Here is a summary of the most important events that unfolded last month, and which may affect economic, financial, and geopolitical issues in the months ahead:

North America

• After weeks of back and forth between Democrats and Republicans, talks over a new Covid-19 stimulus package broke down last week. There is still a several hundred-million-dollar gap between the two plans. Negotiations will have to wait until after the presidential election. If the Democrats sweep tomorrow’s elections, we can expect to see a rather large rescue package which could be positive for equities but negative for the bond market. As for the dollar, under normal circumstances should decline (due to higher indebtedness), however the projected higher US growth rate may actually strengthen it.  

• It has been an interesting month in the run-up to the 2020 presidential election. President Trump and many of his officials tested positive for coronavirus which altered the traditional presidential debate and campaign schedule. Presidential and vice-presidential debates were held without in-person audiences due to the pandemic and tens of millions of US citizens voted early either in person or by mail. There is much uncertainty over whether or not a winner will be declared tomorrow night because of the many mail-in ballots which will not be received and counted until later in the week. During such a divided time in our nation’s history, this election has brought heightened tensions and new issues to the forefront.

• India and the US have signed a military-information-sharing agreement. More specifically, the agreement is for sharing sensitive satellite data which will provide India with a variety of topographical, nautical and aeronautical data that is considered vital for targeting of missiles and armed drones. The two countries have engaged in top-level security dialogue to counter China’s influence in the Indo-Pacific region. 

• The US has announced new sanctions on Iran’s oil sector. The action was prompted by Iran’s financial support of Iran’s Quds Force which is considered an elite unit of its Islamic Revolutionary Guard Corps. Iran’s regime uses the oil sector to fund the destabilizing and terrorizing activity of the Quds Force which answers solely to Iran’s Supreme Leader Ali Hosseini Khamenei. 

• Amy Coney Barrett was sworn in as Supreme Court Justice last week in a rather controversial hearing. A much-divided Senate confirmed her nomination with a 52 to 48 vote which marks a conservative shift in the Supreme Court just a week before election day. The Democrats felt very strongly that the nomination should have been held after the Presidential election, accusing Republicans of hypocrisy for rushing through with Barrett’s nomination even though they had refused to hold hearings for a Supreme Court appointee in 2016 who had been nominated nine months before the election. 

• The US and Russia are nearing a nuclear deal which would freeze the number of nuclear warheads in both countries and extend the New START treaty for one year. The year-long deal would buy time for a future treaty to replace New START and potentially include China. 

Europe

• Over the last month, Europe has entered a second wave of the Covid-19 pandemic. Just last week, France announced a month-long nationwide lockdown in response to the second wave of the Covid-19 pandemic. Over the weekend, England announced it will enter its second lockdown later this week. Germany’s restrictions are, so far, less severe, but it has closed bars, restaurants, gyms, and theaters. Additional countries, (Spain, Italy, Greece, etc.), have also announced additional measures and partial lockdowns. The number of Covid-19 cases in Europe has now surpassed 10 million.

• France is under the highest-level security alert after three people were killed at a church in Nice last week. A guard outside the French consulate in Saudi Arabia was also wounded in a knife attack on the same day, but investigators do not know if the two incidences are connected. French President Emmanuel Macron has described the killing at the church an “Islamist terror attack.” The tragedy comes amid tensions between France and several Muslim countries after a French teacher was beheaded for showing students cartoons depicting the Prophet Mohammed, which is forbidden by the religion.

• Despite a month full of Brexit drama, the United Kingdom (UK) and European Union (EU) are resuming talks. EU officials say a deal will have to be reached by mid-November in order for there to be enough time for legislative approval before the December 31^st deadline. Early in October, the UK proposed the Internal Market Bill which violates the withdrawal agreement with the EU. The EU gave the UK an ultimatum demanding it pull back the bill or risk jeopardizing negotiations for a post-Brexit trade deal.

•  Kyrgyzstan’s parliament rushed legislation to suspend the country’s parliamentary elections once again. New elections had been set for December 20^th after elections in October were annulled after mass protests which led to the ousting of President Sooronbay Jeenbekov. Interim President, Sadyr Japarov, is moving to consolidate power and wants to amend the constitution so he can run for a full-term. Currently, Kyrgyzstan’s constitution bars caretaker presidents from running in elections they oversee.

• Greece is pushing its European Union peers to activate sanctions against Turkey for its major escalation of tensions in the Eastern Mediterranean. In mid-October, a Turkish ship departed to conduct work south of the Greek island of Kastellorizo which is also close to Turkey’s southern border. The event is Turkey’s latest action to provoke Greece over disputed maritime boundaries in the Eastern Mediterranean. Greece’s foreign minister called the development a “major escalation” and says Turkey is directly threatening peace in the region.

Asia and the Pacific 

• China has placed sanctions on several US defense companies, including Lockheed Martin, Boeing, and Raytheon, over $1.8 billion arms sales to Taiwan. Despite the sanctions, the US State Department has approved a potential $2.4 billion sale of additional anti-ship missiles to Taiwan. Taiwan has stressed that they are not seeking an arms race with China. 

• Nationwide protests calling for Thai Prime Minister Prayuth Chan-ocha’s resignation and an end to Thailand’s monarchy have been raging for weeks now. In response to the protests, government authorities declared a state of emergency, launched an emergency decree that seeks to crackdown on protesters, banned gatherings of five or more people, and censored all types of media. In recent days, the state of emergency has been lifted but demonstrators continue to call for the prime minister’s resignation.

• Australia will join India, Japan, and the US in joint naval exercises next month in the Bay of Bengal. The “Quad” countries’ cooperation is an apparent challenge to China’s growing regional influence. India has hosted these drills, known as Malabar, annually alongside Japan and the US. This year will be the first time Australia has participated since 2007 which drew stark criticism from China at the time. Tensions between Australia and China have ramped up over the last month over Covid-19 and trade issues.

• After Australia backed an investigation into China’s handling of the coronavirus, Australian cotton is being targeted by China’s top economic-planning body. China has been discouraging Chinese textile mills from using Australian cotton. China is Australia’s top export destination and biggest trading partner, but tensions between the two countries have reached new heights over the last few months.

•  Prime Minister Jacinda Ardern was re-elected in a landslide win in New Zealand. Her Labour Party won nearly half the votes, allowing it to form a government without a coalition with another party. Ardern has won tremendous support for her handling of the Covid-19 pandemic.

• North Korea unveiled new weapons in a military parade last month, including an intercontinental ballistic missile, but it is unclear whether or not the missiles are real or mockups. Both the US and South Korea are analyzing the new weapons while South Korea has also urged Pyongyang to abide by its disarmament pacts and resume negotiations.

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