Week in review: with friends like these …
This week, London provided the venue for NATO’s 70th birthday bash. But with insults flying between the leaders of member states, the occasion was hardly joyous.
The ramp-up in rhetoric began with France’s Emmanuel Macron, who described NATO as “brain dead” before the 70th anniversary summit began. President Trump was quick to take umbrage, describing the French president’s comments as “nasty” and “insulting”. For good measure, he took aim at NATO members who don’t meet the organisation’s defence-spending obligations, labelling them “delinquents”. And then Macron, Canadian prime minister Justin Trudeau and UK prime minister Boris Johnson were filmed apparently mocking the US president during the summit. Trump retaliated by calling Trudeau “two-faced”.
But despite all the rancour, the meeting produced some degree of unity. The members of the alliance reaffirmed their commitment to Article 5 of the Washington Treaty, which treats an attack on one member as an attack on them all. And the allies agreed to stand together against threats from Russia and China.
President Trump wasn’t content with hurling insults, however. His tweeting fingers were far from idle over the week, causing considerable consternation. The US president accused Argentina and Brazil of currency manipulation and moved to restore tariffs on steel and aluminium imports from both countries.
Trump also annoyed the French at a post-summit press conference, threatening to retaliate against a French digital-services tax with tariffs on wine, cheese, handbags and makeup. Nor did China escape his rhetorical crosshairs; he suggested that a proposed trade deal could be delayed until after the US election in 2020. The president did, however, strike a more positive note on Thursday, when he said that trade talks were “moving along”.
In the financial markets, this busy bout of tweeting led to a rally in government bonds and a sell-off in equities and the US dollar. The S&P 500 was down 0.8% by Thursday’s close. Analysts added to the malaise by continuing to pare back their earnings expectations for the fourth quarter.
Meanwhile, North American economic data pointed to stagnation. In the US, the Institute for Supply Management’s manufacturing index came in below expectations for November at just 48.1; this was the fourth consecutive month at which the reading was below the 50, indicating contraction. New orders were worse still, at 47.2. The Mexican purchasing managers’ index (PMI) slipped from a barely expansionary 50.4 to a firmly contractionary 48.
Elsewhere, evidence of the health of the global economy was mixed. Eurozone, UK and Japanese manufacturing PMIs were revised up for the final count, though France was still the only one above 50, at 51.7. China’s private-sector Caixin PMI surprised positively with a rise to 51.8 in November, even as growth in capital expenditure hit a three-year low.
Purse strings open
The growing gloom was met with some fresh fiscal stimulus. Shinzo Abe, Japan’s prime minister, announced a ¥13.2 trillion (US$121 billion) supplementary budget. The Hong Kong authorities chipped in with HK$4 billion (US$512 million) of relief spending.
On the monetary side, the Reserve Bank of Australia kept rates unchanged at 0.75%, despite slightly weaker-than-expected growth in the fourth quarter. The Canadian central bank also left rates unchanged, citing “nascent evidence that the global economy is stabilising”.
Taking a pounding
In the UK, sterling hit its highest level against the euro since May 2017 as opinion polls suggested a firm Conservative lead ahead of next week’s general election. Conversely, the FTSE 100 was down 2.8% by Thursday’s close; many of the largest UK-listed companies make the bulk of their earnings abroad, and so their shares tend to be adversely affected by a stronger pound.
European shares fell heavily at the start of the week, but mounted a recovery thereafter. Overall, the FTSE World Europe ex UK Index was down 1.1% by Thursday’s close.
With negative interest rates providing an incentive for corporate acquisitions, Japanese and European companies have been on a cash-fuelled spending spree. This week, Japan’s Astellas announced that it is to buy US gene therapist Audentes for £3 billion in cash.
Meanwhile, China’s Zijin Mining agreed to buy Canada’s Continental Gold for $1 billion. Another Canadian gold company, Endeavour Mining, made a public £1.47 billion buyout offer for its UK-listed peer Centamin. This offer was rejected, however.
And finally …
Distressing news for proponents of precision in punctuation: the Apostrophe Protection Society is no more.
The society was formed in 2001 to uphold correct usage of the punctuation mark – in possessives and contractions, since you ask – not in plurals (well, except plurals of numbers and letters in some style guides…).
But now, after 18 years of waging war on the greengrocers’ apostrophe (apple’s, pear’s, etc.), its founder, John Richards, is stepping down. “At 96, I am cutting back on my commitments,” he said. He lamented the state of modern orthography, declaring that “the ignorance and laziness present in modern times have won!”.
Here at Week in Review, we salute Mr Richards’ efforts (and have given this week’s text one final nervous proof!).
RISICO-WAARSCHUWINGDe waarde van beleggingen en de inkomsten daaruit kunnen zowel dalen als stijgen en u kunt minder terugkrijgen dan het geïnvesteerde bedrag.
De opvattingen en conclusies die in deze mededeling worden geuit zijn slechts voor algemene interesse en moeten niet worden opgevat als beleggingsadvies of als een uitnodiging om een bepaald effect te kopen of verkopen.
Alle gegevens die hierin staan en aan een derde partij worden toegeschreven ("Gegevens van derde partijen") zijn (is) eigendom van (een) derde leverancier(s) (de "Eigenaar") en wordt onder licentie door Standard Life Aberdeen** gebruikt. Gegevens van derde partijen mogen niet worden gekopieerd of verspreid. Gegevens van derde partijen worden verstrekt zoals ze zijn en er wordt geen garantie gegeven dat deze juist, volledig of tijdig zijn. Voor zover wettelijk toegestaan, zal noch de Eigenaar, noch Standard Life Aberdeen** of welke derde partij dan ook (inclusief iedere derde partij betrokken bij het verstrekken en/of samenstellen van Gegevens van derde partijen) aansprakelijk zijn voor Gegevens van derde partijen of voor enig gebruik van Gegevens van derde partijen. In het verleden behaalde resultaten bieden geen garantie voor de toekomst. Noch de Eigenaar, noch welke derde partij dan ook, steunt, onderschrijft of promoot het fonds of product waar de Gegevens van derde partijen betrekking op hebben.
**Standard Life Aberdeen verwijst naar het relevante lid van de Standard Life Aberdeen-groep, bestaande uit Standard Life Aberdeen plc samen met haar dochterondernemingen en soms (direct of indirect) gelieerde ondernemingen.