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04/08/2016

KB News Bites: Wait in the lobby

Wait in the lobby: Speculation is rife that the US Republican party is on the verge of a historic fracture as Presidential nominee Donald Trump continues to enrage the party orthodoxy. However, in a sign that the fundamentals may have shifted radically towards the unorthodox, the Trump campaign has managed to raise about $80 million in July – roughly the same as his opponent – converting the passion of his supporters into an avalanche of small donations. In the event of his election, this would allow him greater independence from corporate lobbies than any President in living memory. (04/08)

Recession suppression: UK monetary policymakers are widely expected to reduce the base rate from 0.5% to a new low of 0.25% today in response to a clear deterioration in economic data post-"Brexit". Most recently, the purchasing managers index for the service sector saw its sharpest fall in seven years; it followed equally terrible figures in both the construction and manufacturing equivalents. (04/08)

Putting yen to paper: Japan has approved a ¥13.5 trillion ($132 billion) stimulus package aimed at reviving moribund growth in the world's third-largest economy; more than half it has been earmarked for the current fiscal year. Markets were largely underwhelmed, as the package was in tandem with expectations. However, what is not yet clear is the method of financing. If it is financed by printing new money, it will put into practice the radical theoretical concept of "helicopter money", and should boost inflation and growth. This will carry risks, such as runaway inflation and asset-price bubbles. (03/08)

Donald ducks: Republican notables, including Senator John McCain, chastised Donald Trump for his disparaging comments about the family of a Muslim-American soldier who died serving during the most recent Iraq War. However, notably, no major Republican has as yet rescinded his or her endorsement. Nonetheless, some of the public may have; latest polls shows Mr. Trump relinquishing his lead to Democratic rival Hillary Clinton. (02/08)

Hang ten: In the latest stress tests conducted by the European Banking Authority, only two of the 51 banks tested – Monte dei Paschi di Siena and Allied Irish Banks – would fall below the minimum capital level required by regulators in an "adverse" scenario of plummeting GDP and real estate prices. While Italy’s lenders have been the most maligned in the popular press leading up to the tests, only two Italian Banks made it in the top ten most stressed (i.e. Unicredit is the other), the same as Germany (Commerzbank and Deutsche Bank) and Spain (Criteria Caixa and Banco Popular). (01/08)

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