HALLOWEEN is big news in the United States, as I discovered to my amusement during a stint in New York ahead of next month’s presidential election.
October 31 is still more than a week away, yet everybody wants to talk about candy, pumpkins and dressing up as sub-prime mortgage brokers – a party trick that I’m assured is guaranteed to send shivers down the spines of most Americans.
Joking aside, the election on November 6 is just a fortnight away now and either Barack Obama or Mitt Romney will be handed the task of kick-starting the world’s largest economy.
At least in Europe, the markets seem to be less spooked than before with last weekend’s regional elections in Spain paving the way for the country’s long-awaited sovereign bail-out. Any rescue is likely to result in more austerity for the Spanish people, but I’m assured it will also reassure investors and take the pressure off the country’s borrowing costs.
Back in Blighty, there should be some good news for George Osborne this week with official figures expected to show Britain emerged from recession during the third quarter of the year. Economists are predicting the economy grew by 0.7pc between July and September, ending three successive quarters of contraction.
Despite this, the Chancellor remains under huge pressure with households across the country still struggling to make ends meet. Gross domestic product would have been weaker in the third quarter had it not been for one off events like the Olympics.
Policymakers I know tell me they are no longer convinced that the Bank of England will vote for another round of money printing next month. The latest comments from Threadneedle Street suggest the decision will be closer than previously thought – I promise to keep my ears to the ground on that one.
In terms of stocks and commodities, all eyes are now on the US election. There will be much analysis on how better stocks performed under the Republican and Democratic presidents over the next few weeks, but I would just ignore that. Interest rates are more important than who manages to get into the Oval Office and they are likely to stay low for years.
Oil markets are also likely to be in the spotlight.
Traditional wisdom would have us believe that military action against Iran is more likely under a Republican win. This looks too simplistic with both parties more likely to try diplomacy, analysts tell me that a Romney presidency should not be interpreted as a potential supply-side shock to the oil market.
It’s also all change at the top in China, which means we should not expect any more stimulus from the world’s second largest economy over the next week or so. Strict rules governing the ages of party leaders mean that thousands of Chinese policyakers are set to retire on November 8.
In the Politburo Standing Committee, the most powerful decision making body in the government, seven out of nine members are retiring. It will be fascinating to see what these changes bring although expect gold to remain range bound for the time being.
That’s all for now, it’s time to see what all this Halloween fuss is about. I wonder whether I’ll be able to pick up an Andrew Mitchell costume somewhere?
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.
by City Insider
USA Elections: Barack Obama or Mitt Romney?
Oct 23, 2012 at 12:49 pm in Market Commentary by City Insider
HALLOWEEN is big news in the United States, as I discovered to my amusement during a stint in New York ahead of next month’s presidential election.
October 31 is still more than a week away, yet everybody wants to talk about candy, pumpkins and dressing up as sub-prime mortgage brokers – a party trick that I’m assured is guaranteed to send shivers down the spines of most Americans.
Joking aside, the election on November 6 is just a fortnight away now and either Barack Obama or Mitt Romney will be handed the task of kick-starting the world’s largest economy.
At least in Europe, the markets seem to be less spooked than before with last weekend’s regional elections in Spain paving the way for the country’s long-awaited sovereign bail-out. Any rescue is likely to result in more austerity for the Spanish people, but I’m assured it will also reassure investors and take the pressure off the country’s borrowing costs.
Back in Blighty, there should be some good news for George Osborne this week with official figures expected to show Britain emerged from recession during the third quarter of the year. Economists are predicting the economy grew by 0.7pc between July and September, ending three successive quarters of contraction.
Despite this, the Chancellor remains under huge pressure with households across the country still struggling to make ends meet. Gross domestic product would have been weaker in the third quarter had it not been for one off events like the Olympics.
Policymakers I know tell me they are no longer convinced that the Bank of England will vote for another round of money printing next month. The latest comments from Threadneedle Street suggest the decision will be closer than previously thought – I promise to keep my ears to the ground on that one.
In terms of stocks and commodities, all eyes are now on the US election. There will be much analysis on how better stocks performed under the Republican and Democratic presidents over the next few weeks, but I would just ignore that. Interest rates are more important than who manages to get into the Oval Office and they are likely to stay low for years.
Oil markets are also likely to be in the spotlight.
Traditional wisdom would have us believe that military action against Iran is more likely under a Republican win. This looks too simplistic with both parties more likely to try diplomacy, analysts tell me that a Romney presidency should not be interpreted as a potential supply-side shock to the oil market.
It’s also all change at the top in China, which means we should not expect any more stimulus from the world’s second largest economy over the next week or so. Strict rules governing the ages of party leaders mean that thousands of Chinese policyakers are set to retire on November 8.
In the Politburo Standing Committee, the most powerful decision making body in the government, seven out of nine members are retiring. It will be fascinating to see what these changes bring although expect gold to remain range bound for the time being.
That’s all for now, it’s time to see what all this Halloween fuss is about. I wonder whether I’ll be able to pick up an Andrew Mitchell costume somewhere?
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.