Recently Bangladesh was side-tracked from an electoral democracy. Earlier this year, the ruling party Awami League formed government after a one-sided election. Bangladesh’s major opposition party, the Bangladesh Nationalist Party (BNP), boycotted the election on the grounds that it was not taking place under a neutral caretaker government and that elections held under partisan caretaker governments would not be fair.
Low inflation and exposure to weakening global markets is causing concern in the Federal Reserve, while a fall into recession in Japan is causing greater anxiety throughout Asia.
There is plenty of data out today and it is generally reinforcing our three main thematic points: divergence, weak commodities, especially energy, and the slowing of the Chinese economy. This is helping the US dollar and global bonds, but weighing on equities.
HSBC’s flash manufacturing PMI for China slipped to 50.0 from 50.4. It is a six-month low. The output sub-index fell below 50 for the first time since May.
Job growth in the United States saw a steady growth during October, and the unemployment rate dropped to its lowest level in six years. Economists have suggested that these factors highlight the resilience of the American economy in the face of slowing global demand and a socialist American President whose party just voted down a jobs bill called the Keystone Pipeline.
The FOMC minutes were not very surprising. The FOMC is not in any hurry to raise interest rates before the middle of next year at the earliest. The FOMC statement did not drop the “considerable period” phraseology to describe the time between the end of QE and the first rate hike. However, the minutes show it was a point of discussion and a compromise was achieved to emphasis the data dependency of the Fed’s actions.
The joint Chinese–American announcement of emissions targets brings the world a big step closer to meaningful post-2020 action on climate change. Barack Obama in his Brisbane speech made it clear where the two superpowers see things going: ‘If China and the United States can agree on this, then the world can agree on this’.
Southeast Asia is no stranger to epidemics and is a hotspot for emerging disease threats. There have been serious economic and health-sector impacts from zoonoses including Nipah virus infections, SARS and highly pathogenic avian influenza (commonly known as bird flu). While these events catalysed some change in infectious disease policies within the region, many countries’ interest has since waned. Many governments, faced with numerous other pressing health priorities, have classified the threat of other emergencies as remote.
Currently, the top one percent of all Americans holds about 40% of the complete wealth of the nation. Recent studies have indicated that the biggest income gap in history is having a huge impact on the economy of the United States. This is causing the disappearance of the middle class because of high taxes, regulations that devastate small businesses and regulations that deter risk taking.
The main theme this week has been the heavy tone of both sterling and the yen. The yen’s weakness stems from the aggressive easing by the BOJ and the stepped up buying of foreign assets by Japanese investors. The story that has emerged this week is that Prime Minister Abe is expected to decide shortly after Q3 GDP is reported at the start of next week that the economy is too weak to sustain the planned hike in the sales tax next year.
A set of reports by the Intergovernmental Panel on Climate Change (IPCC), the last of which was released on November 2, 2014, sets the scene for governments to renew their efforts on the issue through ambitious commitments for a comprehensive climate agreement in Paris in December 2015.
