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JSE May Bring Cryptocurrency Trading to Market Published: 21 August 2018

The Jamaica Stock Exchange (JSE) has advised that they have signed a Memorandum of Understanding (MOU) with Blockstation to explore the possibilities of offering crypto-currency trading to investors. The release from the JSE further stated that the market will be notified of ongoing developments as the framework and platform to effect such trading is currently being examined. According to Marlene Street Forrest, the service would satisfy considerable investor interest in digital assets. Blockstation indicated that a live workshop on crypto-currency trading was conducted with a group of five JSE broker members and representatives of local regulators. However, the BOJ is skeptical about virtual currencies and has not formalized a policy regulating its use thus far, despite issuing a press release about the potential benefits that blockchain technology possess for financial inclusion. This is an interesting development that Investors should look at keenly based on the increasing popularity of blockchain technology and the potential impact it will have on payment processes and the capital markets. 

 

Source: JSE

Trump Criticize Fed Published: 21 August 2018

(CNBC) President Donald Trump said he disagreed with the Federal Reserve's decision to raise interest rates, and that the Fed should do "what's good for the country," according to an interview with Reuters. The US President has stated that he is "not thrilled" with Fed Chairman Jerome Powell decision to raise  interest rates, arguing that the central bank should do more to help the US economy. This is unconventional as Presidents have historically avoided commenting on Fed policies since the central bank is designed to be independent from political interference. Since Trump took office, the Fed has raised rates five times, including twice this year under Powell. The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating. The central bank is expected to raise rates at least two more times this year, citing reasons such as a growing economy and increasing levels of employment. It has also penciled in three more rate hikes in 2019. Despite criticism from the White House, economists have commended the actions of the Federal Reserve. According to a survey released Monday by the National Association for Business Economics, approximately eight in 10 economists believe the Fed's interest rate policies are appropriate for the economy. The Federal Funds Rate is currently set at 2.0%, with the  Federal Open Market Committee previously signaling it would raise rates to 2.5 percent in the latter part of 2018, 3.0 percent in 2019, and 3.5 percent in 2020.

Consumer sentiment hits its lowest level since September Published: 17 August 2018

An initial look at consumer sentiment for the month of August came in below expectations.

The University of Michigan's consumer sentiment index hit 95.3 for August — the lowest level since September — according to a preliminary reading released Friday. Economists polled by Reuters expected the index to hit 98 in August, up from 97.1 in July.

Richard Curtin, chief economist of the university's Surveys of Consumers said the weakness "reflected much less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices." Curtin noted, for example, that consumers viewed buying conditions for vehicles less favorably than at any time in the past four years, as "vehicle prices [are] being judged less favorably than anytime since the close of 1984."

 "Overall, the data indicate that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions," he said. "As is usual at this stage in the business cycle, some price resistance has been neutralized by rising wages, although the falloff in favorable price perceptions has been much larger than ever before recorded."

The Federal Reserve has already raised rates twice this year and is expected to hike two more times before year end. Market expectations for rate hikes in September and December are at 93.6 percent and 61.3 percent, respectively, according to the CME Group's FedWatch tool.

Inflation has been on the rise lately.The so-called core Consumer Price Index last month posted its largest increase since September 2008.

China backs Turkey to overcome its economic crisis Published: 17 August 2018

(CNBC) China is the latest country to offer some comforting words to President Recep Erdogan, as Turkey experiences a currency meltdown and a tariff spat with the U.S.

Foreign Ministry spokesperson Lu Yi said China believes that Turkey has the "ability to overcome temporary economic difficulties," according to a translated statement placed on the ministry's website Friday. He hoped that all parties concerned would resolve their differences through dialogue.

His comments follow a reported phone call this week between Erdogan and Angela Merkel, with the German chancellor offering to strengthen ties between the two nations. 

Turkey's currency plummeted 20 percent against the greenback in a single trading day last Friday after President Donald Trump announced a doubling of steel and aluminum tariffs on Ankara, in return for the country's continued detention of American pastor Andrew Brunson.

Venezuela Debt Wreck Marks New Milestone as $6.1 Billion Unpaid Published: 17 August 2018

(Bloomberg) Venezuela’s debt crisis passed a new milestone as the government missed a principal payment on one of its bonds for the first time this week, boosting arrears on international securities to $6.1 billion.  It was hardly a surprise for investors, who have watched the value of their securities plummet since President Nicolas Maduro announced in November that he would seek to restructure the country’s debt in the midst of an economic crisis. But it reinforced the difficult position creditors find themselves in as the overdue payments pile up with no resolution in sight and
no easy recourse for getting their money back. Maduro’s recent measures to reduce long-standing gasoline subsidies and redenominate the currency by lopping off five zeroes, both set to take effect this month, are steps in the right direction but ultimately unlikely to help the country pay back bondholders, said Siobhan Morden, who heads Nomura Securities International’s Latin America fixed-income strategy. “It still looks like a countdown with economic crisis morphing into a political crisis for the Maduro administration,” Morden said in an Aug 15 note.

Netflix sinks to its lowest level in more than 3 months (NFLX) Published: 15 August 2018

European momentum Published: 15 August 2018

The euro area grew at a faster pace than initially reported, with data published by Eurostat showing a 0.4 percent expansion in the second quarter, up from the previous estimate of 0.3 percent. Growth in Germany was 0.5 percent in the three months through June with the solid momentum driven by domestic consumption and investment. Labor data for the U.K. showed unemployment falling to 4 percent, a new 43-year low, while the pace of wage growth eased.

Bounce Published: 15 August 2018

(Bloomberg) The plunge in Turkey’s lira is taking a break today, the currency gaining as much as 6 percent against the dollar to trade at 6.5538 by 5:50 a.m. Eastern Time. In a televised address, President Recep Tayyip Erdogan said the country would boycott American electronic devices, while citizens will  "continue their path with the Turkish lira." His defiance comes as the head of Spain’s Banco Bilbao Vizcaya Argentaria SA’s Turkey unit urged the central bank to tighten monetary policy, echoing calls from other lenders and business groups. The U.S. maintained pressure on Ankara, warning there would be no negotiation until a detained American pastor is released. 

Highest Core Inflation in Decade Flattens Real U.S. Wage Growth Published: 10 August 2018

(Bloomberg) A gauge of U.S. consumer prices jumped by the most in a decade in July, eating into wage gains that have barely budged in the past four months and strengthening the case for the Federal Reserve to keep raising interest rates gradually.  The core measure of the Consumer Price Index, which excludes food and fuel, rose 2.4 percent from a year earlier, the biggest advance since September 2008, a Labor Department report showed Friday. From the prior month, both the main CPI index and core rate rose 0.2 percent -- matching expectations.

Policymakers are widely projected to lift borrowing costs when they meet in September, with many investors expecting an additional hike before the end of this year. Inflation has made progress, and the unemployment rate, at 3.9 percent in July, signals the Fed is near its maximum-employment goal.

Trade may become a source of price pressures. In picking Chinese goods to target for tariffs, the Trump administration has tried to avoid directly taxing consumer goods. But that’s getting harder to do as trade tensions escalate. A list of Chinese products due to be hit with tariffs next month includes consumer items such as digital cameras, selfie sticks and electric scooters.

Stocks Drop With Euro as Turkey Crisis Deepens: Markets Wrap Published: 10 August 2018

(Bloomberg) Global stocks declined and the lira weakened as Turkey’s economic crisis threatened to spread. The dollar rose with Treasuries after inflation data.  The S&P 500 Index erased a weekly advance after President Donald Trump doubled tariffs on Turkish steel and aluminum imports, escalating a diplomatic row that tipped the nation’s economy deeper into crisis. European and emerging-market equities slid more than 1 percent after President Recep Erdogan’s remarks failed to reassure global markets. The 10-year yield slid to 2.90 percent as data reinforced the Federal Reserve’s rate-hike intentions.  

Geopolitical tensions between the U.S. and other countries set the tone for markets this week, with the latest leg of the lira’s downward spiral triggered by a diplomatic row with America. Earlier, China responded to the Trump administration’s trade war volley with additional tariffs of its own. The ruble hit a two-year low after the U.S. announced new sanctions on Russia over a nerve-agent attack in the U.K.

Elsewhere, the pound fell for a seventh session, heading for its worst week since May, while oil erased a loss after fears about global supplies receded. Tesla shares climbed in after-market trading after CNBC reported that its board planned to meet with financial advisers next week to formalize a process to take the company private.