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02/02/2017

Weekly News Bites: All's fair in love and currency war

Our top picks from this week's Morning Chat

All's fair in love and currency war: The US dollar weakened markedly – the euro and yen traded at $1.08 and ¥112, respectively – as President Donald Trump was quoted saying every "other country lives on devaluation" shortly after his trade csar accused Germany of "grossly undervaluing" the euro. Mr. Trump will be aware his country's manufacturing competitiveness – something he has vowed to re-establish – increases as the US dollar weakens. (01/02)

Fill-off: Latest polling suggests April’s French Presidential election is wide open. The popularity of Republican François Fillon, until recently the favourite in part due to his “integrity”, has been decimated. He is accused of engineering dodgy payments to his wife, leaving his political future dangling by a tenterhook. His loss is a gain for Marine Le Pen, of the far right National Front, and Emmanuel Macron, the maverick who recently cobbled together the “neither Left nor Right” En Marche party. These two are now expected to win the most votes, forcing a run-off election in May. (02/02)

Whoever it shakes: The Eurozone is on fire. The economy grew at a respectable 1.8% in 2016; inflation hit a four-year high of 1.8%; unemployment is down to 9.6%, an eight-year low. It is no coincidence that one year ago, European Central Bank President Mario Draghi announced huge quantitative easing, finally fulfilling his “whatever it takes” promise. Ironically, the results will ratchet up German pressure to end all stimulus, which they believe is overheating their economy. He should resist – QE stopped mid-course, like an antibiotic, can do more harm than good. (01/02)

You're fired: Global stocks are selling off this morning, hit by President Donald Trump's firing of the acting US attorney general. Sally Yates – a placeholder AG until the Senate clears Trumpian nominee Jeff Sessions – ordered Justice Department lawyers not to enforce an executive order banning nationals from seven Muslim-majority countries entering the US. The White House said Ms. Yates had "betrayed" her department. Safe-haven such as gold and yen are up. (31/01)

Spurnings: Earnings season continues unabated with tech giants such as Apple and Facebook reporting this week. So far, so good: 168 of the S&P 500 companies have reported, with 74% topping estimates. However, other issues are overshadowing earnings, with the global tech industry balking at a US executive order restricting travel and immigration. The father of Apple's co-founder, Steve Jobs, was a Syrian refugee. Facebook’s chief executive, Mark Zuckerberg, posted of his multi-ethnic heritage, and said his wife's parents were refugees from China and Vietnam. (30/01)

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