Recommended Weekend Reads

September 8 - 10, 2023

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

Indo Pacific

• “India’s Strategic Evolution”  Center for Strategic and International Affairs “The Asia Chessboard” Podcast

  The podcast begins by examining India’s strategic outlook since the end of the Cold War, considering India’s history, the evolution of its economic model, and shifts in the political perspectives and priorities of the Indian government. The participants turn to India’s role in BRICS – examining the relationship between India and China within the organization, the reasoning behind India's participation in BRICS, and the implications of the August 2023 BRICS summit. Next, they discuss Delhi’s changing relationship with Taipei and expanding engagement with Japan and Australia. The conversation concludes with an assessment of what India wants for its strategic future and how it would interact with the international world order. 

• “US-led effort to diversify Indo-Pacific supply chains away from China runs counter to trends”  Peterson Institute for International Economics

  The global economy is threatened by the potential for another devastating pandemic, Russia’s invasion of Ukraine, and a belligerent China, all of which have raised concerns about the resilience of worldwide supply chains. Hence, an important outcome of the US-initiated Indo-Pacific Economic Framework (IPEF) negotiations is a proposed supply chain agreement, the outlines of which were published by the US Department of State after negotiations were concluded in May in Jakarta. But diversifying the region’s supply chains—an objective repeated by Treasury Secretary Janet Yellen during her Beijing visit in July—could prove elusive.

Africa

• “African Energy Boom Sparks Power Grab in Senegal”  Real Clear World

  As Senegal stands on the cusp of an energy boom with its recent discovery of substantial oil and natural gas reserves, the nation faces a pivotal crossroads between economic prosperity and the risk of descending into autocracy. The energy boom's significance extends beyond Africa toward Europe’s ongoing struggle with Russian aggression, holding promise to help European nations reduce Russian oil and natural gas influence with a new supplier. This juncture also comes at a time when governments with strong Western ties across Africa are falling following a series of coups, amplifying concern for Senegal, a former French colony with strong Western ties dealing with its own growing instability. With the government’s ongoing enforcement of crackdowns and imprisonment of opposition members ahead of next year’s election, Senegal’s political institutions are in jeopardy.

• “Africa’s ‘Coup Belt,’ Russia, and the Waning Global Order”  European Council on Foreign Relations

  Coups d’états have returned to Africa. In the 1990s and 2000s, the number of forced takeovers of power on the continent fell, but the figure began to creep back up around 15 years ago. This deterioration has come to particular prominence with the emergence of a ‘coup belt’ spanning from Sudan to Niger (and mostly recently Gabon), where eight coups have taken place in the last three years. The drivers behind coups range from state fragility to weak economic development. But such factors were also a constant in the decades immediately after the end of the Cold War – when Africa experienced fewer coups. The overlooked factor is the weakening of global order and the coup-enabling international environment it has created. Policymakers should consider, in particular, the role that activist ‘middle powers’ and Russia are now playing in taking advantage of an increasingly lawless international setting. 

Geo-Economics

• “Elevating the Role of Critical Minerals for Development and Security”  Center for Strategic and International Studies

  Over the next few decades, the role that copper and critical minerals play in achieving the energy transition, spurring economic development, and strengthening national security will continue to grow. The world is slowly shifting its energy mix to one that is greener, but this transition will require significant mining resources. Mining and the processing of minerals are also crucial in maintaining the military’s technological edge, securing manufacturing supply chains, and pursuing sustainable development practices. The United States Geological Survey (USGS) has designated 50 critical minerals “essential to the economic and national security of the U.S.,” and the Department of Defense (DOD) has identified more than 250 “strategic and critical materials,” defined as those “those that support military and essential civilian industry.” Yet, unlike some strategic allies, such as Canada, the United States does not consider copper to be a critical mineral (see Box 1 for more on these definitions).

• “The Rise of the Walking Dead: Zombie Firms Around the World”  VoxEU/CEPR

  The rise in the number of unproductive and unviable (‘zombie’) firms worldwide does not bode well for future productivity growth. This column documents global trends in zombification over the last two decades by creating a new dataset of nonfinancial zombie firms, listed and private, for a large set of countries. Despite the widespread increased zombification, the results point to a silver lining: negative macro-financial spillovers from zombie firms to non-zombies can be mitigated by strengthening banks and improving insolvency frameworks.

• “Living with High Public Debt”   Kansas City Fed/Serkan Arslanalp and Barry Eichengreen

  Public debts have soared to unprecedented peacetime heights. These high debts pose economic, financial, and political challenges. Multilateral financial institutions and others have consequently laid out scenarios for bringing them back down. Our thesis in this paper is that high public debts are not going to decline significantly for the foreseeable future. Countries are going to have to live with this new reality as a semi-permanent state of affairs. These are not normative statements of what is desirable; they are positive statements of what is likely.  Financial liberalization, internal and external, is an economic fact of life. The genie is out of the bottle. All of which is to say that, for better or worse, high public debts are here to stay.

Russia/Ukraine

• “Behind the Lines: Voting at Gunpoint in Russia’s Sham Elections”  Center for European Policy Analysis

  Russian occupation forces began conducting “elections” in some occupied regions on August 31 and will finish them on September 10.  The aim of the Kremlin is to boost voter participation to add credibility to the elections for local “legislative bodies” and “self-government bodies.”  The whole process, which is intended for domestic Russian and international audiences, seeks to show a vibrant political life and create the illusion that local residents have a say over their future. The reality is many are being forced to vote at gunpoint for pre-selected candidates.

Graphic of the Week

China’s  New “Standard Map” Offends and Outrages Multiple Countries

 Less than two weeks  before India hosts the G20 Leaders’ Summit (which Chinese President Xi Jinping is not attending), the Chinese government released its new “standard map.”  The map has China claiming ownership of vast territories that are actually controlled by India, the Philippines, Malaysia, Vietnam, and Taiwan.  All these countries have strongly repudiated the map and its claims.   In India’s case, China claims power over the Indian state of Arunachal Pradesh as well as the Aksai Chin plateau, a disputed area in the Western Himalayas that is claimed by India but controlled by China.  All in all, the map serves to inflame regional tensions with China further but also shows Beijing’s willingness to challenge and anger its neighbors.

U.S. Regulatory Week Ahead

September 11 - 16, 2023

Washington is fully back to work this coming week as the House of Representatives returns Tuesday from their August recess.  The big event of the week in Congress will be Tuesday’s testimony by SEC Chair Gary Gensler before the Senate Banking Committee.  We expect Republican senators to go hard at Gensler over a range of regulatory issues he has been pursuing, ranging from ESG regulations to regulation of private capital. 

 Chair Gensler will also participate in a conference reflecting on the 15th anniversary of the Lehman Brothers collapse (was it that long ago?). 

Meanwhile, the  House Financial Services Committee is holding three hearings this week on Basel III implementation, oversight of foreign acquisitions of U.S. assets in the U.S., and the implications of the Federal Reserve developing a digital currency.

Also in the House of Representatives this week, the House Select Committee on Competition with China will hold a field hearing in New York on the potential risk China poses to the U.S. financial sector.  Former SEC Chair Jay Clayton is scheduled to be among those testifying.

Looking at events from last week, the Federal Reserve will now field a full complement of Governors as the U.S. Senate confirmed Phillip Jefferson as Vice Chair and Adriana Kugler to a Fed Governorship, making her the first Latino to serve on the Board.

Finally, the Treasury Department will hold the Committee on Foreign Investment in the United States (CFIUS) Conference 2023.  Treasury Secretary Janet Yellen will make a keynote speech, and markets will listen closely for comments she may make about new regulations being developed on outbound U.S. investments to China.

Below is our listing of major regulatory events this week in Washington and elsewhere in the U.S. and Canada.  Please let us know if you have any questions.

U.S. Congressional Hearings

U.S. Senate

• September 12 – 10:00 a.m.:  SEC Chair Gary Gensler will testify before the Senate Banking Committee.  The title of the hearing is “Oversight of the U.S. Securities and Exchange Commission.”

U.S. House of Representatives

• September 12 – 8:30 a.m.  at the Council on Foreign Relations in New York: The House Select Strategic Competition Between the United States and the Chinese Communist Party Committee holds a field hearing on "Systemic Risk: The Chinese Communist Party's Threat to U.S. Financial Stability."  Witnesses will include Jay Clayton, Former chairman of the Securities and Exchange Commission, Jim Chanos, President and founder of Kynikos Associates, and Anne Stevenson-Yang, Founder of J Capital Research.

• September 13 – 10:00 a.m.: The House Financial Services Committee holds an oversight hearing  entitled “ Foreign Investment in the U.S. (CFIUS) and Other Efforts to Strengthen National Security in the U.S.”

• September 14 – 10:00 a.m.: The House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy holds a hearing entitled “Implementing Basel III: What’s the Fed’s Endgame?”

• September 14 – 2:00 p.m.: The House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion holds a hearing entitled “Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives.”

US Federal & State Regulatory Meetings & Events

U.S. Treasury Department

• September 14 – 8:00 a.m. – 5:00 p.m.: The U.S. Treasury will host the Committee on Foreign Investment in the United States (CFIUS) Conference 2023.  Treasury Secretary Janet Yellen will deliver a keynote address, and Homeland Security Secretary Alejandro Majorkas will deliver the closing keynote address.

U.S. Federal Reserve Board

• Nothing significant to report; The Fed Board is in its quiet period in advance of the FMOC meeting on September 20.

Office of the Comptroller of the Currency

• Nothing of significance is scheduled for this coming week.

Federal Deposit Insurance Corporation

• Nothing of significance is scheduled for this coming week.

Securities and Exchange Commission

• September 13 – 12:30 p.m.:  Chair Gary Gensler will participate in a virtual fireside chat at the 15th Anniversary Lehman Collapse Conference hosted by Better Markets.  The title of the chat is “A Market Regulator’s View of Too-Big-To-Fail.”

  • NOTE: SEC Chair Gary Gensler is scheduled to testify before the House Financial Services Committee on Sept. 27th.

Commodities Futures Trading Commission

• September 11 – 10:00 a.m. – 10:15 a.m. PST: Commissioner Christy Goldsmith Romero will give opening remarks on “Modernizing Investor Protection for the Digital Age” at the North American Securities Administrators Association 2023 Fall Annual Meeting.  The meeting will be held at the InterContinental San Diego Hotel in San Diego.

• September 12 – 9:20 a.m. – 9:50 a.m. (Tokyo): Commissioner Caroline Pham will deliver a keynote speech titled “Digital Assets, Retail, Social Media & AI: What’s Next?” at the 13th Nasdaq Surveillance Conference in Tokyo, Japan.

Federal Trade Commission

• September 14 – 11:00 a.m.: The Federal Trade Commission will hold an open meeting virtually.  The agenda includes:

  • Improper Listing of Patents in the Orange Book: The Commission will consider whether to issue a policy statement concerning the improper listing of patents in the Food and Drug Administration’s publication of Approved Drug Products With Therapeutic Equivalence Evaluations, commonly known as the “Orange Book.” The policy statement will discuss whether improper listing of patents in the Orange Book may increase the cost of and reduce access to essential prescription drugs, imposing costs on individuals and society alike. The policy statement also assesses whether the listing of patents in the Orange Book that do not comport with listing requirements may constitute an unfair method of competition.

  • Protecting Kids from Stealth Advertising in Digital Media: The Commission will vote on whether to release a staff perspective and recommendations on the blurring of advertising and content on digital media and how it affects kids, including teens. This staff perspective builds on an October 19, 2022 event that staff hosted to survey existing research, understand the potential harms to kids from blurred advertising, and discuss possible solutions.

Consumer Financial Protection Bureau

• September 13 – 2:30 – 3:30 p.m.:  CFPB Director Rohit Chopra will give a keynote speech entitled “Too-Big-To-Fail from a Financial Consumer’s Point of View” at the 15th Anniversary Lehman Collapse Conference hosted by Better Markets in Washington, D.C.

Farm Credit Administration

• September 14 – 10:00 a.m.: The FCA Board holds its monthly board meeting in McLean, Virginia.

The North American Securities Administrators Association (NASAA)

• September 10 – 12: NASAA holds its 2023 Fall Annual Meeting in San Diego. 

Trade Associations & Think Tank Events

• September 11 – 8:00 – 9:00 a.m.: The Institute for International Finance and the Dubai International Financial Centre host a webinar entitled “Moving the finance industry from promises to action.”

• September 12 – 12:00 p.m. – 5:30 p.m.: The Institute for International Finance and the Canadian Bankers Association co-host the 2023 IIF-CBA Canada Forum: Financing A World in Transition – Challenges and Opportunities in Toronto.

• September 13 – 9:30 – 12:00 p.m.: The Bipartisan Policy Institute holds a conference entitled “New Horizons for the Agricultural Carbon Market” in Washington, D.C.

• September 14: American Bankers Association Diversity, Equity, and Inclusion Summit (virtual)

Please let us know if you have any questions or would like to be added to our email distribution list.

Speaking in Banff, British Columbia to the National Credit Union Management Association

Banff is one of the most beautiful places in the world and I had the honor to speak to the National Credit Union Management Association (NCUMA) this past week. A fantastic event with wonderful attendees. the NCUMA is a world-class organization and I’m very grateful they invited me to speak!

View from my room at the glorious Fairmont Banff Springs Hotel in Banff, British Colombia.

Federal Home Loan Bank of Indianapolis’ Investor Symposium

It was an honor and great fun to speak at the Federal Home Loan Bank of Indianapolis Investor Symposium in Detroit last week. The meeting brought together financial leaders who are driving economic growth and innovation in the region. Smart, creative, energetic. Thank you, FHLBI, for having me join you and for bringing me as a guest to the Detroit Tigers vs. New York Yankees game on a gorgeous Detroit evening!

Recommended Weekend Reads

September 1 - 3, 2023

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

Americas

• “Mexico’s Microchip Advantage”  Foreign Affairs

  Since Congress passed the CHIPS and Science Act one year ago, there has been much talk about how to shift electronics and computing supply chains away from China.  In addition to the rapid buildup of domestic manufacturing spurred by the CHIPS Act tax credits and incentives, the intensification of U.S.–China tension and the imposition of export controls are encouraging many multinational technology companies to relocate production outside of China.  The focus on diversification within Asia, however, has meant that Mexico – the U.S.’ top trading partner and arguably its most important manufacturing partner – is being largely overlooked.  Building regional capacity offers a way to limit Asia-focused supply risks, and in the event of a major U.S.–China conflict, an intra-hemispheric supply chain would be much less susceptible to interference.  Mexico would be the key place to start.

Africa

• “Whose tune will an expanded BRICS dance to?”   Institute for Security Studies (South Africa)

  On the face of it, South African President Cyril Ramaphosa was the big winner of the 15th BRICS Summit in Johannesburg last week. Ramaphosa presided over a summit where the five BRICS leaders agreed to invite six new members to join the bloc: Saudi Arabia, United Arab Emirates, Iran, Ethiopia, Egypt, and Argentina. An expanded BRICS that now accounts for 36% of global gross domestic product (GDP) in purchasing power parity (PPP) terms and 46% of the world’s population. But if the expansion was a success for Ramaphosa, it was arguably an even greater success for Chinese President Xi Jinping, who campaigned energetically for enlarging the alliance. Prime Minister Narendra Modi of India was apparently reluctant because he suspected this would increase Xi’s global power.  Modi is likely to be proven correct.

• “The Niger Coup’s Outsized Global Impact”   Carnegie Endowment for International Peace

  This latest coup in West Africa is a major blow to Niger, the Sahel region, and West Africa as a whole. The junta has publicly accused France, which has some 1,500 troops in Niger, of trying to destabilize the country. The crisis has also been closely monitored in Washington, given the presence of U.S. military bases and political engagement in the landlocked country at the heart of the Sahel. While Niger’s economic and social indicators place it at the bottom of global development indices, these metrics also understate the country’s strategic importance of this vast country. Its geographical position at the crossroads of North, West, and Central Africa, its mineral and oil resources, its potential for the development of renewable energies, and its strong demographic growth help explain the seemingly outsize interest of medium and large powers in the current crisis. This report is an exploration of the major ways the crisis has rippled through the country, the region, and the world.

Indo-Pacific

• “What Kind of World does Xi Jinping Want?”   Harvard Kennedy School

  When Chinese President Xi Jinping agreed to a “Joint Statement” with President Putin, claiming there would be “no limits” to the relationship, some wondered whether this heralded the creation of a new world order. The statement does reference the trend toward the “redistribution of power in the world.” So, what kind of a world does Xi want to see? Two major principles drive his view. First, security and sovereignty issues must all be aligned to ensure the continued rule of the Chinese Communist Party. Second, he insists that China be seen as at least an equal player in the world, making it a key participant in defining the rules of the road.

Political Economy

• “Protests”  National Bureau of Economic Research Working Paper

  Abstract: Citizens have long taken to the streets to demand change, expressing political views that may otherwise be suppressed. Protests have produced change at local, national, and international scales, including spectacular moments of political and social transformation. We document five new empirical patterns describing 1.2 million protest events across 218 countries between 1980 and 2020. First, autocracies and weak democracies experienced a trend break in protests during the Arab Spring. Second, protest movements also rose in importance following the Arab Spring. Third, protest movements geographically diffuse over time, spiking to their peak before falling off. Fourth, a country’s year-to-year economic performance is not strongly correlated with protests; individual values are predictive of protest participation. Fifth, the US, China, and Russia are the most over-represented countries by their share of academic studies. We discuss each pattern’s connections to the existing literature and anticipate paths for future work.

• “The FMOC versus the Staff: Do Policymakers Add Value in Their Tales?”  Federal Reserve Bank of Cleveland

  Using close to 40 years of textual data from FOMC transcripts and the Federal Reserve staff's Greenbook/Tealbook, we extend Romer and Romer (2008) to test if the FOMC adds information relative to its staff forecasts not via its own quantitative forecasts but via its words. We use methods from natural language processing to extract from both types of document text-based forecasts that capture attentiveness to and sentiment about the macroeconomy. We test whether these text-based forecasts provide value-added in explaining the distribution of outcomes for GDP growth, the unemployment rate, and inflation. We find that FOMC tales about macroeconomic risks do add value in the tails, especially for GDP growth and the unemployment rate. For inflation, we find value-added in both FOMC point forecasts and narrative once we extract from the text a broader set of measures of macroeconomic sentiment and risk attentiveness.

Chart of the Week

The End of the Temporary Student Loan Payment Reprieve:

So, Where Are You Going to Cut Your Spending to Pay Back Your Debt? 

In late June, the U.S. Supreme Court struck down as unconstitutional President Biden’s student loan forgiveness program.  On Friday, September 1st, student loans accruing interest will begin again, and borrowers will have to start making payments again in October. The Financial Times took a deep dive and asked: So, now that you have to start paying back your debt again, where are you planning to cut your spending? It looks like restaurants, grocery stores, and the travel industry are going to be the big losers.

U.S. Regulatory Week Ahead

September 4 - 8, 2023

Summer vacations are finished, the kids are back to school, and Washington is roaring back to life this week.  The Senate is back in session (the House comes back on September 11th).  There are a number of meetings and events of note this week.

But first, we would note that last week, the FDIC’s Board of Directors held an Open Meeting to consider five resolutions dealing with long-term debt requirements, new filings for institutions with $100 billion or more in total assets, and approval of new procedures for approving the resolution and sale of midsized and large banks.  You can read the FDIC’s full proposals and background memorandums HERE.

We are also watching the lawsuit brought by a consortium of hedge fund, private equity, and venture capital trade associations against the Securities and Exchange Commission for their newly adopted rule on regulating private funds.  Our friends at Capitol Account (there is a paywall, but as avid readers ourselves, we strongly encourage you to subscribe – it’s worth every penny) point out that Gene Scalia is the lead lawyer on the case.  And knowing Gene’s track record in court, previously bringing suits against the SEC and other regulators, our betting money is on the plaintiffs.

Below is our listing of major events in Washington this coming week.  It is going to get more and more busy in the coming weeks and months, and we hope we can help you keep on top of it all. Let us know if you have any questions.

U.S. Congressional Hearings

• September 7, 2023, 10:00 a.m.:  The Senate Banking Committee holds a hearing on "Perspectives on Challenges in the Property Insurance Market and the Impact on Consumers."  The witnesses will be Douglas Heller, Director of Insurance at the Consumer Federation of America, and Jerry Theodorou, Policy Director for finance, insurance, and trade at the R Street Institute.  

• The House of Representatives is out of session but returns to work on Tuesday, September 11th.  

US Regulatory Meetings & Events 

U.S. Treasury Department

• US Treasury Secretary Janet Yellen will travel with President Biden to New Delhi, India, to participate in the G20 Leaders’ Summit through September 10.

U.S. Federal Reserve Board

• September 7, 2023 – 4:55 p.m.: Fed Governor Michelle W. Bowman will participate in a panel entitled “The Future of Money and Consumer Protection” At the Federal Reserve Bank of Philadelphia Seventh Annual Fintech Conference, Philadelphia, Pennsylvania.

• September 8, 2023 – 9:00 a.m.: Vice Chair for Supervision Michael S. Barr will give a speech on payment innovations at the Federal Reserve Bank of Philadelphia Seventh Annual Fintech Conference, Philadelphia, Pennsylvania.

Office of the Comptroller of the Currency

• Nothing of significance is scheduled for this coming week.

Federal Deposit Insurance Corporation

• Nothing of significance is scheduled for this coming week.

Securities and Exchange Commission

• September 6, 2023 – 10:00 a.m.: The SEC will hold an open meeting to consider whether to adopt a proposed amendment to the National Market System Plan Governing the Consolidated Audit Trail (“CAT NMS Plan”) to implement a revised funding model (“Executed Share Model”) for the consolidated audit trail (“CAT”) and to establish a fee schedule for CAT fees for the self-regulatory organizations that are participants to the CAT NMS Plan in accordance with the Executed Share Model.

• September 7, 2023, 2:00 p.m.: The SEC will hold a closed meeting.

• NOTE: SEC Chair Gary Gensler is scheduled to testify before the Senate Banking Committee on September 12th.  He is also now scheduled also scheduled to testify before the House Financial Services Committee on Sept. 27th.

Commodities Futures Trading Commission

• Friday, September 8, 2023 – 11:30 – 12:30 p.m., The Grand Hyatt, Nashville, TN: Commissioner Summer K. Mersinger will participate in a fireside chat at the National Association of Federal Equity Receivers Annual Conference.

Federal Trade Commission

• September 5 – 1:00 p.m. – 4:15 p.m.: The FTC co-holds the first of three workshops with the Department of Justice’s Antitrust Division on their 2023 Draft Merger Guidelines.  The workshop will consist of two panels:

  • Panel 1: Evolving Approaches to Raising Rivals’ Costs and Vertical Mergers from the 2020 Vertical Merger Guidelines(VMG) to the Draft Merger Guidelines

  • Panel 2: Evolving Approaches to Mergers Between Rivals from the 2010 Horizontal Merger Guidelines (HMG) to the Draft Merger Guidelines

Farm Credit Administration

• Nothing of significance is scheduled for this coming week.

Trade Associations & Think Tank Events 

Think Tanks

• September 6, 2023, 9:00 a.m. – 10:00 a.m.: The Peterson Institute for International Economics,  9:00 a.m. – 10:00 a.m.: Is limited liability the best regime for banks?

• September 7, 2023, 9:00 a.m.:  The U.S. Chamber of Commerce’s Center for Capital Market Competitiveness holds a discussion on "European Union Corporate Disclosure Requirements” at the U.S. Chamber.  Speakers include Dalia Blass, Partner at Sullivan & Cromwell; Sonja Gibbs, Managing director and head of sustainable finance at the Institute of International Finance; Emmanuel Faber, Chair of the International Sustainability Standards Board; David Woodcock, Partner at Gibson Dunn; Peter Matheson, Managing director of international policy and advocacy at the Securities Industry and Financial Markets Association Dan Crowley, Partner at K&L Gates.

• September 7, 2023, 9:30 a.m.: The CATO Institute holds a conference entitled “Staying Ahead of the Curve: Crypto Regulation and Competitiveness.”  Speakers include:
  — 9:35 a.m.: Sen. Bill Hagerty (R-Tenn.) delivers remarks
  — 10:15 a.m.: Panel discussion on "Stablecoins, the Dollar and Regulation"
  — 11:45 a.m.: Panel discussion on "Crypto Regulatory Uncertainty and U.S. Competitiveness"
  — 2 p.m.: Panel discussion on "Regulating Open-Source Financial Technology"

Please let us know if you have any questions or would like to be added to our email distribution list.

The Global Week Ahead

August 27 - September 3, 2023

This coming Friday is the first day of the meteorological autumn.  Goodbye, Summer, and welcome to what we expect will be a hectic fall.  

In the coming week, we are watching several significant geopolitical events - three of which deal with China. First, U.S. Secretary of Commerce Gina Raimondo begins a four-day visit to Beijing to discuss trade issues – the sale of semiconductors being the paramount issue for China.  Second, while she is there, Tuesday, British Foreign Secretary James Cleverly will meet his Chinese counterpart, Wang Yi, in Beijing. Cleverly will be the first UK Foreign Secretary to visit China in five years.  And third, on Friday, Dutch restrictions on the export of chip manufacturing equipment to China go into effect (The Netherlands is home to ASML, the world’s most valuable chip tool maker and a one-time major supplier of semiconductor manufacturing equipment to China).

Also in Europe this week, foreign and defense ministers from the Baltic States and Poland will meet to discuss the growing threat of Russian Wagner Group forces who have amassed in Belarus on the Polish border.

On the global economic radar screen this week, markets will be watching closely the U.S. GDP employment figures and inflation indicators, giving them a sharper insight into the Federal Reserve’s possible thinking on future monetary tightening.

China will release PMIs this week in the face of growing economic headwinds.  And several important Eurozone CPIs will be out, including Germany’s. 

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

Sunday, August 27, 2023

Global

• Nothing Significant to Report (NSTR)

Americas

Political/Social Events –

• U.S. Secretary of Commerce Gina Raimondo begins a four-day trip to China.  She is expected to announce a working on export controls and commercial issues dealing with China.  The trip and announcement of the new working group are seen as likely to alleviate slightly trade tensions between the U.S. and China.  However, markets will be watching to see if there is a breakthrough in restarting Chinese purchases of Boeing 737 Max jets.

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• Singapore Prime Minister Lee Hsien Loong visits Vietnam through August 29.  He will meet with Vietnamese Prime Minister Pham Minh Chinh to discuss improving trade and security issues as well as witness the ground-breaking of several new industrial parks.  This marks the 50th anniversary of diplomatic relations between the two nations and the 10th year since they signed a strategic partnership.

• North Korea is expected to launch a second spy satellite in the coming days after a previous effort - “Chollima-1” failed in May.

Economic Reports/Events –

• China Industrial Profits (July)

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• Turkey's opposition People's Democratic Party will hold its fourth annual grand congress in Ankara.

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• Zimbabwe reports the election results from its August 23 general election.  Incumbent President Emmerson Mnangagwa appears to have won over opposition leader Nelson Chamisa.  There have been serious allegations of voter suppression and cheating the risk of a violent response to the results is significant.

Economic Reports/Events –

• NSTR

Monday, August 28, 2023

Global

• The UN Security Council is scheduled to hold a meeting on the situation in Mali, followed by consultations on the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA).  Following this, the Special Representative of the Secretary-General for Mali and Head of the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA), El Ghassim Wane, will brief reporters virtually on MINUSMA’s withdrawal process (following Security Council consultations).

Americas

Political/Social Events –

• Former President Donald Trump has a hearing before Judge Tanya Chutkan in Washington, D.C., regarding the criminal charges brought against him for involvement in the January 6th insurrection.

• Today is the 60th anniversary of Martin Luther King’s “I Have a Dream” speech on the steps of the Lincoln Memorial in Washington, D.C.

Economic Reports/Events –

• Federal Reserve Vice Chair for Supervision Michael Barr participates in the "Banking Services" roundtable discussion with the Confederated Salish and Kootenai Tribes Council in Pablo, Montana.

• Brazil Bank Lending (July), BCB Focus Market Readout

Asia

Political/Social Events –

• Workers at a Chevron Wheatstone liquified natural gas facility in Australia will vote on whether to permit unions to strike.  The risk of a strike led to a spike in natural gas prices in Europe in the last few weeks, but now with a deal in sight, prices tumbled in the last few days.

• Three Canadian naval ships will visit Yokosuka Port in Tokyo Bay to be refueled.  The visit is part of Canada’s strategy to increase the country’s role in maintaining security in greater Indo-China.

• Japan will launch the moon lander for its "Moon Sniper" mission. They hope to land on a small crater close to the Moon’s equator on the side facing Earth.

• Tropical storm Saola will hit maximum strength east of the Philippines and may be designated as a super typhoon.

• Yamaguchi Natsuo, leader of Japan’s Komeito Party (which is the junior partner in the ruling coalition), meets Chinese officials in Beijing.

Economic Reports/Events –

• China Industrial Profits (July)

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

• Australia Retail Sales (July)

• Taiwan Consumer Confidence (August)

• Philippines Budget Balance (July)

Europe

Political/Social Events –

• Officials from Estonia, Latvia, and Lithuania will meet in Warsaw, Poland, to discuss the possibility of a complete border closure with Belarus.  In recent weeks, Wagner Group forces have increased their presence on the Polish border, leading to a Polish military build-up to counter any possible aggression.

• Ukraine's Foreign Minister Dmytro Kuleba will meet his Czech counterpart, Jan Lipavsky, in Prague.

• The European Parliament returns to work in Brussels.  Multiple committee meetings are scheduled throughout the week.  Among the key issues they will focus on is a €50 billion initiative to support Ukraine’s recovery, reconstruction, and modernization from 2024 to 2027.

• The Bled Strategic Forum will be held in Bled, Slovenia, through August 29.  Attendees will include leaders from Southern and Southwestern Europe.

Economic Reports/Events –

• Eurozone Loans to Households and Companies (July)

• Ireland Retail Sales (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Private Bank Lending (July)

• Qatar GDP (Q1)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Tuesday, August 29, 2023

Global

• NSTR

Americas

Political/Social Events –

• President Biden will host Costa Rican President Rodrigo Chaves Robles for bilateral meetings at the White House.  Among the issues they will discuss is an agreement between the two countries on a possible legal pathway for migrants.

Economic Reports/Events –

• Federal Reserve Vice Chair for Supervision Michael Barr participates in the "Banking Services" roundtable discussion with the Blackfeet Business Council in Browning, Montana.

• US S&P/Case Shiller Indexes (June), JOLTs Job Reports (July), Dallas Fed Services Index (August), Redbook (August 26)

• Mexico GDP (Q2), Economic Activity (June)

• Colombia Business Confidence (July)

• El Salvador Current Account (Q2)

• Uruguay Unemployment (July)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• Japan Unemployment (July)

• Australia Reserve Bank Deputy Governor Michele Bullock gives her last speech at a lecture on climate change and the transition to net zero emissions at the Australian National University in Canberra, Australia.

• Singapore Import/Export Prices (July), PPI (July)

Europe

Political/Social Events –

• The European Council of Defense Ministers will hold informal meetings through August 30 in Toledo, Spain. 

• British Foreign Secretary James Cleverly will meet his Chinese counterpart, Wang Yi, in Beijing. Cleverly will be the first UK Foreign Secretary to visit China in five years.  He was previously scheduled to meet in July with the then-Chinese Foreign Minister Qin Gang.  But after Qin mysteriously disappeared from public view and then was removed from office, Cleverly canceled the trip.

Economic Reports/Events –

• Germany GfK Consumer Confidence (September)

• France Consumer Confidence (August)

• Spain Retail Sales (July)

• Hungary GDP (Q2), Central Bank Interest Rate Decision

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Qatar Balance of Trade (July)

• Turkey Exports/Imports/Balance of Trade (July), Economic Confidence Index (August)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Wednesday, August 30, 2023 

Global

• The UN’s 8th Asia-Pacific Climate Change Adaptation (APAN) Forum, hosted within the UN Environment Programme (UNEP) Regional Office for Asia and the Pacific, will take place from through September 1 in Incheon City, South Korea.

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• US GDP (Q2), PCDE Prices (Q2),  MBA Mortgage Indexes (August 25), ADP Employment Change (August ()Goods Trade Balance (July), Corporate Profits (Q2), Real Consumer Spending (Q2), Pending Home Sales (July)

• Brazil IGP-M Inflation (August), PPI (July), Net Payrolls (July)

• Mexico Fiscal Balance (July)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• Bank of Japan Board Member Naoki Tamura will give a speech at a meeting with local leaders in Eastern Hokkaido, Consumer Confidence (August)

• New Zealand Building Permits (July)

• Philippines PPI (July)

• Australia Monthly CPI Indicator. (July), Building Permits (July)

Europe

Political/Social Events –

• Today is the La Tomatina Festival in Buñol, Spain.  More than 20,000 people are expected to show up and throw tomatoes at each other.

Economic Reports/Events –

• Eurozone  Economic Sentiment (August), New Car Registrations (July)

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

• UK Mortgage Approvals (July), BoE Consumer Credit (July)

• Italy Business Confidence/Consumer Confidence (August), Industrial Sales (June)

• Spain Inflation (August), Business Confidence (August)

• Ireland Inflation (August)

• Switzerland KOF Leading Indicators (August), Economic Sentiment Index (August)

• Bulgaria PPI (July), Central Bank Interest Rate Decision

• Hungary Retail Sales

• Bosnia & Herzegovina Inflation (July), PPI (July), Retail Sales (July)

• Russia Business Confidence (August), Corporate Profits (June), Retail Sales (July), Unemployment (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Thursday, August 31, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• Federal Reserve Bank of Boston President Susan Collins speaks virtually on creating an economy that works for all, and the role community colleges play in the nation's essential development of its people and workforce before the Bunker Hill Community College annual convocation in Boston, Massachusetts.

• Atlanta Federal Reserve Bank President Raphael Bostic speaks on the economic outlook in a moderated conversation hosted by Broward College in Davie, Florida.

• US  Core PCE Price Index (July), Personal Income (July), Initial Jobless Claims (August 26), Challenger Job Cuts (August), Chicago PMI (August)

• Canada CFIB Business Barometer (August), Current Account (Q2)

• Brazil Nominal Budget Balance (July), Gross Debt to GDP (July), Unemployment (July)

• Mexico Unemployment (July)

• Chile Copper Production (July), Industrial Production (July), Manufacturing Production (July), Retail Sales (July)

• Argentina Consumer Confidence (August), Tax Revenue (August)

• Colombia Cement Production (July), Unemployment (July)

• Uruguay Balance of Trade (July)

Asia

Political/Social Events –

• Indonesian military forces will team with US military forces to host “Super Garuda Shield,” a military drill in East Java that will run through mid-September.  20 other countries will participate, including Japan, Singapore, Australia, and the UK.

• Pope Francis begins a visit to Mongolia through September 4.

Economic Reports/Events –

• China NBS Manufacturing PMI (August), NBS General PMI (August)

• Bank of Japan Board Member Toyoaki Nakamura will give a speech at a meeting with local leaders in Gifu, Japan, Japan Industrial Production (July), Retail Sales (July), Housing Starts (July)

• India GDP (Q2)

• South Korea Industrial Production (July), Retail Sales (July)

• Australia Private Sector Credit (July)

• New Zealand ANZ Business Confidence (August)

• Singapore Bank Lending (July)

• Hong Kong Retail Sales (July)

• Thailand Industrial Production (July), Current Account ((July), Retail Sales (July)

• Sri Lanka Inflation (August)

• Pakistan Consumer Confidence (August)

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• ECB Board Member Isabel Schnabel will give opening remarks at a conference entitled “Inflation: Drivers and Dynamics,” organized by the Center for Inflation Research at the Federal Reserve Bank of Cleveland and the European Central Bank at the ECB in Frankfurt, Germany.

• ECB Board Member Guindos will give remarks followed by Q&A at a seminar organized by the Universidad Internacional Menéndez Pelayo in Santander, Spain. 

• ECB Monetary Policy Meeting Accounts

• Bank of England  Chief Economist and Executive Director Huw Pill speaks at the South African Reserve Bank Biennial Conference on “Back to target? Monetary policy in advanced economies” in Cape Town, South Africa. UK Nationwide Housing Prices (August)

• Eurozone Inflation (August), Unemployment Rate (July), CPI (August)

• Germany Retail Sales (July), Unemployment (August)

• Italy Unemployment (July), Inflation (August), CPI (August)

• Spain Consumer Confidence (July)

• France Inflation (August), GDP (Q2), PPI (July)

• Hungary PPI (July), Inflation (August)

• Poland Inflation (August), GDP (Q2)

• Spain Current Account (June)

• Switzerland Retail Sales (July)

• North Macedonia Retail Sales (August), Current Account (Q2), Industrial Production (July)

• Serbia GDP (Q2), Industrial Production (July), Retail Sales (July), Unemployment (Q2)

• Kosovo Unemployment (2022)

• Ukraine Current Account (July)

• Russia GDP (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey GDP (Q2), MPC Meeting Summary, FX Reserves (August 25)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• Uganda Inflation (August)

• Nigeria FX Reserves (August)

• South Africa PPI (July), Balance of Trade (July)

Friday, September 1, 2023

Global

• Albania assumes the presidency of the UN Security Council for the month of September.

• Today is the first day of the meteorological autumn in the Northern Hemisphere.  Goodbye, Summer.  We will miss you.

Americas

Political/Social Events –

• Brazil’s ex-president Jair Bolsonaro gives evidence to police over allegations of illegal import of jewelry.  It is alleged Bolsonaro ordered an aide to sell undeclared luxury jewelry worth more than $70,000 (two watches) he had received as a gift and funnel the money back to him.

Economic Reports/Events –

• Cleveland Federal Reserve Bank President Loretta Mester speaks at the Federal Reserve Bank of Cleveland and the European Central Bank Conference in Frankfurt, Germany.

• US Unemployment (August), Non-Farm Payrolls (August), Participation Rate (August), S&P Global Manufacturing PMI (August), ISM Manufacturing New Orders & Prices (August), Construction Spending (July)

• Canada GDP (Q2), S&P Global Manufacturing PMI (August)

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

• Brazil GDP (Q2), S&P Global Manufacturing PMI (August), Balance of Trade (August)

• Chile IMACEC Economic Activity (July)

• Colombia Davivienda Manufacturing PMI (August)

• Peru Inflation (August)

Asia

Political/Social Events –

• Singapore holds presidential elections.

• A new law curbing Chinese youth smartphone and internet use goes into effect.

Economic Reports/Events –

• China Caixin Manufacturing PMI (August)

• Japan Capital Spending (Q2)

• India Government Budget Value (July), Infrastructure Output (July), S&P Global Manufacturing PMI (August)

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

• Indonesia S&P Global Manufacturing PMI (August)

• Philippines S&P Global Manufacturing PMI (August)

• Taiwan S&P Global Manufacturing PMI (August)

• Singapore SIPMM Manufacturing PMI (July), S&P Global Manufacturing PMI (August)

• Thailand S&P Global Manufacturing PMI (August), Business Confidence (August)

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

• New Zealand ANZ Roy Morgan Consumer Confidence (August)

• Indonesia Inflation (August)

Europe

Political/Social Events –

• Dutch export controls over semiconductor chip equipment to China go into effect.  ASML is headquartered in the Netherlands, the world’s most valuable chip tool maker.

• NATO will conclude its “Agile Spirit 2023” exercises in Georgia.

• The maiden flight of the Spanish-built Miura 1 rocket launched from Moguer, Spain.

• France’s controversial pension reform comes into force.

• In the UK, Aslef union members (train drivers) will go on strike for more pay.

• Also, in the UK, the sale of fluorescent lightbulbs for household use is banned as of today.

• Economic Reports/Events –

• Eurozone HCOB Manufacturing PMI (August)

• Germany HCOB Manufacturing PMI (August)

• France Budget Balance (July), HCOB Manufacturing PMI (August), New Car Registrations (July)

• Spain HCOB Manufacturing PMI (August), New Car Registrations (August)

• Italy HCOB Manufacturing PMI (August)

• Ireland AIB Manufacturing PMI (August), GDP (Q2),  GNP (Q2), PPI (July)

• Hungary S&P Global Manufacturing PMI (August), Balance of Trade (June), GDP (Q2), HALPIM Manufacturing PMI (August)

• Poland S&P Global Manufacturing PMI (August)

• Switzerland Inflation (August), CPI (August), procure.ch Manufacturing PMI (August)

• Russia S&P Global Manufacturing PMI (August)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey Istanbul Chamber of Industry Manufacturing PMI (August)

Africa:

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Africa Total Vehicle Sales (August)

Saturday, September 2, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• The China International Fair for Trade in Services begins in Beijing.  A large number of foreign tech companies are expected to attend.

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• In the UK, 20,000 RMT union members across 14 train companies go on strike for 24 hours over pay and working conditions.

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Africa

Political/Social Events –

• Cote D’Ivoire holds regional and municipal elections.

Economic Reports/Events –

• NSTR

Sunday, September 3, 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

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

U.S. Regulatory Week Ahead

August 28 - September 1, 2023

The coming week will, for the most part, be another quiet summer week – in fact, it will be the last quiet summer week as we head into Labor Day weekend and Washington gets back to work on September 6th.

Until then, the only significant event on the regulatory calendar next week will be the FDIC’s Board of Directors Open meeting.  They will consider five resolutions dealing with long-term debt requirements, new filings for institutions with $100 billion or more in total assets, and approval of new procedures for approving the resolution and sale of midsized and large banks.

We will pick up the calendar again next weekend, which we expect to be much fuller as the House of Representatives returns from the August recess, and all the regulators prepare for a hectic fall.  Until then, enjoy this last quiet week of summer, and let us know if you have any questions.

U.S. Congressional Hearings

•   Congress is out of session for the month of August.  The Senate returns on September 5th, and the House of Representatives on September 11th.

US Regulatory Meetings & Events

Securities and Exchange Commission

• August 31, 2023 – 2:00 p.m.: The Commission holds a closed-door meeting.

Federal Deposit Insurance Corporation

• August 29, 2023 – 10:00 a.m.: The Board of Directors holds an open meeting.  They will consider the following items:

1. Memorandum and resolution re: Notice of Proposed Rulemaking on Long-term Debt Requirements for Large Bank Holding Companies, Certain Intermediate Holding Companies of Foreign Banking Organizations, and Large Insured Depository Institutions. 

2. Memorandum and resolution re: Resolution Plans Required for Insured Depository Institutions with $100 Billion or More in Total Assets; Informational Filings Required for Insured Depository Institutions with At Least $50 Billion, but Less Than $100 Billion in Total Assets. 

3. Memorandum and resolution re: Publication of Proposed Guidance for Dodd-Frank Act Resolution Plan Submissions of Triennial Full Filers. 

4. Memorandum and resolution re: Conditions to Certain Receivership Delegations of Authority and Procedures. 

5. Memorandum and resolution re: Board Approval of Midsized and Large Failed Bank Sales.

Commodities Futures Trading Commission

• August 29, 2023 – 11:20-12:00 p.m.:  Commissioner Kristen Johnson will participate in a panel discussion on DeFi Regulation moderated by Carole House of Terranet Ventures at the DeFi Retreat US being held at the William Vale, Brooklyn, New York.

Trade Associations & Think Tank Events 

• Nothing of note is scheduled for the week. 

Please let us know if you have any questions or would like to be added to our email distribution list.

Recommended Weekend Reads

August 25 - 27, 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.

Africa

• “Unlocking Africa’s Population Potential”  OMFIF

  Africa’s population is growing rapidly. The estimated annual growth rate was 2.5% in 2021. Given the trajectory, Africa’s population will double by 2050. Statistics show that the continent adds two children per mother for every child born in Asia. This dynamic demographic seems to favor Africa, with its youthful population. What does this mean for Africa’s long-term economic prosperity? And why should we be cautiously optimistic?  The relationship between population growth and economic growth in Africa is positive, although weak (Figure 2). This arguably suggests that Africa could turn its growing population, if well harnessed, into an economic powerhouse in the coming decades.

Americas

• “For North American Energy Security, Go Local: Examining the Role of Natural Gas and Mexico’s Energy Sector”  Center for Strategic and International Studies

  Natural gas is the predominant fuel source in Mexico. However, years of reliance on the United States for cheap, plentiful gas imports has prevented Mexico from capturing the potential of its domestic gas industry. This exposes Mexico to risks in the form of geopolitical distortions and unexpected disruptions in U.S. supply. It also exacerbates inequalities between northern and southern states as high energy prices in the latter serve as deterrents for businesses and investors. This brief breaks down the intersection of energy security, natural gas, nearshoring, and migration and outlines areas for Mexico to cooperate with the United States on bolstering its domestic energy sector. 

•  “Not the X-Files: Mapping Public Reports of Unidentified Aerial Phenomena Across America”  Rand Corporation

  In this report, RAND provides findings on U.S. locations where unidentified aerial phenomena (UAP) reports are significantly more likely to occur and offers recommendations to increase awareness of the types of activities that might be mistaken for unexplained phenomena or that point to potential threats. The data were collected by the National UFO Reporting Center (NUFORC), one of the nongovernmental entities that the Federal Aviation Administration (FAA) has referenced in official documents for where to report unexplained phenomena. The analyses of these data should not be interpreted as an endorsement of any individual reports to NUFORC or of the accuracy of the database.

• “How BRICS Expansion Will Impact South America”   Americas Quarterly

  On the occasion of the 15th BRICS Leaders Summit in Johannesburg this week, the current members invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates to join the bloc early next year. The expansion, the first since 2010, will transform the BRICS group and represent a geopolitical win for Beijing.  But with presidential elections looming in Argentina, both Javier Milei and Patricia Bullrich, the first- and second-placed finishers of the recent national primaries, have signaled skepticism about China, and Bullrich even announced her opposition to Argentina’s potential BRICS accession.

Indo-Pacific

• “India is Pushing Back Against China in South Asia”   Foreign Policy

  As the intensifying strategic confrontation between the United States and China dominates many foreign-policy debates, another important competition is quietly playing out. The jostling between India and China for influence in South Asia—from the Himalayas to the islands off the subcontinent in the Indian Ocean—will likely prove crucial to the fate of Washington's strategy to keep the region “free and open” from Chinese coercion. And the good news, at least for now, is that New Delhi—an increasingly close U.S. partner—has been mostly successful in pushing back against Beijing's rising influence across the region.

Chart of the Week 

China’s Provinces Carrying Massive Debt 

The Financial Times drills into one of the biggest financial challenges in China today: The debt accumulated by its provinces – an estimated Rmb94 trillion($12 trillion). Much of it is hidden in opaque local government financing vehicles.  As local governments struggle to manage the debt, they are also increasingly reluctant to sell off state-owned assets to repay the debt.

The Global Week Ahead

August 20 - 27, 2023

This week we will either see the growth of a new global economic bloc… or not.  The BRICS leaders (Brazil, Russia, India, China, and South Africa) are meeting in South Africa this week – but only four of the five leaders will be in attendance as Russian President Vladimir Putin has an international warrant out for his arrest for committing war crimes against Ukraine.  The question for the BRICS is whether to expand their membership.  More than 40 countries have expressed interest in joining – including Cuba and Iran -- and 23 have formally applied for membership.  Brazil is resisting any significant expansion, while South Africa wants to expand. 

Also likely to be discussed is creating a common currency to dethrone the U.S. dollar as the world's largest reserve currency (and for Russia, get around the sanctions) while expanding the power of the BRICS New Development Bank.  India has made it clear they are not supportive of the idea and, as Jim O'Neill, the former Goldman Sachs economist who coined the name "BRICS," told the Financial Times last week, the idea of a common currency is "ridiculous" and that the bloc has "Never achieved anything since they first started meeting." 

Also this week, the 2024 U.S. presidential election cycle begins to kick into high gear as the first Republican presidential candidate debate is held in Milwaukee.  Former President Donald Trump announced he would not participate.  But eight (maybe nine if they can prove they qualified) other candidates will be on stage, and Fox News, who is hosting the debate, has promised to show video clips of Trump and ask the candidates to comment on what he said.

Meanwhile, Trump will be arraigned on Friday in Fulton County, Georgia, along with eighteen other defendants for allegedly trying to overturn the vote in his favor in Georgia.  We understand this will be the first case where the former President will have a mug shot taken.

 The big global economic radar screen event is the Kansas City Federal Reserve Bank's annual Jackson Hole Symposium.   This year's theme is "Structural Shifts in the Global Economy." Fed Chair Jay Powell and ECB President Christine Lagarde will speak on Friday. 

Also this week, China announces 1-year and 5-year loan prime rates, while we will see flash PMI prints from the U.S. and Eurozone.

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

Sunday, August 20, 2023

Global

• Nothing Significant To Report (NSTR)

Americas

Political/Social Events –

• Ecuador is scheduled to hold Presidential and Legislative elections. 

• Guatemala holds run-off presidential elections.

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Europe

Political/Social Events –

• Turkish President Recep Tayyip Erdogan will meet Hungarian Prime Minister Viktor Orban in Budapest, Hungary.

• Sweden hosts World Water Week through August 24.  They will discuss how to pursue innovative solutions for managing water in an increasingly unstable and resource-scarce world.

• Today is National Day in Hungary, a national holiday.  It is also known as State Foundation Day as well as St. Stephen’s Day, the nation’s first canonized saint.  It goes back to 1000 A.D. when Pope Sylvester II ordains St. Stephen as King of Hungary.

Economic Reports/Events –

• NSTR

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

NSTR

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Monday, August 21, 2023

Global

• The UN Security Council is scheduled to hold a meeting on the situation in the Middle East, including the Palestinian question, followed by consultations. In the afternoon, the Council is scheduled to hold a closed meeting on the situation in the Middle East, followed by consultations on the Middle East (Syria).

Americas

Political/Social Events –

• President Joe Biden and First Lady Jill Biden will travel to Maui to assess the damage from the recent wildfires.

Economic Reports/Events –

• Canada New Housing Price Index (July)

• Costa Rica Balance of Trade (July)

Asia

Political/Social Events –

• Cambodia’s Parliament convenes for the first time under prime minister Hun Manet after his father, Hun Sen handed power over to him earlier this month. 

• The United States and South Korea will launch the Ulchi Freedom Shield joint military drill in South Korea.

Economic Reports/Events –

• China Loan Prime Rate (1Y & 5Y)

• Taiwan Export Orders (July), Current Account (Q2), Inflation (July)

• Thailand GDP (Q2)

• New Zealand Imports/Exports/Balance of Trade (July)

Europe

Political/Social Events –

• Montenegrin President Jakov Milatovic, other Balkan leaders, and EU representatives, including EU President Ursula von der Leyen, will meet with Ukrainian President Volodymyr Zelensky in Athens, Greece. 

Economic Reports/Events –

• Germany PPI (July)

• Poland Employment (July), Industrial Production (July), PPI (July)

• Hungary Unemployment (July)

Middle East

Political/Social Events –

• In Israel, US Joint Chief of Staff General Mark Milley is scheduled to visit over next week and meet Defense Minister Yoav Gallant.

Economic Reports/Events –

• Qatar GDP (Q1), Total Credit Growth (July)

• Israel Inflation Expectations (August), Manufacturing PMI (July)

• Turkey Central Government Debt (July)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Tuesday, August 22, 2023

Global

• The BRICS Summit begins in South Africa.  Only four of the five leaders will be in attendance as Russian President Vladimir Putin because of the international arrest warrant that is out there for his crimes against Ukraine.  The leaders are expected to discuss the expansion of the group and the possible establishment of a common trading currency (which is unlikely to happen).

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• US Redbook (August 19), Existing Home Sales (July), Richmond Fed Manufacturing Index (August)

• Argentina Balance of Trade (July)

• Brazil Federal Tax Revenues (July)

• Paraguay PPI (July)

Asia

Political/Social Events –

• Thailand’s parliament will again meet to try to elect a new prime minister.   The sole nominee up for consideration now is property tycoon Srettha Thavisin, but he is unlikely to secure enough votes.

• Singapore holds Election nomination day, where presidential hopefuls submit the necessary paperwork needed to run.

Economic Reports/Events –

• South Korea Consumer Confidence (August)

• Taiwan Unemployment Rate (July)

• Indonesia Current Account (Q2)

Europe

Political/Social Events –

• EU climate chief Frans Timmermans will be nominated leader of a joint campaign between the Netherlands' Green Left and Labor parties that will run in the November Dutch general elections.

Economic Reports/Events –

• Eurozone Current Account (June)

• UK Public Sector Net Borrowing (July), CBI Industrial Trends Orders (August)

• Ireland Consumer Confidence (August), Current Account (June), Wholesale Sales (July)

• Switzerland Balance of Trade (July)

• Poland Retail Sales (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Lebanon Inflation (July)

Africa

Political/Social Events –

• The United Nations will hold a climate finance workshop for members of the Economic Community of West African States in Bonn, Germany.

Economic Reports/Events –

• South Africa Leading Business Cycle Indicator (June)

Wednesday, August 23, 2023

Global

• NSTR

Americas

Political/Social Events –

• Fox News hosts the first Republican presidential debate in Milwaukee, Wisconsin.

Economic Reports/Events –

• US S&P Global Manufacturing PMI/Services PMI/Composite PMI (August), MBA Mortgage Purchase Index (August 18)

• Canada Retail Sales (June)

• El Salvador Balance of Trade (July)

• Argentina Economic Activity (June)

• Paraguay Central Bank Interest Rate Decision

Asia

Political/Social Events –

• India’s Chandrayaan lunar lander is expected to touch down on the Moon’s South Pole.

• The United States, Japan, and Australia will conduct joint naval drills in the South China Sea.

Economic Reports/Events –

• Japan Jibun Bank Manufacturing PMI/Composite PMI (August)

• South Korea Business Confidence (August)

• Singapore CPI (July), Inflation (July)

• Taiwan Industrial Production (July), Retail Sales (July)

• Australia Judo Bank Manufacturing PMI/Services PMI (August)

• New Zealand Retail Sales (Q2)

Europe

Political/Social Events –

• NSTR

Economic Reports/Events –

• Eurozone Consumer Confidence (August), HCOB Manufacturing PMI/Services PMI/Composite PMI (August)

• Germany HCOB Manufacturing PMI/Services PMI/Composite PMI (August)

• France HCOB Manufacturing PMI/Services PMI/Composite PMI (August)

• UK S&P Global/CIPS Manufacturing PMI/Services PMI/Composite PMI (August)

• Poland Central Bank Interest Rate Decision

• Kosovo Balance of Trade (July)

• Russia Industrial Production (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Turkey Consumer Confidence (August)

• Israel Manufacturing Production (June)

Africa

Political/Social Events –

• Zimbabwe holds presidential, parliamentary, and local elections.

Economic Reports/Events –

• South Africa Inflation (July) 

Thursday, August 23, 2023

Global

• The annual Jackson Hole economic policy symposium, hosted by the Kansas City Federal Reserve Bank, begins.

• G20 Trade and Investment Ministers meet in Jaipur, India.

• the Organization for Economic Cooperation & Development (OECD) releases trade statistics for the second quarter of the year.

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• US Building Permits (July), Durable Goods Orders (July), Chicago Fed National Activity Index (July), Initial Jobless Claims (August 19), Kansas Fed Manufacturing Index (August)

• Canada Wholesale Sales (July)

• Mexico Central Bank Interest Rate Decision, Mid-month Inflation (August)

• Argentina Leading Indicator (July), Retail Sales (June)

• Peru Current Account (Q2)

• Chile PPI (July)

• Colombia Business Confidence (July)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• South Korea Central Bank Interest Rate Decision, PPI (July)

• Hong Kong Imports/Exports/Balance of Trade (July)

• Indonesia Property Price Index (Q2)

• Sri Lanka Central Bank Interest Rate Decision

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

Europe

Political/Social Events –

• Ukraine celebrates its 32nd Independence Day.

Economic Reports/Events –

• France Business Confidence (August), Business Climate Indicator (August)

• UK CBI Distributive Trades (August), Cfk Consumer Confidence (August)

• Hungary Gross Wage (June)

• Poland Unemployment (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

• Saudi Arabia Balance of Trade (June)

• Turkey Central Bank Interest Rate Decision

• Israel Composite Economic Index (July)

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• Botswana Central Bank Interest Rate Decision

Friday, August 25, 2023

Global

• NSTR

Americas

Political/Social Events –

• Former President Donald Trump and 18 other individuals must turn themselves into the Fulton County Court (Georgia) to be processed following their arraignment for multiple criminal charges.

• Today is Uruguay Independence Day, a national holiday.

Economic Reports/Events –

• US Michigan Consumer Sentiment (August), Michigan 5-year Inflation Expectations (August)

• Canada Manufacturing Sales (July), Budget Balance (June)

• Brazil FGV Consumer Confidence (August), Current Account (July), FDI (June), IPCA CIP (August)

• Mexico GDP (Q2), Current Account (Q2)

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• Japan CPI (August)

• India FX Reserves (August 18), FDI (June)

• Singapore Industrial Production (July)

• Thailand Imports/Exports/Balance of Trade (July) New Car Sales (July)

• Philippines Budget Balance (July)

Europe

Political/Social Events –

• Dmitry Medvedev, the chair of Russia's ruling United Russia party, will meet with party candidates for the posts of regional heads of the Russian Federation. 

Economic Reports/Events –

• ECB President Christine Lagarde speaks at the annual Economic Policy Symposium "Structural Shifts in the Global Economy" organized by the Federal Reserve Bank of Kansas City in Jackson Hole at 1:00 p.m. CT.

• Germany GDP (Q2), Ifo Business Climate (August), Ifo Current Conditions (August), Ifo Expectations (August)

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

• Spain PPI (July)

• Hungary Unemployment (July)

• Switzerland Non-Farm Payrolls (Q2)

• Bosnia and Herzegovina Inflation (July), PPI (July), Industrial Production (July)

Middle East

Political/Social Events –

• NSTR

Economic Reports/Events –

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

Africa

Political/Social Events –

• NSTR

Economic Reports/Events –

• Nigeria GDP (Q2)

Saturday, August 26, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• Japan will launch a rocket carrying a Japanese lunar lander from Tanegashima Space Centre. The mission is designed to show that lighter and more inexpensive missions to space can be achieved.

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 –

• Gabon holds presidential, parliamentary, and local elections.

Economic Reports/Events –

• NSTR

Sunday, August 27, 2023

Global

• NSTR

Americas

Political/Social Events –

• NSTR

Economic Reports/Events –

• NSTR

Asia

Political/Social Events –

• NSTR

Economic Reports/Events –

• China Industrial Profits (July)

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

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