Week in review: bordering on obsession?
It may have been Valentine’s Day this week, but Shakespeare was right when he said that the course of true love never did run smooth. US President Donald Trump is certainly encountering plenty of bumps along the road to obtaining one of his heart’s desires – a physical barrier on the US-Mexico border.
Democrats and Republicans in the House of Representatives agreed on a bill to provide funding for US border security, avoiding another government shutdown. Crucially, however, it provides less than a quarter of the $5.7 billion that Mr Trump wants to spend on building a wall. Asked how he felt about the deal and before giving it his official seal – presumably without a loving kiss – of approval, his response was “…not happy.” On Thursday, as Congress also ratified the funding deal, he announced plans to declare a national emergency. If the declaration stands (it may be challenged in US courts and Congress) it could be used to divert funds and resources to the barrier.
Over the week, one of the biggest influences on US equities was the progress of trade talks between the US and China in Beijing. On Tuesday, President Trump hinted that he might allow negotiations to continue past the end of this month. Then, tariffs on around $200 billion of Chinese imports to the US are set to be raised from 10% to 25%. It is worth bearing in mind that the S&P 500 Index is up almost 20% since its Christmas-Eve low – there is already some good trade news in the price. Elsewhere, the surprise revelation that December’s US retail sales had fallen at their fastest pace in almost a decade also capped gains on Wall Street. Overall, the S&P 500 gained 1.4% for the week to close on Thursday.
May’s bloody Valentine
The UK’s FTSE 100 Index, meanwhile, climbed 1.8%. But there was little love lost in UK politics. Prime minister Theresa May suffered another blow as MPs once again voted to reject her Brexit plans. The result of the vote has no legal implications. Nevertheless, it will be even more difficult for Mrs May to convince her EU counterparts that her exit strategy has enough parliamentary support behind it to carry. Jeremy Corbyn, leader of the Labour Party, said Mrs May should “admit her Brexit strategy has failed.” Downing Street, however, issued a statement accusing Mr Corbyn of voting to “make no deal more likely.”
Growth slows, but European profits impress
Commentators were quick to blame Brexit for slowing UK economic growth of just 0.2% in the fourth quarter. Business investment was down, but the absence of growth in the EU (currently still the UK’s largest trading partner) and slowing growth in China are more likely explanations. On Thursday, a report revealed that Germany barely avoided entering recession in the October to December period, recording zero growth. Up until then, European equity investors had been enjoying news of generally strong corporate earnings. Dutch brewer Heineken toasted better-than-expected operating profits of €3.8 billion, partly due to better sales in emerging markets, and predicted higher demand for expensive drinks.
Tobacco company Swedish Match also appeared to have struck lucky. Its share price lit up after the company’s plans for US expansion were well-received by investors. Overall, the FTSE World Europe (ex UK) Index was up 1.8%.
Had enough of saccharine sentimentality? Thoughts turned from romantic gestures for the one you love to petty acts showing your contempt for the one that got away? If so, you need look no further than the Wildlife Images Rehabilitation Centre in Oregon. There, staff have spawned an excellent idea for fed-up former lovers. In exchange for a $20 donation, they will purchase a salmon, name it after your ex, and then feed it to their brown bears. Proving that news of the scheme is no red herring, they’ll also provide you with a special certificate and photographic evidence of the bears’ meal. So far, there’s no indication of how many people have taken the bait.
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