Here are the top stories we’ll be watching this week. The US Fed decides its next move on interest rates. The UK’s Conservative party moves closer to deciding a new leader and prime minister. First, the US Federal Reserve comes out with its latest interest rate decision later this week in the face of a weakening jobs market, and continuing fallout from the trade war between China and the US.
Now, people in the markets are not expecting there to be a cut from the current rate of 2 and 1/4 per cent to 2 and 1/2 per cent, but they are expecting cuts in subsequent meetings. By January, they’re expecting three cuts. One is because there are signs that the US economy is slowing. There are still jobs growing in the US – 75,000.
But that was a lot worse than expected. And inflation, underlying inflation, is weaker than expected. The progress on that will be seen at the end of the month from the 28th and 29th of June at the G20 meeting in Japan, in Osaka, where President Trump will meet President Xi of China. And there might or might not be a deal, but it’s after that that I think we’ll get more sense of exactly where the global and the US economies are going.
At the heart of the interest in the leadership election is Brexit, and what each candidate proposes to do about leaving the European Union, and whether they plan to stick to a departure date of October 31 this year. After the first rounds of voting and the first TV debate, MPs will further whittle down the list to try and get down to those final two candidates, who will then go in front of the Tory party grassroots membership. Boris Johnson remains the clear front-runner to succeed Theresa May later this summer. So the battle is on for the all-important second place to go up against him when the party members vote.
Well, Mr Johnson is equivocated, saying that the UK should leave at the end of October, but has also said he doesn’t want a no-deal Brexit. At this point in the race, the obvious second place on that ballot paper will go to somebody who is taking a slightly softer Brexit position. Turkey’s to rerun a critical election in Istanbul for a new man, next Sunday. Whatever the outcome, the election will further deepen concerns about the growing authoritarianism of Turkey under President Recep Tayyip Erdogan.
Istanbul already had a mayoral election just over two months ago. That contest was won by Ekrem Imamoglu. A hitherto little-known figure, he was fielded as a unity candidate by the opposition. His victory brought an end to a 25-year dominance of the city by President Recep Tayyip Erdogan and his ruling party.
Mr Imamoglu’s party refused to accept the result. They said that it was marred by irregularities and fraud. And the country’s high electoral board ultimately agreed and called a rerun of the election. The same candidates are running again – Ekrem Imamoglu for the opposition and Binali Yildirim, a former prime minister, for the ruling party.
The polls, so far, put either of the two candidates neck and neck, or they put Imamoglu, who’s gained hugely in prominence and popularity, ahead. Not only does he face a flagging economy, but he also faces rising tensions with the United States. And perhaps, most importantly, growing discontent within his own party. Defeat, a second time here in Istanbul, could raise new questions about the president’s legitimacy and his control of his own party.
The most recent quarterly earnings figures from Barnes & Noble this Thursday will help indicate what state the bookseller is in. Analysts expect the company will report adjusted earnings of $0.24 a share on revenues of $759m. They’ll also keep an eye on other items like cash flow. Now, Elliott agreed to buy the bookstore, which was the first victim of Amazon’s attack on physical retail stores in the US.
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