Recommended Weekend Reads

August 4 - 6, 2023

Here are our recommended reads from reports and articles we read in the last week. We hope you find these useful,  and have a great, relaxing weekend.   And let us know if you or someone you know wants to be added to our distribution list.

Global Political Economy

• “Economists Reconsider Industrial Policy”   Project Syndicate

  Three noted international economists -Dani Rodrik, Réka Juhász, and Nathan Lane – take a fresh look at the performance of industrial policies.  They note that in the past, economists often focus on indicators such as import tariffs, capturing only limited dimensions of such measures and conflating their objectives with others.  A new generation of research efforts takes a more productive approach – and reaches very different conclusions.

• “The Trade-Offs of Counterterrorism Policies”  Economic Research, Federal Reserve Bank of St. Louis

  Abstract: This article provides a modern overview of counterterrorism tools and their trade-offs for curbing terrorist attacks and their consequences. Defensive and proactive countermeasures constitute two main classes of counterterror tools deployed by targeted governments. The primary drawback of defensive actions, which make terrorist attacks more costly and less apt to succeed, is attack transference that shifts the mode, venue, or target of attacks to those less protected. In contrast, offensive, proactive measures, which confront the terrorists directly, may result in backlash as terrorist sympathizers, the public, and state sponsors augment their terrorist support resulting in more recruitment and attacks. Other essential trade-offs are identified and discussed. Additionally, we formulate a two-stage canonical game-theoretic model involving a targeted government and a terrorist group adversary. This model accounts for defensive and proactive policies but also myriad scenarios. As such, it serves as a foundation to explain modern counterterrorism literature, as illustrated by a discussion of iconic contributions to the study of counterterrorism.

Indo Pacific 

• “Why China’s Export Controls on Germanium and Gallium May Not Be Effective”  Stimson Center

  In 2010, China adopted a series of export controls on rare earth exports to Japan, the United States, and the European Union. Those export controls led to massive smuggling and pushed Japan and the United States to diversify their rare earth supply chains, cutting at least 30% of China’s market share of the global supply of rare earths from 2010 to 2021. China’s recent export controls on gallium and germanium are now increasing calls in more countries for a similar diversification of supply chains of critical materials away from China. While it can take years to diversify supply chains, and the cost of doing so is often prohibitive, the new controls will force countries to continue to advance policies that reduce their dependence on China for critical materials.

•   “Podcast: Japan and NATO in 2023”  International Institute for International Affairs

  The Podcast of IISS experts unpacks the 2023 NATO Summit in Vilnius, Lithuania, and the developments around Japan-NATO cooperation (as NATO has opened an office in Tokyo and is likely to open more offices in the Indo-Pacific), along with Japan’s responses to Russia’s war in Ukraine.  

• “Why is Italy Withdrawing From China’s Belt and Road Initiative?”  Council on Foreign Relations

  In 2019, during Chinese President Xi Jinping’s visit to Rome, Italy shocked the United States and Europe by becoming the first Group of Seven (G7) country to join China’s Belt and Road Initiative (BRI).  But this past week, Italian Prime Minister Giorgia Meloni indicated joining the BRI was a “big mistake,” and Italian Defense Minister Guido Crosetta called Italy’s decision to join the BRI an “improvised and atrocious act.”  So why is Italy pulling out now?

Russia

• “Putin and Prigozhin: It’s Complicated”  Belfer Center for International Affairs, Harvard University

  In late June, Yevgheny Prigozhin led a 36-hour mutiny against President Vladimir Putin’s military leadership, driving his Wagner Forces within 200 kilometers of Moscow.  After quickly backing down, Prigozhin announced he was going into exile in Belarus, and the Wagner Forces were going to be disbanded and absorbed into the Russian Army.  Neither happened.  Prigozhin appeared in Moscow last week at the Russia-Africa Leaders’ Summit, shaking hands with various African leaders.  And the Wagner Group apparently has not been disbanded.  So what is going on?  It’s complicated.

Africa 

• “Kenya’s debt struggles go far deeper than Chinese loans”  Chatham House

  Despite recent claims of a Chinese state-linked hacking team carrying out systematic cyber-attacks on Kenyan government institutions being denounced by Kenya’s Ministry of Interior as ‘sponsored propaganda’, Kenya’s debt burden to China is under scrutiny once again as the alleged attacks were reportedly driven by a desire to assess the status of repayments.  Chinese loans account for roughly 64 percent of Kenya’s current stock of bilateral external debt.  And the question being asked now is did the Kenyan government post the strategic Mombasa Port as collateral for these loans, feeding accusations of China indulging in ‘debt-trap diplomacy’ both in Kenya and across the continent.

• “From Russia, with little to show for it”   Institute for Security Studies

  Russian President Vladimir Putin was hoping for a record turnout of African leaders at the second Russia-Africa summit in St Petersburg last week to show the West he wasn’t isolated after all. He didn’t quite pull that off. Only 17 African heads of state attended – far fewer than the 43 at the 2019 Sochi summit.  So if Putin got some recognition, what did Africa get? Not much, judging by the joint declaration, which looks as though it was written almost exclusively by the Kremlin. It is full of statements implicitly harnessing Africa in support of Moscow’s posture against Western sanctions imposed on it for invading Ukraine.

Chart of the Week 

Looking at U.S. Sanctions in 2022

The Center for a New American Security just published a new report looking at the massive increase of individuals and entities placed under sanctions.  In 2022, 2,275 persons were added to the Specially Designated Nationals and Blocked Persons (SDN) list.  The below chart shows how Russian persons and entities were the primary targets of the sanctions:

The Global Week Ahead

July 30 - August 6, 2023

Summer holidays are now in full force.  In Washington, Congress adjourned for their annual August recess and won’t return until almost mid-September.  Brussels, London, and Berlin (which went on holiday two weeks ago) are also quiet - indeed, empty - as government officials and staff have disappeared to the beaches or mountains.  The same is true for most financial markets.  The Summer Doldrums are upon us.

But there are still plenty of important things happening around the world this week.  China implements its new ban on exporting germanium and gallium. Both are critical raw materials used in semiconductors and other electronics, and the technology industry is scrambling to figure out how to make up for the shortfall.  Overall, China produces more than 90 percent of both germanium and gallium. 

Also, this week,  the US takes the chair of the UN Security Council for August.  US Secretary of State Antony Blinken will personally chair a special meeting to discuss the “Famine and conflict-induced global food insecurity” – an issue that goes right to Russia’s recent abrogation of the Black Sea Grain Initiative (which seems to be official dead as Russia refused to negotiate).  Meanwhile, the foreign ministers of the states of the Organization of Islamic Cooperation will discuss burnings of the Koran in Sweden and Denmark at an extraordinary virtual meeting.  Both burnings have sparked widespread protests and outrage in the greater Muslim world that does not seem to be calming down.

On the global economic radar screen, a lot of economic data is hitting the markets his week.  Markets will be particularly watching China’s PMIs for further indications of the size and scope of the country’s fading economic recovery.   In Europe, markets will also focus on the Eurozone’s CIP and GDP numbers, the Bank of England’s policy meeting, and the Reserve Bank of Australia’s rates decision.   In the Americas, the Central Bank of Brazil meets, while in the US, jobs data and productivity data are reported. 

Here is what else we are watching around the world this coming week:

Sunday, July 30, 2023 

Global

• NSTR

Americas

Political/Social Events –

• The Panama Canal Authority will begin limiting daily transit capacity due to severe drought conditions.  They are expected to allow only 32 ships per day.

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• APEC holds a meeting on the Finance Ministers’ Process in Seattle, Washington.

• In Panama, the trial of 36 defendants, including ex-presidents Ricardo Martinelli and Juan Carlos Varela, accused of money laundering with Brazilian construction group Odebrecht.

• Chile hands over the presidency of the Pacific Alliance to Peru.

• Today is Independence Day in Vanuatu, marking the day in 1980 when they were granted their independence from Great Britain.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• Russia celebrates Naval Day.  Traditionally, the country shows off its latest weapons, ships, and aircraft, but it is not clear what will happen this year due to the Ukrainian invasion.  While on paper, Russia has the second-largest naval fleet in the world.  But the reality is many of those ships are small - Russia currently has only one aircraft carrier (to the US Navy’s eleven super-carriers) – and they place most of their focus on nuclear submarines, although that has reportedly been cut back due to the costs of the Ukraine invasion.

• Italy may declare a state of emergency to deal with the heatwave the country has been enduring.

• French Economy Minister Bruno Le Maire visits Beijing to discuss economic and trade issues.

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• Israel unveils a massive new rail network that could eventually enable train connections to Saudi Arabia.   

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• The Central African Republic will hold a referendum on changing the constitution to allow incumbent President Faustin-Archange Touadéra to run for a third term in 2025.  Ominously, the Russian Wagner Group will be serving as “guards” for the referendums voting centers.

•  The Economic Community of West African States will meet in Abuja, Nigeria, to discuss Niger's July 26 coup.

• Today is Enthronement Day in Morocco, celebrating the day King Mohammed VI took the throne in 1999.

Economic Reports/Events –

• NSTR

Monday, July 31, 2023

Global

• The foreign ministers of the states of the Organization of Islamic Cooperation will discuss the burnings of the Koran in Sweden and Denmark at an extraordinary virtual meeting. 

• The UN Security Council is scheduled to hold a briefing on threats to international peace and security.

• The UN’s Humanitarian Coordinator in Ukraine, Denise Brown. She will brief reporters virtually on the humanitarian situation in the country, including in Odesa.

• The US assumes the chair of the UN Security Council for the month of August.

Americas

Political/Social Events –

• The US Congress is out of session for the month of August.  The House of Representatives returns on September 12, and the Senate on September 5.

• Former President Trump may face new criminal charges this week by Special Counsel Jack Smith over allegations of his involvement in the January 6th attack on the US Capitol.

• Republican Presidential candidate and Florida Governor Ron DeSantis releases his “Declaration of Economic Independence” during a speech in New Hampshire.

Economic Reports/Events –

• US Chicago PMI (July), Dallas Fed Manufacturing Index (July), Loan Officer Survey

• Mexico GDP (Q2)

• Brazil BCB Focus Market Readout, Private Bank Lending (June), M3 Money Supply (June)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• China NBS Manufacturing & General PMIs (July)

• Japan Retail Sales (June), Industrial Production (July), Consumer Confidence (July), Housing Starts (June), Construction Orders (June)

• India Government Budget Value (June)

• Australia TD-MI Inflation Gauge (July), Housing Credit (June), Private Sector Credit (June),

• Singapore Bank Lending (June), Business Confidence (Q2)

Europe

Political/Social Events –

• EU President von der Leyen travels to the Philippines for meetings with Ferdinand Marcos Jr., President of the Philippines.  While there, she will deliver a keynote speech at the business event “A New Era of EU-Philippines Relations, driven by Stronger Trade and Investment for a sustainable future" in Manila.

Economic Reports/Events –

• ECB Survey of Monetary Analysts, GDP (Q2), Inflation (July), CPI (July)

• Germany Retail Sales (June), Import Prices (June)

• UK Mortgage Lending (June), BoE Consumer Credit (June)

• Italy GDP (Q2), Inflation (July), CPI (July)

• Spain Current Account (May)

• Russia  Monetary Policy Report, M3 Money Supply (June)

Middle East

Political/Social Events –

• Lebanon's Central Bank head Riad Salameh will leave office.  No successor has been named, which is likely to further exacerbate the country’s economic crisis.

• Turkey’s President Erdogan meets Iraqi President Rashid and PM Sudani, Baghdad. Discussions will focus on the resumption of an oil pipeline from the semi-autonomous Kurdistan region to the Turkish port of Ceyhan, the fight against the Kurdistan Workers' Party (PKK), and the water crisis.

Economic Reports/Events –

• Saudi Arabia GDP (Q2), Private Bank Lending (June), M3 Money Supply (June)

• Turkey Tourism Revenues (Q2), Tourist Arrivals (June)

• Pakistan’s Central Bank monetary policy meeting.

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa Trade Balance (June), FX Reserves (June), Private Sector Credit (June)

• Kenya Inflation (July)

• Uganda Inflation (July)

• Ghana mid-term budget

Tuesday, August 1, 2023 

Global

• NSTR

Americas

Political/Social Events –

• Guyana celebrates Emancipation Day, marking the day when slavery was abolished in 1838.

• TikTok plans to launch its US e-commerce business sometime this week, placing it in competition with Amazon, Shein, and Temu.

Economic Reports/Events –

• US Redbook (July 29), S&P Global Manufacturing PMI (July), ISM Manufacturing PMI (July), JOLTS Job Openings (July), ISM Manufacturing Employment (July), Construction Spending (June), Dallas Fed Services Indexes (July), LMI Logistics Managers Index (July)

• Canada S&P Global Manufacturing PMI (July)

• Mexico FX Reserves (June), Business Confidence (July), S&P Global Manufacturing PMI (July)

• Brazil Central Bank Interest Rate Decision, Industrial Production (June), S&P Global Manufacturing PMI (July), Balance of Trade (July)

Asia

Political/Social Events –

• China’s new export ban on germanium and gallium goes into effect.  Both are critical raw materials used in semiconductors and other electronics. According to Nikkei, the ban is “expected to affect chipmakers and key substrate suppliers, including Coherent, Wolfspeed, and AXT of the U.S.; Israeli-German Freiberger; and Japan's Sumitomo Electric, all of which require those raw materials. The export controls may also have ripple effects down the chip supply chain as, on average in recent years, China has produced 90% of the world's germanium and over 90% of its gallium.”

• China celebrates Army Day, marking the foundation of the Chinese People’s Liberation Army.

Economic Reports/Events –

• Reserve Bank of Australia Statement on Monetary Policy.

• China Caixin Manufacturing PMI (July)

• Japan Unemployment (June), Jibun Bank Manufacturing PMI (July)

• India S&P Global Manufacturing PMI (July)

• South Korea Imports/Exports/Balance of Trade (July), S&P Global Manufacturing PMI (July)

• Australia Judo Bank Manufacturing PMI (July), Home Loans (June), Building Permits (June), CoreLogic Dwelling Prices (July), Commodity Prices (July)

• Indonesia S&P Global Manufacturing PMI (July), Inflation (July), Tourist Arrivals (June)

Europe

Political/Social Events –

• Today is National Day in Switzerland.

Economic Reports/Events –

• Eurozone HCOB Manufacturing PMI (July), Unemployment (June)

• Germany HCOB Manufacturing PMI (July), Unemployment (July)

• France HCOB Manufacturing PMI (July)

• UK Nationwide Housing Prices (July), S&P Global/CIPS Manufacturing PMI (July)

• Spain HCOB Manufacturing PMI (July), New Car Sales (July)

• Italy HCOB Manufacturing PMI (July)

• Russia S&P Global Manufacturing PMI (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey Istanbul Chamber of Industry Manufacturing PMI (July)

Africa

Political/Social Events –

• The Nigeria Labour Congress, a powerful confederation of unions, will strike over fuel subsidies and other economic policies.

• Benin celebrates its Independence Day, marking the day in 1960 when the country gained its independence from France.

• Economic Reports/Events –

• South Africa ABSA Manufacturing PMI (July), Total New Vehicle Sales (July)

• Nigeria PMI (July)

Wednesday, August 2, 2023

Global

• The G20 Ministerial Meeting on Women's Empowerment will be held in Gandhinagar, India.

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• US MBA Mortgage Indexes (July 28), ADP Employment (July), Total Vehicle Sales (July)

• Brazil IPC-Fipe Inflation (July)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• Bank of Japan Monetary Policy Meeting Minutes, Jibun Bank Services & Composite PMIs (July)

• South Korea Inflation (July), CPI (July), Inflation (July)

• Reserve Bank of Australia Chart Pack, Australia Ai Group Indexes (July)

• Singapore S&P Global Manufacturing PMI (July)

• Bank of Thailand Interest Rate Decision

Europe

Political/Social Events –

• Pope Francis begins a six-day visit to Portugal, including visiting the holy shrine of Fatima.

• North Macedonia celebrates Republic Day, marking when there was an uprising against the Ottoman Empire in 1903 as well as the first Anti-Fascist Assembly for the National Liberation of Macedonia in 1944.

Economic Reports/Events –

• Spain Unemployment (July), Tourist Arrivals (June)

• Russia GDP (June), Unemployment (June), Business Confidence (July), Real Wage Growth (May), Retail Sales (June)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey Imports/Exports/Balance of Trade (July), Auto Sales (July)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR 

Thursday, August 3, 2023

Global

• The UN Security Council is scheduled to hold an open debate in connection with “Famine and conflict-induced global food insecurity” under the agenda item “Maintenance of international peace and security.”   US Secretary of State Antony Blinken will chair the session.

Americas

Political/Social Events –

• The six-month-old cease-fire between the Colombian government and the National Liberation Army (ELN) – a rebel group – begins.

Economic Reports/Events –

• Federal Reserve Bank of Richmond President Tom Barkin speaks on “Winning the War on Inflation” at the Shenandoah Valley Partnership, Weyers Cave, Virginia.

• US S&P Services & Composite PMIs (July), ISM Services Reports (July)

• Challenger Job Cuts (July), Nonfarm Productivity (Q2), Initial Jobless Claims (July 29)

• Brazil S&P Services & Composite PMIs (July)

• Argentina Tax Revenue (July)

Asia

Political/Social Events –

• Pakistan’s former Prime Minister Imran Khan's trial in a graft case involving his alleged non-disclosure of assets after selling state gifts resumes.  Protests are expected around the country.

• APEC Food Security Ministers meet in Seattle, Washington.

• Economic Reports/Events –

• China Caixin Services & Composite PMIs (July)

• Japan Jipun Bank Services PMI (July)

• India S&P Global Services & Composite PMIs (July)

• Judo Bank Services & Composite PMIs (July), Imports/Exports/Balance of Trade (June)

• Australia Imports/Exports/Balance of Trade (June), Retail Sales (June)

• Singapore S&P Global PMI (July)

Europe

Political/Social Events –

• Today is the deadline for the European Commission's decision on the Korean Air-Asiana merger.

• In the UK, GMB union members begin a strike at Amazon’s Rugeley fulfillment center in Staffordshire in a dispute over pay. Another two-day strike is planned at the e-commerce company’s Coventry warehouse tomorrow by up to 1,000 staff.

Economic Reports/Events –

• The Bank of England interest rate policy, BoE Monetary Policy Report & Minutes

• ECB Board Member Fabio Panetta gives a speech via webinar on "Getting disinflation right," organized by Bocconi University, Milan 

• Eurozone HCOB Services & Composite PMIs (July), PPIs (June),

• Germany Imports/Exports/Balance of Trade (June), HCOB Services & Composite PMIs (July), New Car Registrations (July)

• UK S&P Global/CIPS Services & Composite PMIs (July)

• France Budget Balance (June), HCOB Services & Composite PMIs (July)

• Spain HCOB Services & Composite PMIs (July)

• Italy HCOB Services & Composite PMIs (July)

• Russia S&P Global Services & Composite PMIs (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Riyad Bank PMI (July)

• Turkey Inflation (July), PPI (July), CPI (July), FX Reserves (July)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa S&P Global PMIs (July)

• Kenya PMIs (July)

• Ghana PMIs (July)

• Zambia PMIs (July)

• Mozambique PMIs (July)

• Uganda PMIs (July)

Friday, August 4, 2023

Global

• The UN’s Food and Agriculture Organization (FAO) Price Index (July)

• Federal Reserve Bank of New York Global Supply Chain Pressure Index (July)

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• US Unemployment Rate (July)

• Canada Unemployment (July), Ivey PMI (July)

• Mexico Auto Exports (July), Auto Production (July)

• Brazil Car Production (July)

Asia

Political/Social Events –

• Thailand’s Parliament will meet yet again in an effort to choose a prime minister.  But much depends on what the Constitutional Court decides on August 1st as to whether the Move Forward Party Leader Pita Limjaroenrat can be excluded – as the parliament voted to do last week – or if he can stand for the prime minister.

• Japanese Foreign Minister Hayashi Yoshimasa continues a multinational trip across Asia and Africa.  He began the trip on July 27 and is visiting India, Sri Lanka, India, the Maldives, South Africa, Uganda, and Ethiopia. 

• Japan hosts its first joint fighter jet exercises with Italy through Tuesday. 

• The Cook Islands celebrates Constitution Day.

Economic Reports/Events –

• India FX Reserves (July 28)

• Singapore Retail Sales (June)

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• Bank of England’s Chief Economist Huw Pill and Fergal Shortall, Director, Policy Analysis, give a Monetary Policy Report Briefing.

• Eurozone HCOB Construction PMI (July), Retail Sales (June)

• Germany Factory Orders (July), HCOB Construction PMI (July)

• France Industrial Production (June) Private Non-Farm Payrolls (Q2), HCOB Construction PMI (July)

• UK S&P Global/CIPS Construction PMI (July), New Car Sales (July)

• Spain Industrial Production (June)

• Italy HCOB Construction PMI (July)

• Russia Vehicle Sales (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa:

Political/Social Events –

• Ghana celebrates Founder’s Day, commemorating its struggle for independence from the UK.

Economic Reports/Events –

• Zambia mid-term budget

• Uganda Second Quarter Current Account

Saturday, August 5, 2023 

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• China Current Account (Q2)

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• Today is Burkina Faso Independence Day, marking when the country gained its independence from France.

Economic Reports/Events –

• NSTR

Sunday, August 6, 2023

Global

• NSTR

Americas

Political/Social Events –

• Today is Independence Day in Bolivia, marking when the country declared its independence from Spain in 1825.

• Jamaica celebrates Independence Day, marking the day it gained independence from the UK.

• El Salvador celebrates San Salvador Day, celebrating the Divine Savior for whom the country is named.  It is a national holiday.

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• APEC holds a high-level meeting on Health and the Economy in Seattle, Washington.

• Today is the78th anniversary of the atomic bomb being dropped on Hiroshima.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Please let us know if you or a colleague would like to be added to our distribution list.

U.S. Financial Regulatory Week Ahead

July 31 - August 4, 2023

Washington became a ghost town today (Friday, July 28th).  The US House of Representatives adjourned Thursday night until September 5, and the US Senate adjourns today until September 5, too.  All the major financial regulators concluded their business this past week before they, too, headed for the beach for August.  Thus, next week is going to be extraordinarily quiet.  The only regulatory meeting we see on the calendar is an SEC closed meeting.

 But regulators kept busy right up to the end of the week, issuing an important joint guidance notice late Friday afternoon.  Specifically, the Federal Reserve, FDIC, OCC, and National Credit Union Administration issued updated guidance to ensure banks and credit unions understood their ability to use the Fed’s discount window (You can read the guidance statement HERE.).  The reason for the notice now is there have been questions as to whether prompt usage of the discount window could have fended off the collapse of Silicon Valley Bank.

Also, this past week, the big event was the release of new proposed bank capital standards by the FDIC and Federal Reserve.  The only big surprise from the proposal was news that Fed Chair Jay Powell had voiced concerns about the proposal.   Powell voted in favor of the proposal, but two other Fed Governors, Michelle Bowman and Christopher Waller, voted no.  Congressional opponents of the proposal quickly picked up on Powell’s reticence and the two “no” votes and are now planning hearings in September demanding statistical analysis of how the proposal was crafted.  We will keep you updated on that as soon as they are scheduled.

Also happening this past week was the Financial Stability Oversight Council (FSOC) meeting on Friday to consider several issues, including the transition from LIBOR, climate-related regulations, and updates on the mortgage market.   No major proposals came from it.  You can review the Treasury Department’s official Readout of the meeting HERE.

Below is what else is happening in the US regulatory world next week (which is, as we said above, pretty much nothing):

U.S. Congressional Hearings

• Both the House of Representatives and Senate are in Summer recess until September 5, 2023.  There are no hearings scheduled.

US Regulatory Meetings

• Thursday, August 3/2:00 p.m. – The US Securities and Exchange Commission holds a closed meeting.

• NOTE: The Federal Reserve, Commodities Futures Trading Commission, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau,  and National Credit Union Administration have no major meetings or speeches scheduled this coming week.

Think Tank Events

•  There are no think tank events of note this coming week focused on financial services or financial regulation.

Recommended Weekend Reads

July 29 - 30, 2023

Here are our recommended reads from reports and articles we read in the last week. We hope you find these useful, and have a great weekend.   And let us know if you or someone you know wants to be added to our distribution list. 

Global

• “How a Vast Demographic Shift Will Reshape the World”  New York Times

  In this interactive article, the author argues The world’s demographics have already been transformed. Europe is shrinking. China is shrinking, with India, a much younger country, overtaking it this year as the world’s most populous nation.  But what we’ve seen so far is just the beginning. The projections are reliable and stark: By 2050, people aged 65 and older will make up nearly 40 percent of the population in some parts of East Asia and Europe. Extraordinary numbers of retirees will be dependent on a shrinking number of working-age people to support them. In all of recorded history, no country has ever been as old as these nations are expected to get.  As a result, experts predict things many wealthier countries take for granted — like pensions, retirement ages, and strict immigration policies — will need overhauls to be sustainable. And today’s wealthier countries will almost inevitably make up a smaller share of global G.D.P., economists say.

• “The buzz about electromagnet pulse weapons”  Orbis

  An electromagnetic pulse (EMP) may be naturally occurring or can be created from the detonation of a nuclear weapon high above the Earth’s surface. Either way, it would “fry” electronics completely – virtually all unprotected technology.  Various presidential administrations have grappled with how to best manage risks around EMP threats. As this paper explains, the nuclear EMP debate is unfortunately often framed between two extremes. Some administrations have focused on naturally occurring EMP threats, such as space weather events, whereas others have focused predominately on the nuclear EMP threat or even taken a hybrid approach here. Despite these contretemps, protecting against one form of an EMP threat thankfully also serves to protect against the other. Thus, this paper recommends that the United States Government and the private sector work together to harden the electric grid from both natural and man-made EMP incidents and establish an EMP Manhattan Project to develop national contingency plans for such scenarios.

Americas

• “Chipping Away: Assessing and Addressing the Labor Market Gap Facing the U.S. Semiconductor Industry”  Semiconductor Industry Association and Oxford Economics

  Thanks in large part to the enactment of the landmark CHIPS and Science Act of 2022, a significant share of new chip manufacturing capacity and R&D is expected to be located in the U.S. But as America’s semiconductor ecosystem expands in the years ahead, so too will its demand for semiconductor workers with the necessary skills, training, and education.  This report projects the semiconductor industry’s workforce will grow by nearly 115,000 jobs by 2030, from approximately 345,000 jobs today to approximately 460,000 jobs by the end of the decade, representing 33% growth. Of these new jobs, the study estimates roughly 67,000—or 58% of projected new jobs (and 80% of projected new technical jobs)—risk going unfilled at current degree completion rates.

Asia  

• “The Case for a Hard Break with China”    Oren Cass & Gabriela Rodriquez/Foreign Affairs

  The authors argue that never in human history have nations with such radically different economic and political systems as the United States and China attempted economic integration. When welcomed into the international community in the late 1990s, China’s GDP was roughly one-tenth of the United States GDP, and in 1999, it was still one of the world’s poorest countries per capita, ranked between Sri Lanka and Guyana. U.S. leaders across the political spectrum were confident that by encouraging China’s integration into the global economy.  It has not turned out that way. Instead, China has rapidly become—by some measures— the world’s largest economy and a powerful counterweight to U.S. influence. Its state-controlled economy and increasingly authoritarian leadership have subverted U.S. investment, supply chains, and institutions. The fundamental problem is that the United States’ free-market economy is incompatible with a Chinese state-controlled one. U.S. liberty and democracy are antithetical to the authoritarianism of the Chinese Communist Party. The United States must break from China or else become irrevocably corrupted by it.

• “China’s Belt and Road Initiative a Decade On”  International Institute for Strategic Studies

  China’s Belt and Road Initiative (BRI) has served as an avenue for Chinese infrastructure development across the Asia-Pacific. However, not all countries there have received equal attention or embraced BRI membership. Following a 2018 peak, BRI investments have slowed, providing a window for Western alternatives. While concerns of ‘debt-trap’ diplomacy – due to indebtedness to China – may not have been borne out, Beijing seems to be moving towards promoting Chinese-centric norms of security, development, and digital governance. 

Europe/Eurasia 

• “Russia’s Surging Trade with China Creates Infrastructure Headaches”  Moscow Times

  Russia’s logistics network is creaking under the weight of record trade with Asia. Russia’s trade with China jumped 30% last year to a record $191 billion, according to Chinese customs data. In the first six months of 2023, trade turnover in dollar terms was more than double pre-pandemic levels.

Middle East

•   “Work on Israel-Saudi land bridge has begun, Israel Foreign Ministry Confirms”  Al-Monitor

  The project, the first of its kind in modern history, will facilitate the transfer of goods in trucks initially between the UAE, Israel, Jordan, and Saudi Arabia.  And it is designed will operate even if diplomatic ties between Israel and Saudi Arabia are not officially normalized. 

Surveys & Charts of the Week 

• “China’s Approach to Foreign Policy Gets Largely Negative Reviews in 24-Country Survey”  Pew Research Center

  In a newly released survey, views of China are broadly negative across 24 countries in a new Pew Research Center survey: A median of 67% of adults express unfavorable views of the country, while 28% have a favorable opinion.  Negative views extend to evaluations of China’s international actions. Despite several high-profile diplomatic initiatives by Beijing over the past year – such as brokering a peace deal between Saudi Arabia and Iran and issuing a 12-point proposal for the end of violence in Ukraine – a median of 71% think China does not contribute to global peace and stability.

• “8 facts about Americans and Twitter as it rebrands to X”   Pew Research

  Pew has a second fascinating survey release this week, this one on how Americans see and use Twitter (now rebranded “X” by Elon Musk).  The survey revealed eight facts, a number of them quite surprising:

1.     In 2021, 23 percent of US adults said they use Twitter.

2.     Democrats are more likely than Republicans to use Twitter (as of 2021)

3.     As of this Spring 2023, 60 percent of US adults who had used Twitter in the past year said they’d taken a break from the platform in that time.

4.     Also, in Spring 2023, 25 percent of Twitter uses said it is unlikely they will on the site a year from now.

5.     Following Twitter’s acquisition by Musk, most highly active users continued to use the platform but posted less frequently.

6.     The vast majority of tweets are actually just replies or retweets – 75 percent were either replies to other users (40 percent) or retweets (35 percent).  Only 15 percent were original tweets.

7.     Over the past two years, Democratic and Republican Twitter users’ view of the sites impact on American democracy has changed – For example, Republican users have become much less likely to say the site is bad for democracy (60 percent in 2021 vs. 21 percent now).

8.     Finally, the survey found partisan Twitter users have grown further apart in their views about misinformation, harassment and civility on the platform.

Election 2024: Opening Salvos

Neuberger Berman’s Private Bank’s Aspire Magazine

It was a great pleasure to be interviewed for the latest edition of Aspire, published by Neuberger Berman’s Private Bank, talking about the early outlook for the 2024 elections. You can read the full interview here or download it here.

There are certainly going to be lots of twists and turns ahead in this presidential election cycle, which is likely to be unlike just about any other presidential election we have seen in a hundred years or more.

The Global Week Ahead

July 23 - 30, 2023

While most of the capitals in the Northern Hemisphere are going quiet this week or at the end of this week for summer vacations throughout August, it will still be busy in politics and economics. 

The locus of events geopolitically is in Asia this week.  Both the US Secretary of State and Defense Secretary are in Asia for meetings – Secretary of State Blinken in Tonga and Secretary of Defense Lloyd Austin in Papua New Guinea (both to discuss bilateral security agreements) before they meet up in Australia for the US-Australia ministerial meetings to discuss defense and security issues in the region.  French President Emmanuel Macron will also be in the area, visiting the French territory of New Caledonia to discuss enhanced economic ties.  All this occurs as Taiwan holds massive defense drills testing the military ability to defend against a potential Chinese invasion and/or blockade.  Civilians participate, too, as they practice shelter-in-place exercises.

Russian President Vladimir Putin hosts the 2nd Russia-Africa Summit in St. Petersburg.  The Summit was initially scheduled in Africa but was rescheduled to prevent warrants placed by the International Criminal Court on Putin from being served.  While the Summit, in which an estimated 43 African leaders come together, is scheduled to cover a wide range of issues, the dominant issue will be Russia’s withdrawal from the Black Sea Grain Initiative and the potentially dire implications for African and Middle East food security.  Putin now appears to be attempting to broker a new deal that cuts Ukrainian grain and wheat from being exported and Russia essentially taking over as the primary supplier to Africa.  

On the global economic radar screen this week, it is all about central banks and interest rates.  The US Federal Reserve, the European Central Bank, and the Bank of Japan all meet to decide whether to keep rates in place or raise them again.  All this comes as markets watch a flood of flash PMIs worldwide (amid a hectic earnings week).

Here is what else we are watching around the world this coming week:

Sunday, July 23, 2023

Global

• Nothing Significant To Report (NSTR)

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• Cambodia holds national elections.  All 125 National Assembly seats are up for election for a five-year term.  Currently, all 125 seats are held by the Cambodian People’s Party.  The opposition FUNCINPEC Party and Khmer National United Party hold none – and it looks like they will likely win none.  The Prime Minister, Hun Sen, has led a multi-year crackdown on his opposition.

• Japan’s restrictions on semiconductor sales to China go into effect.  In January, Japan placed restrictive controls on the sale of all chipmaking tools to China and placed restrictions on the export of 23 types of semiconductor manufacturing equipment to China. In so doing, Japan formally joins the US and the Netherlands in implementing curbs.

• Vietnamese President Vo Van Thuong will undertake a six-day trip to Europe and visit Austria, Italy, and the Vatican through July 28.  Vietnam is celebrating 50 years of diplomatic relations with both Italy and Austria.  Trade between Vietnam and Italy, and Austria has grown considerably in recent years and is on track to reach $10 billion annually.   Relations between the Holy See and Vietnam have also expanded in recent years.  Seven percent of Vietnam is Roman Catholic (more than 7 million people).  Vietnam is the only Asian communist country to have an unofficial representative of the Vatican in the country and is now moving to make it official.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• Spain holds general elections. Prime Minister Pedro Sánchez – leader of the Spanish Socialists Workers’ Party (PSOE) – is facing a tough challenge from center-right Popular People’s Party candidate Alberto Núñez Feijóo who is leading in the polls.  Moreover, the more conservative Vox Party is likely to gain positions in the new government.  Sánchez called for early elections and supporters and election observers are suggesting he may have made a mistake as voter sentiment is angry right now. The elections come only a few weeks after Spain assumed the presidency of the EU (until December 31st). 

The UK

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• Israel’s parliament (Knesset) is expected to hold its final vote on the controversial judicial reform legislation. 

• Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Monday, July 24, 2023

Global

• The BRICS National Security Advisors and High Representatives on National Security Meeting will be held in Johannesburg, South Africa, through July 25.  This is in advance of the BRICS Leaders Meeting that will take place in August.

• UN Secretary-General António Guterres travels to Rome to participate in the UN Food Systems Summit +2 Stocktaking Moment. The high-level event is meant to build on the momentum of the 2021 Food Systems Summit. While in Rome, the Secretary-General will also meet with the President of the Republic of Italy, Sergio Mattarella, and the President of the Council of Ministers of the Republic of Italy, Giorgia Meloni, as well as with other leaders who are attending the summit. The UN Deputy Secretary-General, Amina J. Mohammed, will also participate in the event. On the margins of the conference, the Deputy Secretary-General will meet with H.E. Mr. Antonio Tajani, Deputy Prime Minister and Minister of Foreign Affairs of Italy as well as heads of delegations attending the conference.

• The World Trade Organization (WTO) has a General Council meeting in Geneva through July 25.

• The UN Security Council is scheduled to hold a briefing on the Middle East, followed by consultations on the Middle East (Syria).

Americas

Political/Social Events –

• US Secretary of State Antony Blinken visits Tonga (the first visit by a US Secretary of State), New Zealand, and Australia through July 29.  While in Tonga, he will dedicate the new US Embassy and hold discussions with Tongan leaders.  The visit is seen as a counter to China’s aggressive efforts to bring Tonga into its orbit.  Blinken then goes to Wellington, New Zealand, to meet with his counterpart as well as attend the FIFA Women’s World Cup.  From there, he goes to Australia to participate in the Australia-US Ministerial Consultations (AUSMIN) and holds bilateral talks with Australian leaders. 

• US Defense Secretary Lloyd Austin travels to Papua New Guinea and Australia.  This is the first time a US Defense Secretary has visited Papua New Guinea, and while he is there, Austin will discuss a plan to grant the US military access to six sites in the country for the next 15 years.    In Australia, Austin will join Secretary of State Blinken for the Australian-US ministerial meetings.

Economic Reports/Events –

• US S&P Global Manufacturing & Services PMIs (July), Chicago Fed National Activity Index (June)

• Canada Wholesale Sales (June)

• Brazil BCB Focus Market Readout

• Mexico Mid-Month Inflation (July)

Asia

Political/Social Events –

• French President Emmanuel Macron begins a four-day visit to the French territory of New Caledonia.

• A delegation from the European Parliament's Committee on Foreign Affairs (AFET) travels to Japan and then on to Taiwan through July 27.  

• Taiwan holds its annual Han Kuang military drills through July 28.  The exercise is an annual military event held by the Army and Air Force is a test of the military’s ability to preserve its forces during an invasion and to counter potential Chinese blockade attempts.  It will include shelter-in-place and evacuation drills in districts across the island for the first time ever.

• Philippine President Ferdinand Marcos, Jr. delivers his second State of the Nation Address.

Economic Reports/Events –

• Japan Jibun Bank Services & Manufacturing PMIs (July)

• Australia Judo Bank Services & Manufacturing PMIs (July)

• Singapore Inflation (June), CPI (June)

Europe

Political/Social Events –

• The 15th Euro-Latin American Parliamentary Assembly will be held in Madrid through July 27.  

• A delegation of the EU Parliament’s Economic and Monetary Affairs Committee will travel to the US for meetings with US financial regulators.  They are expected to discuss inflation, support to Ukraine and financial sanctions on Russia, digital finance, sustainable finance, banking and capital markets supervision, cryptocurrencies, and competition policy.

• The EU Competitiveness Ministers hold informal meetings through July 25 in Bilbao, Spain.  They are expected to discuss boosting sustainable consumption and the New Consumer Agenda 2020–2025 and will analyze and establish lines of work to increase consumer empowerment in the green transition. Meanwhile, the ministers for industry and the internal market address Open Strategic Self-Government.  This meeting comes less than a week after European Commissioner Margrethe Vestager named U.S. Professor Fiona Scott Morton as the new chief economist for the Commission’s Directorate-General for Competition is likely to expose tensions among the ministers.  Scott Martin withdrew from consideration after French President Emmanuel Macron criticized the appointment because of Scott Morton’s previous ties to big US Tech firms.

Economic Reports/Events –

• Eurozone HCOB Manufacturing & Services PMIs (July)

• France HCOB Manufacturing & Services PMIs (July)

• Germany HCOB Manufacturing & Services PMIs (July)

• UK S&P Global/CIPS Manufacturing & Services PMIs (July)

• Spain PPI (June)

Middle East

Political/Social Events –

• Palestinian President Mahmoud Abbas will meet with Turkish President Recep Tayyip Erdogan in Turkey. Israeli Prime Minister Benjamin Netanyahu is expected to visit for meetings with Erdogan on July 28.   The Abbas-Erdogan meetings are expected to focus on finding ways to improve Israeli-Palestinian relations as well improved Turkish-Palestinian relations

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• China’s Director of the Office of the Central Commission for Foreign Affairs Wang Yi will attend the 13th Meeting of BRICS National Security Advisers and High Representatives on National Security in Johannesburg, South Africa.  He will then travel to Nigeria, Kenya, and Turkey for high-level meetings.

• The UN High Commissioner for Human Rights Volker Türk,  will conduct a two-day official mission to Chad through July 26.  During his visit, he will meet with senior Government officials as well as human rights representatives and members of political parties and civil society.  Chad has seen a huge influx of Sudanese refugees fleeing the violence which broke out two months ago.

Economic Reports/Events –

• South Africa SACCI Business Confidence (June)

• Ghana interest rate decision

Tuesday, July 25, 2023

Global

• The World Bank issues its World Economic Outlook update.

• The UN Security Council is scheduled to hold a briefing, followed by consultations on the United Nations Office for West Africa and the Sahel (UNOWAS).   

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• The Federal Reserve Board’s Federal Open Markets Committee begins two days of closed meetings.

• US Redbook (July 22), S&P/Case-Shiller Home Prices (May), Conference Board Consumer Confidence (July), Richmond Fed Manufacturing Index/Manufacturing Shipments Index/fed Services Index (July)

• Canada Manufacturing Sales (June)

• Brazil FGV Consumer Confidence (July), IPCA mid-month CPI (July)

• Mexico Economic Activity (May)

• Argentina Retail Sales (May)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Korea GDP (Q2)

• Indonesia Central Bank Interest Rate Decision,  Loan Growth (June)

Europe

Political/Social Events –

• The EU Agriculture and Fisheries Council meets in Brussels to discuss Ukrainian imports and their impact on EU farm markets.  This comes in the wake of Russia withdrawing from the Black Sea Grain Initiative.  While Ukraine struggles to figure out how to move its agricultural exports out, Poland, Romania, and other EU countries are furious at the impact it is having on prices within the EU and the negative impact it is having on farmers. 

Economic Reports/Events –

• Eurozone Bank Lending Survey

• Germany Ifo Current Conditions & Expectations (July)

• UK CBI Business Optimism Index (Q3), CBI Industrial Trends Orders (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Balance of Trade (May)

• Turkey Business Confidence (July), Capacity Utilization (July)

Africa

Political/Social Events –

• Today is Tunisia Republic Day, commemorating the vote in 1957 abolishing the monarchy and establishing the country as a republic.

Economic Reports/Events –

• South Africa Central Bank leading economic indicator

• Ghana mid-term budget

• Zambia mid-term budget

• Nigeria interest rate decision

• Lesotho interest rate decision

Wednesday, July 26, 2023

Global

• The UN Security Council is scheduled to hold a meeting on threats to international peace and security.

Americas

Political/Social Events –

• President Joe Biden’s son, Hunter, is scheduled to appear in court to plead guilty to charges of tax evasion and gun charges in a Wilmington, Delaware federal court.

• Cuba celebrates National Rebellion Day, marking the day when Fidel Castro sited as when the revolution began in 1953.  On that day, Castro, along with 136 insurgents, laid siege to the military unit in Santiago de Cuba.  The raid failed.

Economic Reports/Events –

• The Federal Reserve Board’s interest rate decision & press conference with  Fed Chair Jay Powell;

• US New Home Sales (June), MBA Mortgage Indexes (July 21)

• Bank of Canada Summary of Deliberations

• Brazil Current Account (June), FDI (July)

Asia

Political/Social Events –

• Japan’s Air Self-Defense Force will host French Air Force units for their first bilateral jet training exercise.  The drills go through July 28 and will take place at Nyutabaru Air Base in Miyazaki, Japan. 

• Today is Maldives Independence Day, celebrating when the country no longer was a protectorate of Britain and granted autonomy.

Economic Reports/Events –

• Japan Coincident Index (May), Leading Economic Index (May)

• South Korea Consumer Confidence (July)

• Australia Inflation (Q2), Monthly /CPI Indicator (June), RBA CPIs (Q2)

• Singapore Industrial Production (June)

• India M3 Money Supply (July 14)

Europe

Political/Social Events –

• The 2nd Russia-Africa Summit takes place in St. Petersburg, Russia.  Russian President Vladimir Putin will host the summit (which originally was scheduled to take place in Africa but was rescheduled to avoid warrants placed by the International Criminal Court on Putin from being served).  The Summit comes in the wake of Russia’s withdrawal from the Black Sea Grain Initiative – a move which will have potentially grave consequences on African food security.

Economic Reports/Events –

• Eurozone Loans to Households (June), Loans to Companies (June), M3 Money Supply (June)

• France Consumer Confidence (July), Unemployment (June)

• UK New Car Production (June)

• Russia Industrial Production (June), Corporate Profits (May)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Central Bank Interest Rate Decision

Africa

Political/Social Events –

• Today is Liberia Independence Day, celebrating when the country was founded in 1822 as a haven for freed African-American slaves. 

Economic Reports/Events –

• Mozambique Central Bank interest rate decision  

Thursday, July 27, 2023

Global

• The UN Security Council is scheduled to hold a vote linked to the Central African Republic sanctions.  The Security Council is also scheduled to hold an open debate on the Middle East.  

Americas

Political/Social Events –

• President Joe Biden will host Italian Prime Minister Giorgia Meloni at the White House.  They are expected to discuss Ukraine, China, and Italy’s upcoming presidency of the G7.

• In Peru, the Workers' General Confederation is planning two days of protests in Lima in opposition to the government. This is part of protests going back to last year when then-President Pedro Castillo was removed from office as he was attempting to take over the government.  But many Peruvians accuse current President Dina Boluarte and her allies of illegitimately removing and jailing Castillo, which led to sometimes violent protests through March in which 67 people were killed.

Economic Reports/Events –

• US GDP (Q2), Durable Goods Orders (June), Goods Trade Balance (June), Wholesale Inventories (June), Retail Inventories (June), Initial Jobless Claims (July 22), PCE Prices (Q2), Real Consumer Spending (Q2), Pending Home Sales (June), Kansas Fed Manufacturing & Composite Indexes (July)

• Canada CFIB Business Barometer (July)

• Brazil PPI (June), Federal Tax Revenues (June), Net Payrolls (June)

• Mexico Unemployment (June), Balance of Trade (June)

• Argentina Consumer Spending (July)

Asia

Political/Social Events –

• Thailand’s National Assembly is expected to hold yet another vote for prime minister. Last week, conservatives and military-appointed senators in Parliament voted to block the frontrunner for the job, Pita Limjaroenrat, from being nominated again for the post.

• The APEC Business Advisory Council meets in Manila, the Philippines.

• Today is the 70th anniversary of the armistice being signed to end the Korean War (technically, it is a cease-fire, and North Korea is still at war with South Korea and the US).

Economic Reports/Events –

• China Industrial Profits (June)

• Australia Export/Import Prices (Q2)

• Singapore Unemployment (Q2)

• Indonesia M2 Money Supply (June)

Europe

Political/Social Events –

• EU President Ursula von der Leyden meets with Austrian Chancellor Karl Nehammer and Austrian President Alexander Van der Bellen in Salzburg, Austria.

• EU Health Ministers will hold an informal meeting through July 28 in Las Palmas de Gran Canaria, Spain.  They will focus on the Spanish presidency's priorities of implementing new initiatives focused on prevention and healthy lifestyles, strengthening the capacities of health systems, and developing new EU strategies in this field.

Economic Reports/Events –

• European Central Bank Interest Rate Decision & Press Conference

• Germany GfK Consumer Confidence (August)

• UK CBI Distributive Trades (July)

• Spain Unemployment (Q2), Retail Sales (June)

• Italy Business Confidence (July), Consumer Confidence (July)

Middle East

Political/Social Events –

• Israeli Prime Minister Benjamin Netanyahu will visit Turkish President Recep Tayyip Erdogan in Turkey.  Netanyahu’s visit comes days after Palestinian Authority President Mahmoud Abbas visiting for meetings with Erdogan.

Economic Reports/Events –

• Turkey MPC Meeting Summary, Inflation Report, FX Reserves (July 21)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa PPI (June)

• Zambia inflation (July), Trade Balance (June)

• Malawi Central Bank interest rate decision 

Friday, July 28, 2023

Global

• The G20 Environment and Climate Sustainability Ministers will meet in Chennai, India.

• The UN Security Council is scheduled to hold a briefing on the United Nations Peacekeeping Operations (HoMC).  

Americas

Political/Social Events –

• US Secretary of Treasury Janet Yellen will chair a meeting of the Financial Stability Oversight Council at the US Treasury.  They are expected to discuss: An update on the work of the Council’s Nonbank Mortgage Servicing Task Force, an update on the Council’s Climate-related Financial Risk Committee, and an update on developments in the banking sector.  The preliminary agenda for the public session includes an update on the Council’s Climate-related Financial Risk Committee and an update on the transition from LIBOR.

• Peru celebrates Independence Day, the day when the Declaration of Independence from Spain was announced in 1821.

Economic Reports/Events –

• US PCDE Price Index (June), Personal Spending (June), Employment Cost Index (Q2), PCE Price Index (June), Michigan Consumer Sentiment/Inflation Expectations/5-year Inflation Expectations (July)/Consumer Expectations (July)/Current Conditions Reports (July)

• Canada GDP (May), Budget Balance (April & May)

• Brazil Nominal Budget Balance, Bank Lending (June), IGP-M Inflation (July), Unemployment (June)

• Mexico Fiscal Balance (June)

Asia

Political/Social Events –

• The Hong Kong High Court will hand down a decision as to whether an injunction outlawing a song associated with the 2019 democracy protests is legal.  The Hong Kong government put out a broad injunction banning anyone from “broadcasting, performing, printing, publishing, selling, or offering for sale, distributing, disseminating, displaying or reproducing” the song.

Economic Reports/Events –

• Bank of Japan interest rate decision, Bank of Japan Quarterly Outlook Report, CPI (July)

• India Bank Loan Growth (July 14), Deposit Growth (July 14), Infrastructure Output (June)

• Australia PPI (Q2), Retail Sales (June)

• Singapore Bank Lending (June), Export& Import Prices (June), PPI (June)

Europe

Political/Social Events –

• Gatwick Airport in London will see workers go on strike for four days over pay.

• San Marino celebrates the Fall of Fascism Day and Freedom Day, a national holiday.  It marks the day in 1942 when San Marino was liberated.

Economic Reports/Events –

• Eurozone Economic Sentiment (July), Industrial Sentiment (July), Selling Price Expectations (July), Services Sentiment (July), Consumer Confidence (July)

• Germany Import Prices (July), Inflation (July)

• France GDP (Q2), Household Consumption (June), Inflation (June), PPI (June)

• Spain GDP (Q2), Inflation (July), Business Confidence (July)

• Italy PPI (June), Industrial Production (May)

Middle East

Political/Social Events –

• NSTR

• Economic Reports/Events –

• Turkey Imports/Exports/Balance of Trade (June)

Africa:

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa trade balance (June)

Saturday, July 29, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• NSTR 

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR 

Sunday, July 30, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• Today is Independence Day in Vanuatu, marking the day in 1980 when they were granted their independence from Great Britain.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• Russia celebrates Naval Day.  Traditionally, the country shows off its latest weapons, ships, and aircraft, but it is not clear what will happen this year due to the Ukrainian invasion.  While on paper, Russia has the second-largest naval fleet in the world.  But the reality is many of those ships are small - Russia currently has only one aircraft carrier (to the US Navy’s eleven super-carriers) – and they place most of their focus on nuclear submarines, although that has reportedly been cut back due to the costs of the Ukraine invasion.

Economic Reports/Events –

NSTR

• NSTR 

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• The Central African Republic will hold a referendum on changing the constitution to allow incumbent President Faustin-Archange Touadéra to run for a third term in 2025.

• Today is Enthronement Day in Morocco, celebrating the day King Mohammed VI took the throne in 1999.

Economic Reports/Events –

• NSTR

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US Financial Regulatory Week Ahead

July 24 - 28, 2023

August is right around the corner, and Washington is preparing to disappear for the month for vacations.  Congress will be out of session for almost the entire month, and most regulatory agencies traditionally take advantage of the quiet to also head to the beach.  But before it all goes quiet, financial regulators have scheduled a busy week ahead. 

The week's big event is Thursday, when the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve are expected to vote on a draft requiring higher bank capital standards. 

Both the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission have open meetings this week.  The SEC will vote on four cyber-related rules, and the CFTC will vote on four new swap regulatory rules.

Also, the Financial Stability Oversight Council (FSOC) meets Friday to consider several issues, including the transition from LIBOR, climate-related regulations, and updates on the mortgage market.  

Congress is relatively quiet, with only one financial service-related hearing in the Senate Banking Committee looking at banking and other financial services fees.

Below is what else is happening in the US regulatory world next week:

U.S. Congressional Hearings

• Wednesday, July 26, 2023- 9:30 a.m. – The Senate Banking, Housing, and Urban Affairs Financial Institutions and Consumer Protection Subcommittee holds a hearing on "Taking Account of Fees and Tactics Impacting Americans' Wallets."

US Regulatory Meetings

• Sunday to Tuesday – July 23- July 25: A delegation of the EU Parliament’s Economic and Monetary Affairs Committee will travel to the US for meetings with US financial regulators.  They are expected to discuss inflation, support for Ukraine and financial sanctions on Russia, digital finance, sustainable finance, banking and capital markets supervision, cryptocurrencies, and competition policy.

• Tuesday, July 25 – 11:00 a.m. – The US Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), and the Wisconsin Department of Financial Institutions (DFI) are holding a joint public roundtable at the DFI Headquarters in Madison, Wisconsin.  SEC Chair Gary Gensler will give pre-recorded remarks, and Commissioner Mark Uyeda will be in attendance. The roundtable will be webcast on SEC.gov.

  The event will consist of a few key sessions:

  • Investor roundtable focused on retail investor issues, where investors will engage in a moderated discussion with the Investor Advocate and the WI DFI Securities Administrator

  • Public roundtable webcast and investor case studies, where retail investors, investigators, and regulators will share experiences of securities frauds and engage in discussions related to identifying frauds and avoiding suspicious investments.

  • Securities Investor Protection Corporation (SIPC) and the Canadian Investor Protection Fund (CIPF)-moderated discussions on investor protection during periods of firm insolvency.

  • Stakeholder discussion with the SEC’s Retail Strategy Task Force on retail investor frauds, deceptive practices, and what the future of investor protection looks like

• Tuesday, July 25 – 11:00 a.m. – The Consumer Financial Protection Bureau (CFPB) holds a “REgCast” to provide information to help financial institutions determine whether they are covered by financial institutions for purposes of the small business lending rule.  To watch the event, you can register HERE.

• Wednesday, July 26 – 10:00 a.m. – The US Securities and Exchange Commission will hold an open meeting.  The three agenda items that will be considered are (the full agenda is HERE):

  • Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure

  • Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers

  • Exemption for Certain Investment Advisers Operating Through the Internet  

• Wednesday, July 26, 2023- 2:00 p.m. -- Federal Reserve Board Chairman Jerome Powell holds a news conference after a Federal Open Market Committee meeting.

• Tuesday, July 26, 2023 - 9:30 a.m. – The Commodities Futures Trading Commission will hold an Open Meeting  to consider the following:

  • Final Rule: Reporting and Information Requirements for Derivatives Clearing Organizations

  • Proposed Rule: Swap Confirmation Requirements for Swap Execution Facilities

  • Proposed Rule: Amendments to Provisions Common to Registered Entities

  • Proposed Rule: Amendments to Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants (Seeded Funds and Money Market Funds)

• Wednesday, July 26 - 3:30 p.m. – The US Treasury Department holds a meeting of the Advisory Committee on Risk-Sharing Mechanisms to discuss the role of nongovernmental mechanisms in supporting the terrorism risk insurance market and related to the Terrorism Risk Insurance Program.

• Thursday, July 27 – The US Federal Reserve Board and the FDIC Board are both expected to vote on proposed higher capital requirements.  It is expected it will apply to banks with more than $100 billion in assets and would implement the so-called Basel III proposal finalized in 2017.

• Thursday, July 27 – 2:00 p.m. – The US Securities and Exchange Commission holds a Closed Meeting.

• Friday, July 28, 2023: The Financial Stability Oversight Council (FSOC) will meet at the US Treasury Department to consider a number of issues.  These include:

  • An update on the work of the Council’s Nonbank Mortgage Servicing Task Force;

  • An update on the Council’s Climate-related Financial Risk Committee and an update on developments in the banking sector.*  

  • An update on the Council’s Climate-related Financial Risk Committee and;

  • An update on the transition from LIBOR.  

Recommended Weekend Reading

July 22 - 23, 2023

Here are our recommended reads from reports and articles we read in the last week. We hope you find these useful and have a great weekend.   And let us know if you or someone you know wants to be added to our distribution list.

Global 

• “The Scramble for Critical Raw Materials: Time to Take Stock?” Global Trade Alert/University of St. Gallen/Max Schmidheiny Foundation

  The growing scramble for so-called Critical Raw Materials has become an acute flashpoint between nations. Accusations and fears that governments weaponize trade in these industrial materials are in the headlines daily.  Given the central role they play in the digital and energy transitions, policies to secure and produce these materials have the potential to upset trade relations for decades to come. The authors of his study sort out the fact from fiction in this complex, long-term policy challenge, arguing that many of the narratives deployed by governments simply don’t stand up to scrutiny.  They go on to lay out five steps that would “thicken” markets over time for the small number of industrial materials where major excess demand gaps are likely to emerge in the decades ahead.

• “Cyber Operations during the Russo-Ukrainian War”  Center for Strategic and International Studies

  When Russia invaded Ukraine in February 2021, one of the immediate fears in the West was Russia’s supposedly vaunted cyber operations expected attacks on governments, militaries, corporations, and individuals.  Yet, Russia has not launched an all-out, costly cyberwar against Ukraine or the West.  Instead, Russia has decided to focus on political warfare and espionage along with criminal malware campaigns – most of it focused on Ukraine, who have been fairly successful at beating them back, employing hundreds of thousands of IT volunteers to support cyber operations against Russia. The study also goes on to make a series of recommendations on what other nations should do to continue to be vigilant.

Europe/Eurasia

•   “Strategy on China”   Government of the Federal Republic of Germany

  Last week, the German government released its first official strategy on how to comprehensively deal with China.  Built off the nation’s first official national security strategy, both reports come after months of intense debate and outright bickering between the various German political parties.  In the report, the German government commits to working with China economically but also says, “de-risking from China is urgently needed.  However, we are not pursuing a decoupling of our economies.”  The report also puts the onus on businesses to “keep a close eye on relevant China-related developments, data, and risks.”  The report also goes on the make clear Germany’s views on China-Taiwan tensions: “The status quo of the Taiwan Strait may only be changed by peaceful means and mutual consent.  Military escalation would also affect German and European interests.”

• “Russia’s Weapon of Mass Starvation”  Center for European Policy Analysis

  Russia's withdrawal from a deal to allow Ukrainian grain exports risks exacerbating famines and maritime danger in the Black Sea.   A panel of experts explains what the impact on global markets and supplies is going to look like unless the deal is restored. 

Middle East

•   “Saudi Arabia imports record volumes of discounted Russian fuel oil in June”  Al-Monitor

  Europe used to be the top market for Russian oil and petroleum products, but all that has changed since Russia’s invasion of Ukraine.  Saudi Arabia has seen a ten-fold year-on-year increase in fuel oil at a steep discount, all of which the Kingdom resells into the open market.

• “Why ISIS Cannot Bring the Caliphate Back to Life”  Carnegie Endowment for International Peace

  Since the defeat of ISIS forces at Al-Baghouz in 2019, five factors have stymied the group’s revival in Syria and Iraq.  1) Local conditions in both Syria and Iraq have militated against ISIS’s return (Syria and Iranian forces have regained control), 2) There has been an ebbing of the Islamic tide not only in Syria and Iraq but across the entire region, 3) the population in the areas where ISIS operated has changed, 4) ISIS just can’t seem to attract new recruits to supplement its ranks and replace its losses, and 5) there has been a significant decline in the proliferation of weapons and financing available to ISIS.

Americas

• “After AMLO: The Economic, Security, and Political Outlook in Mexico in 2024”  Ryan Berg/Center for Strategic and International Studies (CSIS)

  President Andrés Manuel López Obrador (AMLO) sought to transform the politics, economy, and security of Mexico. He calls his wide-ranging series of reforms the “fourth transformation,” placing it on par with other great moments in Mexican history. But as his sexenio—Mexico’s six-year presidential term—ends, and AMLO has no possibility for reelection, the Mexico AMLO will leave his successor is in dire order. What will Mexico look like in 2024?

• “Remote work has made downtown DC a ghost town as federal office buildings sit mostly empty”  Business Insider

  A General Accountability Office (GAO) report released on July 13th has found that 17 of 24 federal agency headquarters are mostly empty – utilizing just 25 percent of their building capacity.  Many federal employees are continuing to work remotely.  Now, the DC City Government is asking President Biden to either force workers back to work or turn the properties over to the DC government for them to utilize in other ways.

The Global Week Ahead

July 16 - 23, 2023

Amidst the record-setting summer heat in the Northern Hemisphere, there are a lot of important geopolitical events this week. US-China relations look to be taking another positive step as US Climate Envoy John Kerry travels to Beijing – following the recent visits of US Secretary of State Antony Blinken and US Treasury Secretary Janet Yellen.  Kerry will meet with his Chinese counterpart to discuss how the US and China can collaborate to make the upcoming COP27 meetings in the United Arab Emirates in November a success.  

Of more immediate concern is the deadline to extend the Black Sea Grain Initiative comes to an end on Monday.  Russia has balked at renewing the agreement, which allows the flow of grain and fertilizer – mainly from Ukraine – via the Black Sea to Africa, the Middle East, and Asia. Failure to renew the deal could create a massive global food security crisis.

The EU-CLAC (Community of Latin America and the Caribbean) summit will be held in Brussels. EU and CLAC leaders will seek to advance greater trade and economic relations and help advance an EU - Latin American free trade agreement with several South American nations – which is vital for the EU as they seek new markets to access critical minerals necessary for their long-term energy transition plans. 

Also this week, Spain holds snap elections that increasingly look to reject the Socialist Government. The significance of this is Spain has just taken over the Presidency of the European Union until the end of the year and could significantly impact the EU’s fiscal reform efforts and overall policy planning going forward.

On the global economic front, as G20 Finance Ministers and Central Bank Heads meet in India, markets will be watching China’s 2nd quarter GDP numbers and where the People’s Central Bank sets the MLF rate for clues as to just how weak the Chinese economy is and its impact on global trade. Most analysts are expecting weak numbers. The US will report retail sales and industrial production as the Federal Reserve goes into its blackout period ahead of the July 26 Open Markets Meeting. 

Finally, Turkey’s Central Bank, led by a newly installed. 

Japan will be reporting CPI numbers which the markets will show that inflation has peaked. The UK will also be reporting CPI numbers, and the expectation is price pressures will show signs of abating.  

Finally, Turkey’s newly installed central bank chief Hafize Gaye Erkan will be deciding where the countries rates will go after they raised rates in June to 25 percent in June.

Here is what else we are watching around the world this week:

Sunday, July 16, 2023

Global

• The G20 Finance Ministers and Central Bank Governors meetings continue in Gandhinagar, India.  US Treasury Secretary Janet Yellen will participate and hold a press conference today.

Americas

Political/Social Events –

• US Special Presidential Envoy for Climate John Kerry will travel to China for talks with his counterparts to discuss resuming joint-climate efforts. He will be meeting with his counterpart, Xie Zhenhau. This follows the visit last week of US Treasury Secretary Janet Yellen and the trip two weeks ago Secretary of State Antony Blinken made to Beijing.  Joint talks over climate were suspended after then-Speaker of the House Nancy Pelosi (D-CA) made a high-profile visit to Taiwan.  Kerry will seek to find ways for the US and China to work together to implement the COP28 conference, which takes place in Dubai in November. 

• In New Hampshire, Senator Joe Manchin (D-WV) is scheduled to participate in a “No Labels” event.  Many political observers see no Labels as a potential third political party campaign going into the 2024 campaigns.  Senator Manchin has been chatted up as a possible presidential candidate for No Labels. 

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• American Samoa celebrates Manu’a Cession Day, a public holiday marking the day when the Islands of Manu decided to join the rest of American Samoa and become a US-held territory.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• European Commission President Ursula von der Leyen, Italian Prime Minister Giorgia Meloni, and Dutch Prime Minister Mark Rutte will travel to Tunisia for talks with Tunisian President Kaïs Saïed seeing to limit illegal migrant outflows from the country.  Between January and May this year, more than 50,000 illegal immigrants have traveled from Tunisia to the EU, many of them from Sudan and other Sub-Saharan nations using the country as a jumping-off point.  The Tunisian government has been trying to crack down on illegal immigrants but appears to be overwhelmed by the numbers that have flooded into the country.

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Wholesale Prices (June)

Africa

Political/Social Events –

• Japan’s Prime Minister Kishida visits Saudi Arabia for talks with Deputy Crown Prince Mohammed bin Salem.  Kishida will possibly also travel to the UAE and Qatar, all in an effort to bolster oil supplies.

Economic Reports/Events –

• NSTR

Monday, July 17, 2023

Global

• The G20 Finance Ministers and Central Bank Governors continue in Gandhinagar, India.

• The UN Security Council will meet in the afternoon to discuss the situation in Ukraine.  UK Foreign Minister James Cleverly will chair the meeting (the UK is chairing the Security Council for the month of July).

Americas

Political/Social Events –

• The 3rd EU-CLAC (Community of Latin America and the Caribbean) summit takes place in Brussels through July 18.   The heads of state of the EU and CELAC (33 members) will attend the two-day event, which is co-chaired by European Council President Charles Michel and Ralph Gonsalves, the Prime Minister of St. Vincent and the Grenadines.  This is the first EU-CLAC summit since 2015.  The 2017 summit was canceled due to concerns about the situation in Venezuela.  This summit is seen as particularly important because of the War in Ukraine – where the EU finds itself at odds with the positions of a number of Latin American countries, particularly Brazil – in how to deal with Russia.  Intertwined with this is the EU’s desire to have greater access to critical mineral mining in the region.  

Economic Reports/Events –

• US Securities and Exchange Commission Chair Gary Gensler gives a speech on artificial intelligence and securities regulation at the National Press Club in Washington, D.C.

• US New York Empire State Manufacturing Indies (July)

• Canada New Motor Vehicles Sales (May), Wholesale Sales (May)

• Brazil BCB Focus Market Readout, IBC-BR Economic Activity (May)

Asia

Political/Social Events –

• Korea celebrates Constitution Day, a national holiday.

Economic Reports/Events –

• China’s People’s Bank of China 1-Year MLF Announcement, GDP (Q2), Industrial Production (June), Retail Sales (June), Unemployment (June), Industrial Capacity Utilization (Q2),

• Singapore Imports/Exports/Balance of Trade (June), Balance of Trade (June)

Europe

Political/Social Events –

• The Black Sea Grain Initiative is set to expire.  The Initiative, a U.N.brokered deal that Turkey assisted in negotiating,  guarantees the safe passage of Black Sea grain from Ukraine ports, was brokered last year.  Since then, more than 33 million tons of grains and fertilizers have been exported through the Black Sea and through the Bosphorus.  The agreement was initially arranged on a five-month basis, but Russia recently demanded it be changed to every 60 days.  Now, Moscow is arguing they see no need to extend the deal unless they are granted significant sanctions relief, including allowing the Russian Agricultural Bank to be reconnected to the SWIFT payment system and lifting of all sanctions placed on any company involved in food and fertilizer exports.  Failure to renew the deal and keep the flow of grain and fertilizer will likely have an enormous impact on food security in Africa, the Middle East, and parts of Asia as well as food prices globally.

• EU President Ursula von der Leyen meets with Brazilian President Luiz Inácio Lula da Silva.  Lula is in Brussels for the EU-CELAC Summit.

• EU President Ursula van der Leyen will sign a Memorandum of Understanding with Argentine President Alberto Fernández on energy cooperation.

• The EU Agriculture and Fisheries ministers will hold informal meetings through July 18 in Vigo, Spain.  They will discuss ways to decarbonize the EU’s fisheries and aquaculture sector. 

In the UK, ASLEF train drivers go on strike for a week over pay.

Economic Reports/Events –

• ECB President Christine Lagarde gives a pre-recorded welcome address at the 9th ECB conference on central, eastern, and south-eastern European (CESEE) countries.  She will be speaking on the "Changing geopolitical landscape – economic implications for central, eastern and south-eastern Europe" at the event being held at the ECB in Frankfurt, Germany.

• ECB Board Member Philip R. Lane chairs and speak at Session 1, "Macroeconomic policy challenges amid a changing geopolitical landscape," at the 9th ECB conference on central, eastern, and south-eastern European (CESEE) countries at the ECB, Frankfurt, Germany.

• Italy Inflation (June), CPI (June)

Middle East

Political/Social Events –

• Turkey’s President Recep Erdogan begins a three-day trip to Saudi Arabia, the UAE, and Qatar.  The purpose of the trip is to boost bilateral trade and investments.  Turkey has set a public goal of boosting investments in the Gulf Region by $25 billion in the next few years, focusing on defense, energy, and infrastructure.

• Algeria’s President Abelmadjid Tebboune makes a state visit to China through July 21.  He will meet with President Xi Jinping and other senior officials to discuss bilateral trade and security issues.

• Israel is bracing for another set of nationwide protests over the judicial reform bill moving through the Knesset.

Economic Reports/Events –

• Turkey Budget Balance

Africa

Political/Social Events –

• Botswana celebrates President’s Day, a national holiday celebrating the role of the president.

Economic Reports/Events –

• NSTR

Tuesday, July 18, 2023

Global

• The G20 Finance Ministers and Central Bank Governors conclude in Gandhinagar, India. 

• The UN Security Council will meet to discuss the impact of artificial intelligence on maintaining international peace and security.  UK Foreign Secretary James Cleverly will again chair the session.

• The Islamic New Year begins tonight.

Americas

Political/Social Events –

• The Inter-American Development Bank (IDB) cohosts with the Government of Panama at the Public-Private Partnerships forum in Panama City.  Government officials and private sector representatives from 25 countries will gather to focus on investment in sanitation, energy, transportation, and telecommunications.  The IDB estimates that by 2030, Latin America and the Caribbean need $2.2 trillion in new investments.

• The Aspen Security Forum begins in Colorado. The three-day conference will include speeches by a number of senior US, UK, and other foreign officials. 

• Uruguay celebrates Constitution Day, a national holiday.

Economic Reports/Events –

• Federal Reserve Vice Chair for Supervision Michael S. Barr speaks on “Fair Lending Practices” At the National Fair Housing Alliance 2023 National Conference, Washington, D.C.

• US Retail Sales (June), Redbook (July 15), Industrial Production (June), Manufacturing Production (June), Capacity Utilization (June), Business Inventories (May), NAHB Housing Market Index (July)

• Canada Inflation (June), CPI (June), Raw Materials Prices (June), PPI (June)

• Argentina Economic Activity (May)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• Japan Tertiary Industry Index (May)

• Australia Reserve Bank Meeting Minutes

Europe

Political/Social Events –

• EU President Ursula von der Leyen signs a Memorandum of Understanding with Luis Lacalle Pou, President of Uruguay, on energy cooperation.  Later, she will sign a Memorandum of Understanding with Gabriel Boric, President of Chile, on a Strategic Partnership on Sustainable Raw Materials Value Chains cooperation.

• The UK Ministry of Defense will publish its updated Integrated Review Command Paper.  Last updated in 2021, the paper defines the government’s vision for the UK’s role in the world for the next decade, both from a foreign policy, defense, security, and development perspective.

Economic Reports/Events –

• Italy Construction Output (May)

Middle East

Political/Social Events –

• Israel’s President Isaac Herzog will meet with President Biden to discuss how to deepen Israel’s regional integration as well as Russia’s growing military relationship with Iran.   He will also address a joint session of Congress.

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Wednesday, July 19, 2023

Global

• NSTR

Americas

Political/Social Events –

• Unions and left-wing political groups in Peru are expected to march on Lima.  They are united in their demand for President Boluarte to resign and for Congress to shut down.   They also want a new constitution to be written.  In response, the government has declared a state of emergency.

• Nicaragua celebrates FSLN Revolution Day – also known as Sandinista Revolution Day – a national holiday celebrating the rise of the Sandinista National Liberation Front (FSL) that launched an armed resistance to the Somoza regime in the 1970s.

Economic Reports/Events –

• US MBA Housing Starts (June), Building Permits (June), Mortgage Indexes (July 14)

• Canada Housing Starts (June)

• Argentina Balance of Trade (June), Leading Indicators (June)

Asia

Political/Social Events –

• Thailand’s Parliament will re-vote who will be the next Prime Minister.  Last week, the Parliament failed to pick a Prime Minister after the pro-democracy candidate, Pita Limjaroenrat, did not get a majority of votes.  If they fail to reach a solution, another vote will be held on July 21.

• Myanmar celebrates Martyr’s Day, commemorating those who led the independence movement in 1947.

• In South Korea, the Boryeong Mud Festival begins.   The seven-day event, which first began in 1998, is the biggest summer festival in South Korea.  It is compared to Brazil’s Rio Carnival and Spain’s La Tomatina and consists of a wide variety of “survival mud games,” mud baths, and other contests. (who doesn’t love playing in the mud?)

Economic Reports/Events –

• The Asian Development Bank releases its updated economic growth forecasts.  It will offer growth and inflation outlooks for all 31 member state economies in Asia-Pacific (excluding Japan).

• Japan Reuters Tankan Index (July)

• Australia Westpac Leading Index (June)

Europe

Political/Social Events –

• The EU-Bosnia and Herzegovina Stabilization and Association Council meets in Brussels.  Bosnia and Herzegovina applied for EU membership in 2016 and was granted EU candidate status in 2022 on the condition the country take recommended steps to fight corruption and organized crime, migration management, and the overall rule of law.  This meeting will be an update and assessment of their progress.

• The World Court will hear a request from Canada and the Netherlands asking the Court to order Syria to cease all acts of torture and arbitrary detention.

Economic Reports/Events –

• Bank of England Deputy Governor Dave Ramsden gives a speech on quantitative tightening at the Money Macro and Finance Society in London.

• Eurozone Inflation (June), CPI (June), Construction Output (May), New Car Registrations (June)

• UK Inflation (June), Retail Prices (June), PPI (June)

• Russia PPI (June)

Middle East

Political/Social Events –

• Saudi Arabia hosts the Gulf Cooperation Council (GCC) – Central Asia Summit in Jeddah.  Leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan are expected to attend.

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• Kenya's opposition will hold their third set of anti-tax protests in Nairobi.  Previous protests have resulted in extensive violence and deaths as Police sought to repel them from advancing down the capitol’s main highway.  Keny’s High Court has suspended recently passed tax hikes, but the government moved to raise the prices of gasoline anyway. 

Economic Reports/Events –

• South Africa Inflation (June), Retail Sales (May)

Thursday, July 20, 2023

Global

• The UN Security Council will meet to be updated on the 1701 Report (this references the UN Resolution 1701, which was passed in 2006,  which calls for the full cessation of hostilities and the deployment of Lebanese forces to South Lebanon, and the withdrawal of Israeli forces from the country).

Americas

Political/Social Events –

• U.S. Treasury Secretary Janet Yellen travels to Vietnam. She will meet with State Bank of Vietnam Governor Nguyen Thi Hong.  She will later meet with Prime Minister Pham Ninh Chinh and Finance Minister Ho Duc Phoc. She meets later with Communist Party of Vietnam Central Economic Commission Chair Tran Tuan Anh.

• Colombia celebrates Independence Day, a national holiday.

Economic Reports/Events –

• US Philly Fed Manufacturing Index (July), Philly Fed Business Conditions (July), Philly Fed CAPEX Index (July), Philly Fed New Orders (July), Initial Jobless Claims (July 15), Existing Home Sales (June), CB Leading Index (June)

• Mexico Retail Sales (May)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• China Loan Prime Rate (1Y & 5Y)

• Japan Imports/Exports/Balance of Trade (June)

• Australia Unemployment (June)

• Indonesia Retail Sales (May)

Europe

Political/Social Events –

• In the UK, Parliamentary by-elections will be held in Uxbridge and South Ruislip.

• The EU Foreign Affairs Council will meet in Brussels to discuss the Ukraine War, exchange views on Turkey, and general issues of economic security.

• The EU Justice and Home Affairs Ministers will hold informal meetings in Madrid, Spain, through July 21.  They will focus on progress toward the Migration and Asylum Pact and on stepping up the fight against drug trafficking and organized crime. 

• In the UK, hospital consultants, 20,000 RMT rail workers as well as BBC England journalists all go on strike.  The rail workers will be on strike through the weekend.

Economic Reports/Events –

• Eurozone Current Account (May), Consumer Confidence Flash (July)

• Germany PPI (June)

• UK Gfk Consumer Confidence (July)

• France Business Confidence (July)

• Spain Balance of Trade (May)

• Italy Current Account (May)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey TCMB Interest Rate Decision, Central Government Debt (June), FX Reserves (July 14)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa Reserve Bank Interest Rate Decision, Building Permits (May)

• Ghana PPI (June)

Friday, July 21, 2023

Global

• The G20 Labor and Employment Ministers meet in Indore, India.

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• Canada Retail Sales (May), New Housing Price Index (June), Manufacturing Sales (June)

• Mexico Mid-Month Inflation (July)

• Brazil Federal Tax Revenues (June)

Asia

Political/Social Events –

• The China Securities Regulatory Commission (CSRC), the country’s top securities regulator, is holding a special symposium for some of the world’s biggest investors in a bid to encourage greater foreign investment.  The meeting will focus on current conditions many of the firms are facing in China and as seen as an extraordinary measure to encourage greater confidence in the Chinese markets.

• Sri Lanka’s President Ranil Wickremesinghe visits India for talks with Prime Minister Narendra Modi.  Wickremesinghe will be looking for ways to improve economic relations with India in a bid to help strengthen the weak Sri Lankan economy.

• Guam celebrates Liberation Day, celebrating when US Forces liberated the island from Japan in 1944.

Economic Reports/Events –

• Japan Inflation (June)

• South Korea PPI (June)

• Singapore URA Property Index (Q2)

Europe

Political/Social Events –

• The leaders of Armenia and Azerbaijan will meet in Brussels, Belgium.  The EU is attempting to broker a peace agreement between the two countries.

• Belgium celebrates Independence Day, a national holiday.

Economic Reports/Events –

• UK Retail Sales (June), Public Sector Borrowing (June)

• Russia Central Bank Interest Rate Decision and Press Conference

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa:

Political/Social Events –

• NSTR

Economic Reports/Events –

• Eswatini Central Bank Interest Rate Decision

Saturday, July 22, 2023

Global

• The G20 Energy Ministers meet in Goa, India.

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR 

Sunday, July 23, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• Cambodia holds national elections.  All 125 National Assembly seats are up for election for a five-year term.  Currently, all 125 seats are held by the Cambodian People’s Party.  The opposition FUNCINPEC Party and Khmer National United Party hold none.

• Japan's restrictions on semiconductor sales to China go into effect.  In January, Japan placed restrictive controls on the sale of all chipmaking tools to China and placed restrictions on the export of 23 types of semiconductor manufacturing equipment to China. In so doing, Japan formally joins the US and the Netherlands in implementing curbs.

Economic Reports/Events –

•  NSTR

Europe

Political/Social Events –

• Spain holds general elections. Prime Minister Pedro Sánchez – leader of the Spanish Socialists Workers’ Party (PSOE) – is facing a tough challenge from center-right Popular Party candidate Alberto Núñez Feijóo who is leading in the polls.  Sánchez called for early elections, and supporters and election observers are suggesting he may have made a mistake as voter sentiment is angry right now. The elections come only a few weeks after Spain assumed the presidency of the EU (until December 31st). 

Economic Reports/Events –

•  NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Please let us know if you or a colleague would like to be added to our distribution list.

Recommended Weekend Reading

July 14 - 16, 2023

Here are our recommended reads from reports and articles we read in the last week. We hope you find these useful and have a great weekend.   And let us know if you or someone you know wants to be added to our distribution list.

Indo-Pacific 

• “Scientific and Technological Flows Between the United States and China”   Rand Corporation

  This study points out that scientific and technological dominance — the price of increasingly tough competition between the US and China — has been recognized as a national priority by high-level leadership from both countries. This dominance can be attained in two primary ways: A country can rely on its domestic scientific and technology innovation resources and activities, or it can leverage foreign scientific and technological assets. The researchers focused on the second approach for this study; in this report, they describe the benefits and liabilities associated with U.S.-Chinese scientific research collaboration. Specifically, the researchers investigated three types of flows between the United States and China: the inflow of U.S. technology inputs into Chinese military technology, the bilateral movement of scientific researchers between the United States and China, and scientific collaboration between researchers based in the United States and those based in China.

• “The Southeast Asia Aid Map”   The Lowy Institute (Australia)

  This interactive database tracks and maps aid and development finance flows from the international community to Southeast Asia, which is one of the most dynamic and fast-growing regions in the world. The research covers Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor‑Leste, and Vietnam, with complete data from 2015 to 2021.  The goal of this research project is to improve aid efficiency in Southeast Asia through better transparency and coordination of development efforts.  This project has collected information from more than 100,000 projects via more than 97 development partners in the region.

• “Critical Minerals Strategy 2023-2030”  Australian Department of Industry, Science, and Resources

  Australia is one of the most mineral-rich nations in the world, and they possess a number of “critical minerals” necessary to help achieve Net Zero emissions there and globally.  Australia is the largest producer of Lithium, the third-largest producer of Cobalt, and fourth largest producer of rare earths.   The Australian Government has just released this comprehensive strategy for not only how they will mine these critical minerals but also sell and export them – which is very important for global markets to understand.

Europe/Eurasia

•    “The Ukrainian War Economy”   Bruegel

  Ukraine has been subject to full-scale Russian aggression since 24 February 2022, with major implications for Ukraine’s economic performance and economic management. As a result of war damages and territorial losses, Ukraine’s real GDP contracted by about 30 percent in 2022. Ukraine also experienced severe balance-of-payments and budget tensions in the first months of the war. Intensification of foreign financial aid from the second half of 2022 helped to achieve relative macroeconomic stability in the first half of 2023. The prospects of the Ukrainian economy depend on the length of the war, associated damages, and the size of external financial aid.

Americas

• “Electoral College and Election Fraud”   University of Chicago Becker Friedman Institute Working Paper

• Abstract: One frequently overlooked aspect of the U.S.-style electoral college system is that it discourages election fraud. In a presidential election based on the popular vote, competing political parties are motivated to manipulate votes in areas where they hold the most significant influence, such as states where they control local executive offices, legislatures, and the judiciary. However, with the electoral college system in place, the incentives for fraud shift to swing states where the local government is politically divided, and fraud is, therefore, more difficult and costly. Our theoretical model elucidates why the electoral college system provides more effective protection against election fraud compared to the popular vote system. While polarization makes fraud more likely, it does not affect the superiority of the electoral college system.

• “Electric Vehicles for Everyone? The Impossible Dream”   Manhattan Institute

  A dozen U.S. states, from California to New York, have joined dozens of countries, from Ireland to Spain, with plans to ban the sale of new cars with an internal combustion engine (ICE), many prohibitions taking effect within a decade. Meanwhile, the U.S. Environmental Protection Agency (EPA), in a feat of regulatory legerdemain, has proposed tailpipe emissions rules that would effectively force automakers to shift to producing mainly electric vehicles (EVs) by 2032.  This is all to ensure that so-called zero-emission EVs play a central role in radically cutting carbon dioxide (CO2) emissions. But, as this report illustrates: 

• No one knows how much, if at all, CO2 emissions will decline as EV use rises. Every claim for EVs reducing emissions is a rough estimate or an outright guess based on averages, approximations, or aspirations. The variables and uncertainties in emissions from energy-intensive mining and processing of minerals used to make EV batteries are a big wild card in the emissions calculus. Those emissions substantially offset reductions from avoiding gasoline, and as the demand for battery minerals explodes, the net reductions will shrink, may vanish, and could even lead to a net increase in emissions. Similar emissions uncertainties are associated with producing the power for EV charging stations.

• No one knows when or whether EVs will reach economic parity with the cars that most people drive. An EV’s higher price is dominated by the costs of the critical materials that are needed to build it and is thus dependent on guesses about the future of mining and minerals industries, which are mainly in foreign countries. The facts also show that, for the majority of drivers, there’s no visibility for when, if ever, EVs will reach parity in cost and fueling convenience, regardless of subsidies.

• “Did Latin America’s Progressives Become Too “Woke”?”   Americas Quarterly

  After many countries saw progressive victories on abortion and other issues, a  conservative backlash is gaining strength in the region. In Chile, the electorate rounding rejected a new constitution in September 2022; In Argentina, the far-right libertarian candidate for president, Javier Milei, has been either leading in polls.  And in other Latin countries, conservative parties are battling back and gaining political strength.

Graphs of the Week

Africa, Oceania Are Seeing a Rise in Hunger Since the Pandemic as the Risk of Russia Pulling out of the Black Sea Grain Initiative Rises

According to the UN’s Food and Agricultural Organization (FAO), the percentage of people in Africa and greater Oceania who are hungry has risen by 19.7 percent and 7 percent, respectively, since the COVID Pandemic ended.   This is particularly important and troublesome now as the Black Sea Grain Initiative is set to expire on July 17, and Russia is saying it “sees no reason to continue it.”  Moreover, since Russia’s invasion of Ukraine, Russia has significantly expanded its dominance of wheat production over Ukraine, bolstering its hold on the world’s wheat trade.

The following four charts show:

1. The increase in hunger in Africa and Oceana

2. The growth rate and projections of Russia’s dominance in wheat growth over Ukraine

3. Africa’s dependence on Russia and Ukraine for wheat

4. Which countries are the largest wheat exporters globally