Observe. Think. Chat. Do. Trade. Repeat…
William Penn was an English writer, religious thinker and philosopher, and influential Quaker who founded the Province of Pennsylvania during the British colonial era.
Penn was an advocate of democracy and religious freedom.
This is a controversial decision that has been opposed by China, South Korea, and some Pacific island nations. They fear that the water release will harm the marine environment and human health, and affect seafood exports.
Japan says that the water release is safe and necessary for the decommissioning of the plant, which was damaged by a massive earthquake and tsunami in 2011. The water has been treated to remove most of the radioactive substances, except for tritium and carbon-14, which are considered to have low risks. The water will also be diluted to meet the international standards for drinking water before being discharged.
The International Atomic Energy Agency (IAEA) has endorsed Japan’s plan and said that the water release will have a negligible impact on people and the environment. The IAEA will also monitor the water release and verify Japan’s compliance with the safety standards.
The water release is expected to take about 30 years to complete, and will involve pumping out about 1.34 million tonnes of water from more than 1,000 tanks at the Fukushima site.
The amount the UK owes exceeds GDP for first time since 1961. Inflation-linked bonds mean the UK is paying more than its peers.
From the financial crisis to Russia’s invasion of Ukraine, the UK has borrowed and spent its way out of every jam. The bill for that is becoming a massive concern for the UK treasury and for the economy.
The UK’s public debt has soared by more than 40% to almost £2.6 trillion ($3.3 trillion) since the pandemic struck, leaving the country owing more than its entire annual economic output for the first time since 1961. A heavy reliance on index-linked bonds, at a time of high inflation, also means Britain will pay more to service the debt.
The high level of debt poses a risk to the UK’s credit rating, which could affect its borrowing costs and fiscal credibility. The three main credit-rating firms are due to update their assessments of the UK over the next four months in 2023, and some analysts are concerned that the UK could face a downgrade, especially after the U.S. lost its AAA status from Fitch.
A downgrade could undermine Prime Minister Rishi Sunak’s effort to rebuild Britain’s fiscal reputation after his predecessor, Liz Truss, triggered a bond-market crash in 2022 by promising huge unfunded tax cuts.
The pressure on the UK’s finances is also being compounded by a selloff in bonds amid aggressive rate hikes by the Bank of England to quell inflation. The yield on the 10-year benchmark this week rose above 4.70% to its highest since 2008.
The UK bond market is among the developed world’s worst performers this year. The rise in yields could increase the cost of servicing the debt, which is already high due to the UK’s heavy reliance on index-linked bonds that adjust with inflation.
The UK’s economic growth is forecast to remain flat through next year, which limits the scope for reducing the debt through higher revenues or lower spending. The National Health Service is stretched to breaking point and the tax burden is already at a 70-year high. The ONS warned that debt could balloon to more than three times GDP over the next half century without action.
According to the latest data from the Office for National Statistics (ONS), the UK’s gross domestic product (GDP) grew by 0.2% in the second quarter of 2023 (April to June), following a revised growth of 0.1% in the first quarter of 2023 (January to March). This means that the UK’s GDP growth rate for the whole year of 2023 is estimated to be 0.3%, which is lower than the previous forecast of 0.5%.
ONS data to March 2023
The main factors that contributed to the weak GDP growth in the second quarter were the slowdown in consumer spending, the decline in business investment, and the negative impact of the additional bank holiday in May due to the King’s Coronation. The services sector, which accounts for about 80% of the UK’s economy, grew by only 0.1% in the second quarter, while the production sector grew by 0.7%, and the construction sector fell by 0.2%.
The outlook for the UK’s economy remains uncertain, as it faces several challenges such as high inflation, rising interest rates, a slowing global economy, and the ongoing effects of Brexit and the effects of the war in Ukraine.
ONS data for EU countries
Some economists have warned that the UK faces a ‘very real risk’ of recession due to higher interest rates, which could dampen consumer and business confidence and increase the cost of servicing the debt.
The OECD has projected that the UK’s GDP growth will improve moderately to 1.0% in 2024, but still remain below its pre-pandemic level.
The quote is often used to inspire people to take action and avoid procrastination, as it implies that delaying something may result in missing the opportunity or losing the motivation to do it.
The quote also suggests that the present moment is the best time to pursue your goals and dreams, rather than wait for a more convenient time.
The former boss of NatWest is set to receive a £2.4m pay package this year, despite having quit in disgrace over her handling of the closure of Nigel Farage’s bank account.
A contractual obligation no doubt?
The company says revenue jumped to above $13.5bn (£10.6bn) for the three months to the end of June. Nvidia also expects sales to perform very well in the current quarter and plans to buy back $25bn of its stock. The firm’s shares rose by more than 6.5% in extended trading in New York, adding to their huge gains this year. Nvidia also said it expects revenue of around $16bn for the three months to the end of September 2023.
That is substantially higher than Wall Street expected and would equate to a rise of around 170%, compared to the same time last year.
Even before 23rd August’s figures, Nvidia’s stock price had more than tripled for the year, making it the top performer in the S&P 500. It’s share price jumped to around $500 after hours, a level that would mark a record if it closes there on 24th August 2023. Its prior closing high was $474.94 on 18th July 2023.
‘A new computing era has begun’, Nvidia’s chief executive, Jensen Huang, said in a statement. ‘Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI’, he reportedly added.
The strong performance was driven by Nvidia’s data centre business, which includes AI chips.
Revenue for that unit came in at more $10.3bn, a rise of more than 170% from year ago, as cloud computing service providers and large consumer internet companies snapped up its next-generation processors.
This year, Nvidia’s stock market value has jumped to more than $1 trillion as its shares more than tripled in value, mking it the fifth publicly traded U.S. company to join the so-called ‘Trillion dollar club’, along with Apple, Amazon, Alphabet and Microsoft.
Nvidia have been making micro chips for a long time and it’s only really been in the last couple of years that the market has caught on.
Nvidia was originally known for making the type of computer chips that process graphics, particularly for computer games. They have been making chips for a long time and have now become the leader in AI chip design and manufacture.
Now Nvidia’s hardware is the foundation for most AI applications, with one report suggesting it had cornered 95% of the market for machine learning.
ChatGPT which generates human-like responses to user queries within seconds was trained using 10,000 of Nvidia’s graphics processing units clustered together in a supercomputer belonging to Microsoft.
AI products are expected to dramatically change how we use computers and the role they play in our lives.
India became a new national superpower in space on 23rd August 2023, landing its Chandrayaan-3 mission safely on the moon’s unexplored south pole. The Chandrayaan-3 spacecraft launched last month and touch downed on the lunar surface around 13:34 GMT.
The Chandrayaan-3 spacecraft launched last month and touch downed on the lunar surface around 13:34 GMT. The feat makes India the fourth country, after Russia, the U.S. and China – to land on the moon, and the first to land on one of the moon’s lunar poles.
The lunar south pole has emerged as a place of recent exploration interest thanks to recent discoveries about traces of water ice on the moon. India previously attempted a lunar south pole landing in September 2019, but a software failure caused the Chandrayaan-2 mission to crash into the surface.
The south pole is the place to be right now as it is such a very interesting, historical, scientific and geologic area that a lot of countries are trying to get at that can serve as a base for future exploration.
The discovery of water on the south pole of the moon is important for future exploration, as it could serve as a source of fuel for rockets and spacecraft.
Days prior to Chandrayaan-3′s scheduled landing, Russia attempted to land its first spacecraft on the moon in almost 50 years. But the Luna-25 mission crashed into the lunar surface on Saturday, with Russian space agency Roscosmos confirming the spacecraft spun out of control.
During a June visit from India’s Prime Minister Narendra Modi, he signed agreements alongside President Joe Biden to join the Artemis Accords and further collaborate on missions between Indian Space Research Organisation – ISRO and NASA. Next year, the space agencies are expected to work together to fly Indian astronauts to the International Space Station.
India has also done more with less than its top global counterparts, with ISRO’s annual budget a fraction of NASA’s. In 2020, ISRO estimated the Chandrayaan-3 mission would cost about $75 million. The Covid pandemic delayed the Chandrayaan-3 mission from launching in 2021.
The lander – called Vikram after Indian Space Research Organisation (ISRO) founder Vikram Sarabhai – carries within its belly the 26kg rover named Pragyaan, the Sanskrit word for wisdom.
One of the mission’s major goals is to hunt for water-based ice, which scientists say could support human habitation on the Moon in future and allow for easier future space exploration.
The Cambridge-based company, which designs chips for devices from smartphones to game consoles, plans to list on New York’s Nasdaq in September. The highly anticipated IPO in the U.S. comes after UK Prime Minister, failed to convince Arm to float in London or pursue a dual UK-U.S. listing.
Arm’s decision to list in New York rather than London has fuelled fears that the City is losing its competitiveness to Wall Street, where valuations are typically higher. SoftBank-owned chip designer Arm on 21st August 2023 disclosed a modest 1% fall in annual revenue as it made public the paperwork for a U.S. listing that is expected to be the year’s biggest initial public offering. The company is reportedly looking for a valuation of between $60bn (£47bn) to $70bn.
Arm was bought in 2016 by Japanese conglomerate Softbank in a deal worth £23.4bn. Prior to the takeover, it was listed in both London and New York for 18 years.
Some of the companies that use ARM processors include Apple, Qualcomm, Samsung, Broadcom, and Fujitsu. ARM technology is used in a wide range of devices, from smartphones to game consoles to supercomputers.
Arm is a British semiconductor and software design company that is known for its Arm processors, which are widely used in smartphones, tablets, laptops, and other devices. Arm was founded in 1990 as a joint venture between Acorn Computers, Apple Computer, and VLSI Technology. The company was originally called Advanced RISC Machines, but later changed its name to Arm Ltd in 1998.
Aristotle was an ancient Greek philosopher and scientist, who is considered one of the greatest intellectual figures of Western history.
He wrote on a wide range of subjects, including logic, metaphysics, ethics, politics, biology, natural sciences, philosophy, linguistics, economics, politics, psychology and the arts.
He founded the Lyceum, a school of philosophy in Athens, and tutored Alexander the Great.
China’s central bank has cut one of its key interest rates for the second time in three months as the world’s second-largest economy struggles to bounce back from the pandemic.
The country’s post-Covid recovery has been hit by a property crisis, falling exports and weak consumer spending. In contrast, other major economies have raised rates to tackle high inflation. Raising interest rates to tackle inflation is likely creating a econmic problem all of its own for many contries caught in the inflation trap.
The PBOC last cut its one-year rate, on which most of China’s household and business loans are based, in June 2023 – demonstrating China’s commitment to reviving the economy. Economists had also expected the bank to lower its five-year loan rate, which the country’s mortgages are pegged to. However, this was unchanged at 4.2%. In a surprise move mid-August 2023, short and medium-term rates were also cut.
China will need a much bigger stimulus package to boost confidence to drive up consumption and growth. Without it, the economy is risking faltering into deflation which will make it even harder to recover. More rate cuts could be announced in conjunction with government spending, as well as targeted measures to help the property market.
Beijing is trying to restore confidence, but officials will also be mindful of the long-term implications of the policies may create. China’s economy has struggled to overcome several major issues in the wake of the pandemic, which saw much of the world shut down.
Concerns with China’s property market still remain and were highlighted again when ongoing crisis-hit real estate giant Evergrande filed for bankruptcy protection in the U.S in August. The heavily-indebted company is attempting to arrange a multi-billion dollar deal with creditors.
Also, earlier this month, another of the country’s biggest property developers, Country Garden, warned that it could see a loss of up to $7.6bn (£6bn) for the first six months of the year. At the same time data showed China had slipped into deflation for the first time in more than two years. That was as the official consumer price index, a measure of inflation, fell by 0.3% last in July 2023 from a year earlier.
Official figures indicated that China’s imports and exports fell sharply in July 2023 as weaker global demand threatened the country’s recovery prospects.
Beijing has also stopped releasing youth unemployment figures, which were seen by some as a key indication of the country’s slowdown. In June 2023, China’s jobless rate for 16 to 24-year-olds in urban areas climbed to a record high of more than 20%.
There is a serious ongoing message here of concern and worry for global stock markets, and not just from China – do we need to act now?
The NRR is an assessment of the risks facing the UK that would have a significant impact on the UK’s safety, security or critical systems at a national level. The NRR is based on the government’s internal, classified risk assessment and offers more detail on the potential scenarios, response and recovery options relating to the risks.
The 89 threats are divided into four categories: natural hazards, malicious attacks, accidents and system failures, and global events.
The NRR also provides information on how likely each threat is to occur in the next five years (from very low to very high), how severe the impact would be on the UK (from minor to catastrophic), and what actions the government and other stakeholders are taking to prevent or mitigate the risks.
The NRR is intended to help the public and businesses better understand and prepare for potential threats facing the country now and in the future.
Isaac Asimov was an American writer and professor of biochemistry at Boston University. During his lifetime, Asimov was considered one of the ‘Big Three’ science fiction writers, along with Arthur C. Clarke and Robert A. Heinlein.
My favourite book by Isaac Asimov is I, Robot. If you haven’t read it yet, go lift one off the shelf – it’s well worth a read.
The U.S. stock market has experienced a 5.6% slide for the S&P 500 index over 15 trading sessions through 17th August 2023 and levelling off in the last trading day of that week.
This is about as bad as August typically gets, as August is a rocky month with low volume and high volatility. Some of the reasons for the pullback include the rise in the 10-year Treasury yield, the strengthening of the U.S. dollar, and the signs of a slowing Chinese economy.
However, some analysts argue that the pullback will likely prove to be temporary and not turn into a serious market rout. It has been suggested that the bull run isn’t quite over just yet, and that a 10% ‘pullback’ was on the cards.
Analysts also suggest that the rise in yields would need to threaten a serious shift or there would need to be an additional shock to cause a larger selloff.
However, some suggest that the market is showing signs of stability, as the speed of the surge in the 10-year yield often occurs near the end of a selling cycle for equities. Investors should watch for indicators such as oil prices, wage pressures, and inflation expectations to gauge the market sentiment.
The S&P 500 and the Dow levelled off the week at the close of trading Friday 18th August 2023.
The NASDAQ did score its best first half of the trading year since 1983 January to June 2023 so a pullback was likely to happen.
Thomas Edison – inventor 1847 – 1931
Thomas Edison was an American inventor and businessman. He developed many devices in areas such as electric power generation, mass communication, sound recording, and motion pictures. These inventions, which include the phonograph, the ‘motion picture camera’, and early versions of the electric ‘light bulb’.
The electric light bulb is one of the most important inventions in human history. It has revolutionized the fields of lighting, communication, entertainment, and industry. The electric light bulb produces light by passing an electric current through a thin wire called a filament, which heats up and glows. The filament is enclosed in a glass bulb that is either vacuumed or filled with an inert gas to prevent it from burning out. The humble bulb has undergone many developments through time including the introduction of energy saving devices using LED’S, Light Emitting Diodes.
The electric light bulb was not invented by any one person, but by many inventors who contributed to its development over the years. Some of the earliest attempts to create electric light were made by Humphry Davy, Warren de la Rue, and Joseph Swan in the 19th century.
However, the most famous and successful individual inventor of the electric light bulb was Thomas Edison, who patented his version in 1879 and 1880. Edison experimented with different materials for the filament, such as carbon, platinum, and even bamboo, until he found one that could last for over 1,000 hours. He also improved the vacuum pump and the socket for the bulb. He demonstrated his invention to the public by lighting up his laboratory and the nearby streets in Menlo Park, New Jersey.
The electric light bulb has changed the world in many ways. It has extended the hours of work and leisure, improved safety and health, enabled new forms of art and entertainment, and stimulated scientific and technological innovation.
The electric light bulb is also a symbol of human creativity, curiosity, and progress.
If you want a good read – go find, ‘The Last Days of Night’ by Graham Moore. It’s brilliant!
A new artificial intelligence (AI) road safety camera system has been deployed on the A30 near Launceston, Cornwall, by Devon and Cornwall Police.
The camera system uses AI to detect potential offences such as using mobile phones or not wearing seatbelts while driving. The camera system can capture ultra clear images of the car’s interior and send them to a human reviewer who can issue a warning letter or a notice of intended prosecution, depending on the severity of the offence.
The camera system is the first of its kind to be used in the UK and it has caught almost 300 drivers breaking the law in the first three days of its operation. The camera system is part of the Vision Zero South West project, which aims to reduce road deaths and serious injuries in Devon and Cornwall. The project conducted a 15-day trial of a similar vehicle-based system last year and detected 590 seat belt and 45 mobile phone offences across various roads in the two counties.
The police hope that the new technology will help deter drivers from using their phones or not wearing their seatbelts, which are both dangerous and illegal behaviours that put people’s lives at risk.
The road safety system is from tech’ firm Acusensus.
The police have reportedly said they are ‘disappointed’ by the number of people not wearing seatbelts orand using their mobile ‘phones when drving.
The fall in Bitcoin followed several hours after reports emerged that SpaceX, one of Elon Musk’s enterprises, wrote down the value of its Bitcoin holdings by a total of $373 million in 2022 and 2021, and that the space travel company had sold the virtual currency.
This is likely one of the fastest minute-by-minute selloffs in the history of Bitcoin but this is largely an Elon Musk/SpaceX-driven selloff and probably short-sighted and largely retail-driven. But still, 9% is a big drop for any asset!
In 2022, Tesla, which Musk also owns, announced that it sold about 75% of its Bitcoin holdings after investing $1.5 billion in the flagship cryptocurrency.
Bitcoin had been under pressure earlier, starting after the Federal Reserve issued the minutes from its July policy meeting. In Thursday’s session, the cryptocurrency slumped to its lowest level in almost two months.
This quote is from ‘Lady Windermere’s Fan’.
Singapore’s financial regulator has reportedly said it had finalised rules for a type of digital currency called ‘stablecoin’, placing it among some of first the regulators worldwide to do so.
Stablecoins are a type of digital currency designed to hold a constant value against a fiat currency. Many claim to be backed by a reserve of real-world assets, such as cash or government bonds.
Reserves that back stabelcoins must be held in low-risk and highly-liquid assets. They must equal or exceed the value of the stablecoin in circulation at all times, the rules say. The stablecoin market is valued at around $125 billion, with two tokens – Tether’s USDT and Circle’s USDC – dominating roughly 90% of the market cap value. Stablecoins are broadly unregulated around the world.
These rules will apply to stablecoins that are issued in Singapore and mimic the value of the Singapore dollar, or of any G10 currencies, such as the U.S. dollar.
Last year, the collapse of a so-called algorithmic stablecoin named UST put this type of stablecoin in the crosshairs of regulators. Unlike USDT and USDC, UST was governed by an algorithm and did not have real-world assets like bonds in its reserves.
Singapore’s stablecoin framework puts it among one of the first jurisdictions to have such rules. In June, the U.K. passed a law that gives regulators the ability to oversee stablecoins, though there are no concrete rules yet. Hong Kong is meanwhile undergoing a public consultation on stablecoins and seeks to introduce regulation next year.
A stablecoin is a type of cryptocurrency that tries to maintain a stable value by being pegged to another asset, such as a fiat currency, a commodity, or another cryptocurrency. Stablecoins aim to offer the benefits of cryptocurrencies, such as decentralisation, security, and transparency, without the drawbacks of high volatility and price fluctuations.
Stablecoins can be used for payments, remittances, trading, and storing value. However, stablecoins also face some challenges and risks, such as regulatory uncertainty, technical issues, and trust issues.
There are different ways to create and manage stablecoins, depending on the mechanism used to stabilize their value.
Crypto has attracted a lot of attention in recent years. Crypto is short for cryptocurrency, which is a digital or virtual currency that uses cryptography to secure and verify transactions. Crypto can also refer to the underlying technology that powers cryptocurrencies, such as blockchain.
Some examples of popular cryptocurrencies are Bitcoin, Ethereum, Ripple ( XRP)and Cardano (ADA).
Cryptocurrencies have many advantages over traditional currencies, such as decentralisation, transparency, anonymity, and lower fees. However, they also face some challenges, such as volatility, regulation, security, and scalability. Crypto enthusiasts believe that cryptocurrencies have the potential to revolutionise the world of finance and beyond.
Some examples of popular stablecoins are Tether, USD Coin and Binance USD.
Asia is promoting clear crypto rules at a time when large businesses are facing regulatory uncertainty in the U.S.
Some Asian countries that have taken the lead in crypto regulation include Singapore, Hong Kong, Japan, and South Korea. They have proposed or implemented frameworks that protect investors, prevent money laundering, and encourage innovation in the crypto industry.
In contrast, the U.S. has been singled out for its lack of clarity and consistency in crypto regulation. The SEC for instance and other agencies have different views on how to classify and regulate crypto assets – take alook at the case with XRP and ripple of recent years.
Some industry leaders have threatened to leave the U.S. or sued the regulators over their actions. There is also a debate in Congress that could level crypto transactions with a tax.
As a result, some analysts have suggested that Asia could become more attractive to investors and innovators in the crypto industry, as it offers more certainty and stability in the regulatory environment.
However, there are also challenges and risks involved in crypto regulation, such as balancing security and innovation, ensuring compliance and enforcement, and dealing with cross-border issue.
Welcome to the birth of digtal currency.
Spike Milligan was a famous Irish comedian, writer, musician, poet, playwright and actor famously known for writing the hit radio programme, ‘The Goon Show’.
The inscription ‘I told you I was ill’ is the famous epitaph of Spike Milligan.
He died in 2002 at the age of 83. He had once joked that he wanted this phrase to be on his headstone, but the local diocese did not approve of it in English. So he had to write it in Gaelic, which is ‘Duirt me leat go raibh me breoite’.
The glitch reportedly also added €1,000 to some accounts without explanation. This led to large crowds forming at ATMs across the country, hoping to take advantage of the error.
Some reports suggest that the police were called to calm some situations as some ATMs ran out of cash. The bank has since fixed the problem and warned customers that any excess money they withdrew or transferred will be debited from their accounts.
The bank also apologized for the disruption and urged customers who may face financial difficulties due to overdrawing on their accounts to contact them.
Questions remain – how or even why did this happen?
According to the Office for National Statistics (ONS) – Inflation fell to 6.8% in the year to July 2023, down from 7.9% in June. A reduction was anticipated by analysts, and there are signs the cost of living could be easing finally, after figures on Tuesday revealed wages rose 7.8% annually between April and June 2023. But inflation and therefore prices remain high, placing pressure on household finances.
When the rate of inflation falls, it does not always mean that prices are coming down, but that they are likely to rise less quickly. A fall in gas and electricity prices last month helped drive inflation lower. The cost of some food food items, such as milk, bread and cereals had come down, but that food prices are still some 15% higher than they were in July 2022.
However, according to the ONS figures core inflation a figure which strips out the price of energy, food, alcohol and tobacco, remained unchanged in July at 6.9%. With inflation still more than three times the Bank of England’s 2% target, many ‘experts’ expect the UK’s central bank to raise interest rates again in September 2023.
The Bank has steadily hiked interest rates to 5.25%, the highest level in 15 years, meaning mortgage costs have jumped dramatically, but on the flipside savings rates have increased too for the first time since the financial crisis of 2008.
The Chancellor said July’s figures on the cost of living showed the action the government had taken ‘is working’.
Well… it’s ‘working‘ in the sense it is having the desired affect to reduce inflation – (that both the government and the Bank of England were way behind on) – but it isn’t helping the economy, as interest rates climb making it more expensive for businesses and consumers to function.
But, at least wages are going up now thanks to all the strikes! This will ultimately add more inflationary pressure in the short term.
Let the tinkering continue!
Wages grew at a record annual pace between April and June 2023, according to new figures from the Office for National Statistics (ONS).
Regular pay grew by 7.8%, the highest annual growth rate since comparable records began in 2001.Inflation, which measures the pace at which prices are rising, has eased but remains relatively high at 7.9%. Thhe ONS suggested these latest figures demonstrates ‘people’s real pay is recovering‘ and that basic pay is growing at its fastest since current records began’.
However, wage growth is still not quite outstripping the pace of price rises and inflation is still high. Figures suggest that, taking into account the Consumer Prices Index (CPI) measure of inflation, average regular pay fell by 0.6%.
There are signs in the ONS’s data that the UK employment market is easing. The jobless rate rose from 4% to 4.2%, while the number of people in employment ticked lower.
The fall in employment in the three months to June and the further rise in the unemployment rate will be welcomed by the Bank of England as a sign labour market conditions are cooling. These comments from an analyst were presented as welcome news – but they are odd really when an economy needs good levels of employment (not unemployment). We live in weird times! Good news! Bad news!
The Bank of England is still generally expected by many pundits to increase its key interest rate again to 5.5% before ending the current run of rate rises.
The number of vacancies in the UK jobs market fell again, down 66,000 between May and July 2023. However, there are still more than one million vacancies.
List of workers striking for higher pay
This is by no means an exhaustive list – just a sample of the demands placed on resources through strike action that impacts inflation through a period of fast wage growth.
Japan’s economy posted its third straight quarterly expansion, latest government data showed 15th August 2023, as robust export growth contributed to an annualised 6% expansion in the second quarter, easily beating market expectations.
Economists had reportedly expected the world’s third-largest economy to produce a 3.1% growth in the April-June quarter. The GDP data translated to a more modest quarterly expansion of 1.5%, topping expectations for 0.8% growth.
The strong performance was mainly driven by a surge in exports, especially in the auto sector, as global demand recovered from the impact of the COVID-19 pandemic. Japan also benefited from an increase in inbound tourism, as travel restrictions eased and the Tokyo Olympics boosted visitor arrivals.
However, the outlook for the Japanese economy remains uncertain, as the country faces a resurgence of COVID-19 cases and a sluggish consumer recovery. The government has extended a state of emergency in several regions, including Tokyo and Osaka, until the end of August, which could dampen domestic spending and business activity.
Quarterly expansion came in at a more modest 1.5%, versus expectations for 0.8% growth.
Optimism was tempered by muted domestic demand, given a surprise drop in private consumption expenditure despite the first employee compensation sequential increase in seven quarters.
The Bank of Japan has maintained its ultra-easy monetary policy stance, keeping its key interest rate at -0.1% and pledging to support the economy with massive asset purchases.
The central bank has also introduced a new lending scheme to encourage green and digital investment for the future.
Russia’s central bank has announced a surprise hike in its key lending rate by 3.5%, from 8.5% to 12%, as the country’s economic recovery loses steam amid a resurgence of COVID-19 cases and weak domestic demand.
The decision was announced after an emergency meeting of the bank’s board of directors was called a day earlier as the ruble declined. The fall comes as Moscow increases military spending and Western sanctions weigh on its energy exports.
The Russian currency passed 101 roubles to the dollar on Monday, losing more than a third of its value since the beginning of the year and hitting the lowest level in almost 17 months. It had recovered slightly after the central bank announced the meeting.
The central bank blamed the weak ruble on ‘loose monetary policy‘, suggesting that bank has ‘all the tools necessary‘ to stabilize the situation.
By raising borrowing costs, the central bank is trying to fight price spikes as Russia imports more and exports less, especially oil and natural gas, with defense spending going up and sanctions taking a toll. Importing more and exporting less means a smaller trade surplus, which typically weighs on a country’s currency.
The bank also made a big rate hike of 1% last month, saying inflation is expected to keep rising and the fall in the ruble is adding to the risk.
After Western countries imposed sanctions on Russia over the invasion of Ukraine in February 2022, the ruble plunged to a low of 130 to the dollar, but the central bank enacted capital controls that stabilized its value.
China’s central bank has announced a surprise cut in its key lending rates as the country’s economic recovery loses steam amid as domestic demand remains weak.
The PBOC trimmed the interest rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility (MLF) loans from 2.65% to 2.50%.
The People’s Bank of China (PBOC) said on Monday 14th August 2023 that it would lower the one-year loan prime rate (LPR) by 10 basis points from 3.55% to 3.45%, and the five-year LPR by 10 basis points from 4.2% to 4.1%. The LPRs are benchmark rates that reflect the cost of borrowing for banks and businesses.
The rate cuts are aimed at easing the financial constraints on households and businesses to boost their financing demand and stimulating economic growth, which slowed to 5.2% year-on-year in the second quarter, down from 6.8% in the first quarter.
Analysts said the rate cuts also indicated a shift in China’s monetary policy stance from neutral to moderately easing, as the PBOC faces increasing pressure to support the economy amid rising deflationary risks, falling producer and consumer prices, and subdued real estate activity.
The PBOC reportedly said it would continue to implement a prudent monetary policy and maintain reasonable and sufficient liquidity in the market.