On Monday, the US registered stronger than expected manufacturing and composite PMIs while a weak service PMI. In the same day, the FED injected about 50bn $ in the financial system through REPOs following last week spike in short-term borrowing costs. The FED continued its intervention in the REPO market on Tuesday, and on Wednesday it announced an increase in the size of its overnight cash loans from 75bn $ to 100bn $.
Stocks plunged during the week due to fears of a Democratic impeachment after the recent call of President Trump with the Ukraine President. The fears were confirmed when Trump released the transcripts of his call; Democrats then formally began an impeachment enquiry due to the President’s attempts to hurt Mr Biden.
On Thursday both PCE and GDP growth (QoQ) indicators were in line with expectations, while consumer confidence remained volatile. The dollar index closed at 97.36 rising 0.80%. The S&P 500 ended the week losing 1%, and the Nasdaq Composite closed down by 2.2%; instead, the 10 Year Yield was unchanged at 1.68%.
Adam Neumann stepped down as CEO of We Work due to concerns about the company’s governance and his eccentric behavior. Moreover, JP Morgan has been caught in We Work’s troubles, being one of the company’s largest lenders, with a 100ml $ exposure only to Mr Neumann.
On Monday the British travel agency Thomas Cook, founded in 1841, entered in compulsory liquidation, having failed to sign a 1.4bn $ deal with creditors and investors.
Following weeks of turmoil over Brexit, this week Parliament reopened as UK supreme court ruled Johnson’s prorogation unlawful. Overall, during the week the GPB-USD fall by 1.5%, while the FTSE 100 rose by 1%.
In Europe the week began with weaker than expected manufacturing, services and composite PMI in Germany, France and for the EU as a whole. These pushed investors into safe havens with gold and silver futures rising 1% and 5% on Monday. However, over the week gold and stock indexes of all Europe were unchanged.
On Tuesday, governor Yi Gang of the People’s Bank of China claimed China would not ease aggressively as other central banks, emphasizing it will continue to pursue a normal monetary policy preserving space both for fiscal and monetary stimulus.
Following the recent attacks on its oil-production facilities, Saudi Arabia is looking forward to proceeding with the IPO of Saudi Aramco and it is evaluating whether or not to increase the floating to 10% of outstanding shares. On a 2 trillion $ valuation this IPO would be the largest ever raising about 200bn $, dwarfing the 25bn $ of Alibaba. During the week oil prices continued their decline: Brent and WTI lost 4.8% and 3.3%