Japanese VAT hike, Impeachment drama
Major events of last week:
- USA-EU: WTO ruling on the Airbus subsidies, allows the USA to impose $7.5bn tariffs to EU products. Tariffs will be imposed on the 18th of October. The ruling on Boeing subsidies is expected on March 2020. The sudden deterioration of EU-USA trade relation has just happened, but it does not include the automobiles industry.
- India: A fiscal boost, in the form of $20bn tax cuts has been announced.
- Japan: The increase of the VAT rate from 8% to 10% is a reality. The next consumption macro releases, measuring the September’s performance are expected to be higher, as Japanese have most likely increased their spending behavior just before the expected hike.
- US-North Korea: Some hours before the restart of working level negotiations, North Korea launched missile tests that landed inside Japan’s west coast.
- Protests in Hong Kong continue. Two protesters have been shot during the last week. The government made the face covering illegal. Protests are also happening in Bagdad, Iraq, with 9 people dead.
- Impeachment drama: As the Senate is controlled by the Republicans, the ending of the impeachment drama is prescribed and that is the reason there wan no mention at quantomental’s reports. Nevertheless, the drama gets interesting. With Trump openly asking China to investigate corruption cases on camera, corruption investigation turns into an easy way to earn goodwill with Trump.
- Cryptos: Total market cap finds support at $216bn (+0% w/w, -42% from the 2019 high, -73% from the all time high of January 2018).
- Macros: US recorded lower Non-Manufacturing PMI, Manufacturing PMI, and Non-Farm Employment change. European and Chinese releases are bottoming up. Mixed readings from Japan. US equities have fallen on the PMI releases but found support at the 200Day Moving Average level.
Major events of next week:
- US-China trade talks resume in Washington, on Thursday.
- Boris Johnson believes that he could break a deal within the Friday’s Ecofin. Given that he fails, he is obliged to ask for an extension by October 19.
- OPEC’s monthly report on oil. It should include all estimates from the September 14 attacks in Saudi Arabia
- The Italian budget.