers and Traders monthly vehicle manufacturing figuresUS, Q2 GDP second estimate plus personal income and goods trade balance figuresResults: Air New Zealand FY, Coty Q4, CRH H1, Dell Technologies Q2, Dollar General Q2, Grafton H1, Norwegian Air Shuttle Q2, Qantas Airways FYFridayFrance, August consumer confidence dataGermany, GfK consumer confidence surveyNigeria, Q2 GDP figuresUK, estimate of young people not in education, employment or training (NEET)Results: SAS Q3World eventsFinally, here is a rundown of other events and milestones this week.MondayItaly, the European Economic Association’s annual conference begins at Milan’s Bocconi UniversityRussia, National Flag Day — a national holiday, but offices remain openUK, former Formula 1 boss Bernie Ecclestone is due to appear before Westminster magistrates’ court charged with “fraud by false representation”. Ecclestone, 91, allegedly failed to declare to HM Revenue & Customs overseas assets believed to be worth more than £400mn.UK, further strike action begins when Unite union members who manufacture coffins for Co-op Funeralcare down toolsTuesdayUkraine, National Flag DayUK, up to 120 Unite union members employed by the Red Funnel ferry company resume strike action in a row over payUK, hosepipe bans come into force. South West Water will introduce one covering Cornwall and parts of Devon, the first such restrictions in 26 years, while Thames Water’s will affect 15mn customers across the south of England. A ban for Yorkshire households begins on Thursday.WednesdayAngola, parliamentary electionsUK, around 1,500 Unite members working in the waste departments of 15 Scottish councils will join cleansing workers from City of Edinburgh council in a second wave of strike action over payUkraine, Independence Day and six months since Russia’s invasion beganThursdayAlgeria, French president Emmanuel Macron begins an official visit to the countryUruguay, Independence Day celebrations and public holidayUK, GCSE results for England, Wales and Northern Ireland publishedUK, strike ballot closes for train drivers in the Aslef union working for Chiltern Railways, Northern Trains and Transpennine ExpressUS, start of the Jackson Hole Economic Symposium, an annual conference of central bankers, sponsored by the Federal Reserve Bank of Kansas CityUS, President Joe Biden attends a Democratic National Committee event in Montgomery County, MarylandFridayUK, energy regulator Ofgem announces the October price cap, expected to raise the upper limit of charges for households by 65 per cent to £3,244 a yearUK, more than 1,000 journalists at regional newspaper publisher Reach plc go on strike over pay. Separately, more than 115,000 members of the Communication Workers Union at Royal Mail will begin four days of strikes in a dispute over wages.SaturdayUK, Notting Hill Carnival, an annual three-day street celebration of Caribbean culture dating back to the 1960s, returns in LondonUK, third anniversary of the death of British teenager Harry Dunn, who was killed when his motorcycle collided with a car driven by Anne Sacoolas, the wife of a US government employee who was working at an American Air Force baseSundayUK, a fireworks concert marks the end of the annual Edinburgh International FestivalUS, anniversary of Martin Luther King’s 1963 “I Have A Dream” speech from the steps of the Lincoln Memorial in Washington, DC More

NEW YORK (Reuters) -The rebound in U.S. stocks is gaining believers among investors who study market trends, bolstering hopes for equities in the second half of 2022.After notching its worst first half since 1970, the S&P 500 has bounced some 15% from its mid-June low, fueled by stronger-than-expected corporate earnings and hopes the economy can avoid a recession even as the Federal Reserve raises rates to tame inflation.Past rallies in stocks have been short-lived this year and many market participants believe it is too early for optimism. Federal Reserve officials have gone out of their way to emphasize that the central bank has plenty of work to do in bringing down inflation, and the coming week’s symposium in Jackson Hole, Wyoming, could see them once again push back on expectations of a dovish monetary policy pivot, one narrative that has helped lift stocks. The S&P 500 closed down about 1.29% on Friday, ending a streak of four straight weekly gains.Still, those who look to market phenomena such as breadth, momentum and trading patterns to inform their investment decisions see a more optimistic picture, and are growing convinced the recent gains in equities are unlikely to fade.Several indicators “really suggest that that low we had in June is certainly more durable than the low we had in May or March,” said Willie Delwiche, an investment strategist at market research firm All Star Charts. “It’s a rally that can be leaned in to, not one that needs to be feared at this point.”Among these are measures that show the “breadth” of a market move, or whether a significant amount of stocks are rising or falling in unison. A period of narrowing breadth late last year came as a worrying sign to some investors and preceded the start of a decline in the S&P 500 in which stocks fell nearly 21% in the first half of 2022.That trend has reversed recently. The number of new highs on the New York Stock Exchange and Nasdaq surpassed new lows last week for the first time this year on a weekly basis – an encouraging sign to Delwiche and other strategists. “The beginning of sustainable rallies usually starts with a large percentage of stocks rallying together,” said Ed Clissold, chief U.S. strategist at Ned Davis Research. The firm recently increased its recommended exposure to U.S. equities to “neutral” from “underweight” as some indicators turned positive.Additionally, the number of S&P 500 stocks above their 50-day moving average recently hit 90%. The signal has preceded big moves in the S&P 500, with the index gaining an average of 18.3% in the year after the 90% threshold is hit, data from Bespoke Investment Group showed. “The probability that we are higher in a year is much higher with that flashing,” said Todd Sohn, technical strategist at Strategas.A market that is galloping higher also tends to sustain its momentum. A rise of 15% or more in the S&P 500 within 40 trading days has been followed by an additional average gain of 15.3% over the next year, Delwiche said. One important technical indicator was hit earlier this month, when the S&P 500 recovered 50% of its bear market price decline. Since World War Two, the index has not gone on to make a new low after such a move, according to Sam Stovall, chief investment strategist at CFRA Research.Some indicators do not support more gains. Analysts at BofA Global Research said that stocks have historically bottomed when the sum of inflation and trailing price/earnings was less than 20. That number currently stands at 28.5, the bank wrote on Wednesday.At the same time, the U.S. Treasury yield curve typically steepens around market bottoms, according to Strategas’ Sohn. The current shape of the curve, however, shows yields for shorter-dated bonds exceeding those for many longer-dated ones, a sign that has preceded past recessions. (LINK)”We would say that tactically selling into further strength is justified,” Citi strategists wrote earlier this week, noting that the S&P 500 had already rallied through their year-end target of 4,200.Indeed, three previous bounces in the S&P 500 this year have reversed to result in the index marking new lows.But Delwiche, of All Star Charts, believes this move may be different.”It’s more likely that we see strength beget strength,” he said. More

The writer is former French minister of labour and ex-ambassador to the OECDDrying rivers, burning forests, record temperatures — this summer has offered multiple reminders of the sheer scale of the planetary climate crisis. People are suffering and calling for action.Unfortunately, most governments around the world have been trying to deal with this global warming catastrophe with short-term measures. But treating the symptoms is not enough. The long-term approach needs to change as this crisis will intensify. This is not an unexpected emergency. As early as 1972, the first report of the Club of Rome showed that economic growth, according to the current model, would lead to a sharp drop in the global population by 2100 due to pollution, scarcity of energy resources and the impoverishment of arable lands. A warning which came 50 years ago! The trends predicted back then are now making their impact felt. For more than 30 years, the annual reports of the Intergovernmental Panel on Climate Change have alerted us to the acceleration of global warming and the dramatic ecological, social and economic threats it poses, including the destruction of biodiversity and the degradation of the oceans. The risk of warming is exponential. However, we can still act to mitigate and adapt.The Paris Agreement of 2015 and subsequent UN climate conferences led states to make strong commitments. But are a warning system and political commitment enough? Obviously not — because we are failing to measure the effectiveness of public policies in this area, which limits their impact and improvement. We must act more efficiently. The response to global warming poses a challenge to governments of unprecedented scale and difficulty, as well as to the global economy. Mark Carney, former governor of the Bank of England, has called it the “tragedy of horizon”. In other words, how to reconcile ecological, economic, social and political time horizons, which differ greatly?There are many questions to answer. How can we build a bridge between the short-term interests of finance and the long-term interests of the environment? How and at what pace can we transfer an energy model which built the wealth of developed countries, without reducing the quality and standard of living? How to manage this transformation without the highest price being paid by the poorest, when access to energy (for transport, housing, heating, travel) will be more expensive? How to anticipate the challenge of skills and mobility when hundreds of millions of jobs will change either their nature or location? How to “upskill” and reskill oil or coal workers to become maintenance technicians in nuclear or renewable energies? In May 2021, following a proposal from the French government, the OECD established a programme to measure and benchmark the effectiveness of public policies in the fight against global warming. The International Climate Action Programme (IPAC) is designed to support the efforts of countries to achieve the goals of the Paris Agreement. Drawing on a “wealth of international climate-related data”, the IPAC assesses national and international policies aimed at achieving net zero greenhouse gas emissions by 2050, providing recommendations and sharing best practices.As France’s permanent representative to the OECD, I had the chance to support and negotiate this project with the 37 other member states. We insisted that economic and social indicators be integrated into the IPAC, as the interaction between the different factors will determine whether the policies carried out succeed or fail. The IPAC’s principal objective is to publish a first global report in 2023, based on an annual scoreboard with a small number of structural indicators to assess climate action and issue recommendations that will feed into public debate and inform the decisions of key performers. The current energy crisis makes the implementation of this robust measurement system even more critical. In the short term, many countries are lowering their ambitions to reduce fossil fuel usage in order to protect their populations and industries. This debate is particularly acute within the OECD, where some countries argue that the transparency provided by the IPAC is no longer appropriate, at least in the short term. I disagree. Establishing a solid base to manage this current difficult phase as effectively as possible, and in order to accelerate the longer term fight against global warming, is essential. We will not make progress unless we are able to measure the effectiveness of the policies we adopt — now and in the future. More

But the collapse of Prime Minister Mario Draghi’s national unity government in July propelled Italy towards an election on Sept. 25, making the capital raising plan more complicated for the world’s oldest bank.According to La Repubblica, the bank may get 1.6 billion euros already committed by Italy’s treasury by Nov. 12. Later on, it could get additional “injections of private funds, perhaps from the longed-for buyer that the Treasury has been seeking for years”, the paper said.In mid-July, Monte dei Paschi CEO publicly said the bank would raise the 2.5 billion euros via a capital increase to be executed under an “all or nothing” condition.In documents published in mid-August on the bank’s website, MPS dropped the “all or nothing” condition for the cash call.Repubblica said this change could be linked to MPS’s intention to complete the cash call in steps or could be aimed at reducing the risks for the banks in the underwriting consortium for the capital increase.Monte dei Paschi was not immediately available for comment.A source with knowledge of the matter had told Reuters in late July that the Treasury was determined to complete the bank’s capital raising despite the political chaos. ($1 = 0.9966 euros) More