As we move towards autumn, signs of volatility are creeping back into markets. One of the main questions at the forefront of investors’ minds is how soon the U.S. Federal Reserve (Fed) will move to raise interest rates. Some market experts, and even some Fed officials, have been pointing at reasons why the U.S. central bank should look to “normalize” interest rates. Meanwhile, a fall in the oil price following a report from the International Energy Agency that forecasted a continuing supply glut added to global market turbulence.
Cooling down in the U.S.
We’re referring to the economy, not fall temperatures. A deluge of data arriving this week reflected the moods of cautious consumers and hesitant businesses. Retail sales fell 0.3% in August, marking the first decline since March. Manufacturing activity fell 0.4% for August, led by lower output of consumer goods. And business inventories were unchanged in July, suggesting that businesses don’t expect demand for their products to increase anytime soon. All of these numbers point to a continuation of slow growth for the U.S. economy.
This has put a damper on expectations for a rate increase anytime soon. The Fed holds its next meeting on September 20 and 21, and it is widely anticipated that rates will remain unchanged. A recent Wall Street Journal survey of economists showed that a majority of respondents (74%) believe there will be a rate increase in December.
Markets have been volatile this week, as the future of global central bank policy remains uncertain. The S&P 500 Index has had a week of ups and downs ahead of the Fed meeting next week, and 30-year U.S. Treasury yields fluctuated on speculation that central banks may be reaching their limits on accommodative monetary action.
Sorting the wheat from the chaff
German chemical giant Bayer has this week announced confirmation of its $66 billion takeover of U.S. crop producer Monsanto. Bayer’s pick-up line for the controversial genetically modified seeds business was far from corny. It values Monsanto’s shares at $128 each, a fifth higher than its closing price on Tuesday. Given that the deal follows a wave of consolidation in the industry, and the fact that the combined business will control more than 25% of the world’s supply of seeds and pesticides, it is likely to face huge regulatory hurdles.
Jean Claude junks UK politicians
European Commission President Jean-Claude Juncker gave his state of the union address this week. Blaming Brexit on “40 years of lies by British politicians,” he deemed the European Union (EU) to be facing an existential crisis, while suggesting the UK will not have access to the single market when it leaves.
Meanwhile, Herman Van Rompuy a former head of the European Council, warned that Brexit negotiations might not start for another year, until a new German government is in place. On Friday EU leaders meet in Bratislava, without Britain, to discuss the EU’s future after Brexit.
Looking at some of our politicians, we can be forgiven for thinking: How on Earth did they get elected? Spare a thought, then, for Gylve Fenriz, a member of Norwegian death metal band Darkthrone and (reluctant) new kid on the block in local politics. Fenriz, whose seminal works include titles such as ”Total Death,” “Ravishing Grimness” and “Plaguewielder,” agreed to run for a backup town council seat in Kolbotn in the Oslo commuter belt.
“I said yeah, thinking I would be like 18th on the list and I wouldn’t really have to do anything,” he told music site CLRVYNT. The election campaign consisted of a picture of Fenriz holding his cat, named Peanut Butter, and the catchy slogan: “Please don’t vote for me.”
But the Darkthrone man won the election. “Basically, I have to step in when the usual people who go to the big meetings are sick or something. Then I have to go sit there and feel stupid among the straight people.”
“It’s really boring,” he added.