Last week in the financial markets
· Bahrain joins UAE in normalising relations with Israel, signing the declaration of peace at the White House
· The number of Covid-19 cases passed 30 million globally
· The Trump administration moved to ban Chinese-owned WeChat and TikTok apps from US app stores as of Sunday
· Trump to nominate US Supreme Court justice Ruth Bader Ginsburg successor this week, who passed away last Friday
· The Fed declares rates will stay near zero for at least three years to boost jobs and prices
· Snowflake, which listed on Wednesday, was the biggest ever IPO for a US software company and the largest flotation of the year. The company’s shares more than doubled from the listing price on its trading debut. It’s now worth $66 billion.
· Tens of thousands of Belarusians marched against strongman Alexander Lukashenko on Sunday
Driving forces for the week ahead
Brexit negotiations are the hot topic once again
Agree to disagree?
Prime Minister Boris Johnson has received mixed backlash over his efforts to negotiate a Brexit deal agreement with the EU, or what is looking more and more like a “no-deal” Brexit. Talks with Brussels hang in balance as the UK gains momentum after striking its first big post-Brexit trade deal with Japan, expected to increase trade by £15bn a year.
However, negotiations with the EU have not been as seamless as the exchange above. Some of the clauses outlined by Johnson in the internal market bill, which provides a framework of trade between England, Wales, Scotland and Northern Ireland once the UK leaves the EU, are conflicting with some parts of the “Northern Ireland protocol”. The bill proposes to give power to ministers to breach mainly two clauses in the NI protocol.
This protocol, which was signed alongside the Brexit withdrawal agreement in October, states that the UK has to comply with any EU rules on exports which stem from the EU’s international obligations. The new bill would enable ministers to implement their own rules on export declarations for products moving from NI to GB, in effect deciding that international law need not apply. Moreover, the bill also states that the minister can disapprove the state aid article in the protocol, which mandates free trade in goods between NI and the EU with no disruptive subsidies.
Boris in trouble
Brussels has shown disapproval of this bill behind closed doors, given that relevant obligations in the withdrawal agreement would be overridden otherwise. If EU-UK trade talks end with no-deal on December 31st, the European Commission has threatened to take legal action against Johnson’s internal market bill as a breach of international law. Formal negotiations are set to resume on September 28, where key elements of the new bill and Brussel’s relative position will become clearer.
What else we’re reading
· Gas companies are abandoning their wells, leaving them to leak methane forever
· Beyond the market hype: Tesla tries to expand its lead in batteries
· Nikola founder Trevor Milton steps down after fraud allegations
· ECB to review flagship bond-buying tool in fighting Covid crisis
This week’s key events and data releases
Tuesday: Elon Musk showcases new technology at Tesla’s Battery Day, BOE’s Bailey speaks
Wednesday: Flash PMIs from Eurozone, Germany, France and the UK released
Thursday: Powell and Mnuchin testify before Senate Banking Committee, ECB publishes Economic Bulletin
Friday: Eurozone August M3 Money Supply