Week ahead – Future with Biden
Week ahead – Future with Biden
When all is well and good, Joe Biden is most likely to be the 46th President of the United States. We can finally put the election behind us and focus on the recovery of the economy stemming from the effects of the Coronavirus. Here is your week ahead.
Monday, 9th and Tuesday 10th November – Bank of England’s Governor Andrew Bailey Speech
The elections drew our attention in the past week. However, the Coronavirus continues to run rampant in many countries, including the United Kingdom. They recorded over 25,000 new cases on the 7t November, even after Boris Johnson implemented a 4-week lockdown. Bank of England Governor Andrew Bailey stated that the Central bank is considering other policy tools such as a path of policy and negative rates – however, it has no fixed order and time frame on when they will use them. He stated that “It will always be dependent upon the state of the world and the state of the economy.” Alongside Bailey’s speech, the UK is set to release its unemployment rate the day after, with analysts predicting an increase of the unemployment rate to 4.8%, up from 4.5% a quarter before. Furthermore, Brexit talks will continue this week, making the Cable an interesting pair to watch.
Monday, 9th November – China’s Consumer Price Index
After beating the Coronavirus, China is well on its way to recovery. Economists polled by the WSJ protect the consumer price index will rise 0.75% from a year earlier, predicting a number that would be the weakest inflation reading in the past ten years. China has implemented strict Coronavirus rules in order to make sure the outbreak does not resurface. For example, schoolchildren in China must wear masks during the day, re-apply hand sanitizer, and have temperature checks three times a day. Ali Mokdad, a professor of Global Health at the University of Washington and a former official with the international health program at the Centers for Disease Control and Prevention, stated that china “have done an amazing job of controlling the virus.”
Wednesday, 11th November – RBNZ Interest Rate decision
With Jacinda Ardern being elected Prime Minister, there is a general consensus that public debt will be set to increase as the government rampantly borrows in order to control the economic effects of the Coronavirus. New Zealand has generally been touted as one of the most successful countries in trying to eliminate the Coronavirus – however, it came at a great economic cost. The IMF forecasts that New Zealand’s economy is expected to fare much worse than most advanced economies, with GDP per capita is predicted to be lower in 2025 than in 2019. However, with most restrictions in New Zealand removed, many local businesses are back and operating. In October, a survey of 700 global business leaders by Bloomberg ranked New Zealand as the nation that has the best handled the pandemic and the market they would most confident investing in.
Many Central Bank leaders believe that negative interest rates are the most beneficial when the economy is recovering – and that’s what is currently happening in New Zealand. The average house price in Auckland sold for over $1 Million NZ, which means a surprise negative interest rate this week ahead; however, will most definitely send the NZ dollar downwards, which may boost economic activity.
Friday, 13th November – US CPI
With Joe Biden most likely taking the spot of the Presidency, markets can return back to a relative normal. It is a long recovery ahead for the United States, with Biden promising to prioritize eliminating the Coronavirus. Cases in the United States continue to run rampant, with cases reaching an all-time high at 126,000 on 7th November. It is to be seen whether Biden’s plans will materialize. With that said, the US CPI is stated to say the same at 1.7%.
Friday, 13th November – Europe GDP
The UK, Italy, France, and Germany are all experiencing second waves in their respective countries. This has forced many of them to enter a second lockdown, essentially locking in a “double-dip” recession, as CNN puts it. The European Unions GDP surged 12.1% between July and September, as restrictions eased all around the bloc. However, with restrictions coming back, these gains may be short-lived. Andrew Kenningham stated that “It is difficult to think of another occasion when such ‘good news’ will have so little to cheer” and that “the second wave of Coronavirus restrictions is about to push the single currency area into a double-dip recession”. With that said, analysts predict GDP figures to stay relatively equal at around 12.1%
Relatively quiet week ahead in comparison to previous weeks. Don’t forget to stay safe, and trade safe.
Congratulations, Joe Biden.
If there is a time for a currency to be relatively weak, it’s during recessionary periods. A stronger currency entails a rougher time for goods and services to be exported out of the country as those exports are more expensive due to the stronger currency.
We have a relatively light data week ahead regarding the amount of significant data points coming out. However, the economic events are extremely significant in determining the state of their respective economies. Hope you all are staying safe. Here is your week ahead.
In 2020, Silver had a legendary rise from its low during the peak of the Coronavirus lockdowns in March – up over 140%. Analysts (including me) attempted to justify its price and separate its strong correlation with Gold by arguing that Biden’s climate change policies will boost Solar Panels’ use, which extensively uses Silver. This may be a catalyst in the longer term.
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