Global Market News

Global Equities Make Gains

Global equities made gains this week. The Dow Jones and S&P 500 increased 1.27% and 1.45% on the week, respectively, while the Nasdaq rose 1.40%. The US 10-year Treasury note continued its decline to 3.80%, and the price of a barrel of West Texas Intermediate crude oil decreased more than 2%, ending the week at $74.91. Volatility, as measured by the CBOE Volatility Index, was much more steady this week as compared to the last few weeks, closing Friday at 15.86.

The Fed is Preparing for Rate Cuts

At the annual Jackson Hole Economic Symposium this week, Federal Reserve Chairman Jerome Powell made strong signals in his speech that the US central bank was preparing to cut rates at the upcoming September meeting, noting his confidence that inflation is on a stable path to 2%. His comments followed the release of the Fed’s July meeting minutes on Wednesday which showed that the vast majority of Fed officials saw a September rate cut as appropriate and some had even seen a case for cutting in July. Equity markets rose and bond yields fell following Powell’s comments.

Updated Market Figures

International Developments

Modi Visits Ukraine, Russia Defends Against Large Drone Attack

On August 23rd, Indian Prime Minister Narendra Modi visited Ukraine on the eve of its Independence Day to deepen bilateral cooperation and advocate for peace amid the ongoing war with Russia. During the visit, Modi signed agreements in key sectors such as pharmaceuticals, agriculture, and cultural exchange, while emphasizing the importance of respecting international law and territorial sovereignty. This visit followed Modi’s earlier controversial meeting with Russian President Vladimir Putin, which strained relations with Ukraine, especially after a Russian attack on a children’s hospital in Kyiv. It also followed the large drone attack on Moscow carried out by Ukraine on August 21st, which saw Russian forces shoot down all 11 Ukrainian drones targeting the capital.

Taiwanese Cabinet Proposes Record Defense Budget, Hosts Ketagalan Forum Security Forum

Earlier this month, Taiwan’s President Lai Ching-te announced a record defense budget of 647 billion NT ($20.2 billion) for the next year, emphasizing the island’s commitment to self-defense and cooperation with democratic allies amid increasing pressure from China. His cabinet then submitted the proposal on August 22nd, the first budget proposal of Lai’s tenure as president. This new budget surpasses the proposed 606.8 billion NT for 2024 and reflects Taiwan’s response to China’s military exercises and political coercion, which intensified after Lai’s inauguration in May 2024. Meanwhile, at the Ketagalan Forum in Taipei on August 21st, former US Ambassador Nikki Haley and Japan’s former Prime Minister Yoshihiko Noda called for greater international support for Taiwan, with Haley advocating for Taiwan’s full UN membership and coordinated efforts to counter China’s influence.

Ghana Signs Deal for Construction of $12b Petroleum Hub

The Petroleum Hub Development Corporation (PHDC) signed a $12 billion deal with the TCP-UIC Consortium, marking the start of a transformative $60 billion Petroleum Hub Project in Ghana’s Western Region. Covering over 20,000 acres in the Jomoro Municipal Area, the project’s first phase includes constructing key infrastructure such as a 300,000 barrels-per-day refinery, a petrochemical plant, and 3 million cubic meters of storage facilities, with the goal of establishing Ghana as a leading petroleum and petrochemical hub in Africa. The project’s strategic location is expected to make Ghana a key player in the West African petroleum market, leveraging its stable political climate and attractive investment incentives. The Petroleum Hub will be developed in three phases over 12 years, with subsequent phases expanding the hub’s capacity and infrastructure, contributing to Ghana’s industrialization and economic growth.

US Social & Political Developments

Biden Approved New Nuclear Weapons Strategy Focused on Chinese Threat

President Biden approved a highly classified nuclear strategy refocusing the US deterrent capabilities to address growing threats from China, Russia, and North Korea, reflecting a shift from previous nuclear policies. This new strategy, which emphasizes preparing for possible coordinated nuclear confrontations, includes projections that China’s nuclear arsenal could rival that of the US and Russia by 2030 or sooner. The strategy also highlights concerns over potential collusion between these nuclear-armed adversaries and acknowledges the intensified nuclear expansion by China and North Korea. This development represents a significant departure from the Cold War-era focus on Russia, adapting to the evolving and increasingly complex nuclear landscape.

Harris Unveils Economic Policy Plans

Vice President Kamala Harris unveiled a detailed economic agenda during a smaller event in Raleigh, NC, as part of her presidential campaign. Her proposals include a corporate tax rate hike, the elimination of medical debt, a $25,000 subsidy for first-time home buyers, and a $6,000 child tax credit for the first year of a baby’s life. Additionally, Harris aims to introduce regulations against price gouging for groceries and food and cap prescription drug costs. Her plan, which could increase federal deficits by up to $2 trillion over a decade, is designed to address rising living costs and support the middle class while positioning her campaign distinctly from President Biden’s prior policies.

Corporate/Sector News

Twitter Buyout Labelled Worst Deal for Banks Since the Financial Crisis

Elon Musk’s $44 billion acquisition of Twitter, now rebranded as X, has become the most problematic merger-finance deal for banks since the 2008-09 financial crisis, according to an August 20th report. A consortium of seven banks, including Bank of America and Morgan Stanley, provided $13 billion in financing for the buyout in October 2022, but the deal has since struggled, leaving the debt unsold and significant losses incurred. This situation, termed as having “hung” debt, has persisted longer than any other similar case on record since the financial crisis, with some experts deeming it the largest such deal by dollar amount ever. The involved banks—Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, Société Générale, and others—are currently facing difficulties due to the below-investment-grade debt’s high interest rates, though there is hope they could recover if X meets its debt obligations.

Gold Bars Reach $1M Valuation for First Time Ever

On August 19th, gold bars reached a historic milestone, with their value surpassing $1 million for the first time due to the spot price of gold exceeding $2,500 per troy ounce. Gold bars, typically weighing around 400 ounces, are now worth over a million dollars each. This surge in gold’s value has been driven by significant central bank purchases, totaling 483.3 tons in the first half of the year, and anticipation of more accommodative monetary policy from the US Federal Reserve. Despite the high price, gold bars can vary in weight and purity, and smaller, more affordable options are available for individual buyers.

US District Judge Strikes Down FTC Non-compete Ban

This week, US District Judge Ada Brown struck down a Federal Trade Commission (FTC) regulation intended to ban noncompete agreements, ruling that the FTC lacked the authority to impose such a sweeping ban. The rule, which was set to take effect on September 4th, aimed to eliminate noncompete clauses to boost worker mobility and wages but faced legal challenges from business groups. Judge Brown deemed the FTC’s action “arbitrary and capricious,” arguing it overstepped the agency’s statutory authority and was excessively broad. The ruling’s impact is nationwide, and the future of the ban could be influenced by upcoming elections and potential Supreme Court decisions.

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This week from BlackSummit

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