Take Five: From Anchorage to Jackson Hole
Here's your week ahead from Rocky Swift in Tokyo; Suzanne McGee and Rodrigo Campos in New York and Dhara Ranasinghe and Naomi Rovnick in London.
Following Friday's meeting between Donald Trump and Russian President Vladimir Putin, it's the turn of Ukraine's President Volodymyr Zelenskiy and European leaders to meet the U.S. President later on Monday, opens new tab to map out a peace deal.
The fear is Trump could try to pressure Kyiv into accepting a settlement favourable to Moscow. Zelenskiy has already all but rejected the outline of Putin's proposals, including for Ukraine to give up the rest of its eastern Donetsk region, of which it currently controls a quarter.
No doubt, markets will be hesitant to price in an end to the war until a ceasefire, at least, is agreed.
Europe, meanwhile, is unlikely to embrace Russia, even if peace returns to Ukraine. Defence stocks are likely to remain an investor favourite for now.
It's officially summer in financial markets. Q2 earnings are out, the next crop of major economic data isn't until early September and many money managers and traders are heading out to the beaches for a break. There is just one thing to worry about: Jackson Hole.
The Wyoming resort plays host to the annual central bankers' schmoozefest and will include Federal Reserve Chair Jerome Powell among its attendees. The conference takes place as stocks hover near record levels, and Trump continues to take pot-shots at Powell.
Jackson Hole has the potential to be disruptive. Any hint from Powell that a September rate cut isn't happening and markets could sell off hard, while an overly upbeat tone from the Fed chair may feed more euphoria. 'And bull markets die in euphoria,' says Steve Sosnick, strategist at trading firm IBKR.
As global stocks rally, everything from weak U.S. jobs data to trouble at the top of the Federal Reserve has been a reason to bet on U.S. rate cuts, meaning it's not been profitable to be bearish.
About 60% of global investors surveyed by BofA think U.S. stagflation could be the dominant global market regime within three months.
A basket of stocks that do well in stagflationary environments, where growth slows as inflation accelerates, has been outpaced by Wall Street's benchmark S&P 500 index (.SPX), opens new tab this year, Societe Generale strategists reckon.
Next week's business surveys, which can show economic trends months before they appear in official data, will offer more clues about whether U.S. tariffs are driving the world's largest towards stagflation.
SocGen, however, expects Fed rate cuts to inflate a stock-market bubble that might not pop until at least next year.
With nearly every central bank looking to cut rates to give their economies a soft landing, the Bank of Japan stands apart in its mission to raise borrowing costs - in theory.
So, next Friday's inflation data will be in focus for any sign of when the BOJ's long-pledged tightening cycle will resume.
The previous reading of the core consumer price index (CPI) showed an annual 3.3% increase in June, remaining above the BOJ's 2% target for over three years.
No bank went harder or longer with quantitative easing than the BOJ. But the long road towards normalisation has been complicated by uncertainty over U.S. tariffs and concerns about whether Japan was seeing the right kind of price increases.
BOJ Governor Kazuo Ueda has justified slower rate hikes because underlying inflation, which focuses on domestic demand and wages, remains below the central bank's target.
Centrist senator Rodrigo Paz was leading Bolivia's presidential election late on Sunday.
The election kicks off a string of national and local votes across Latin America that extends into late next year, when behemoth Brazil votes to elect a new (or sitting) president.
After 2022's "pink tide" brought left-leaning governments to power in Chile, Colombia and Brazil, investors want to see if voters will return to more market-friendly right-wingers.
Ahead of the Bolivian election, the country's bonds rallied on hopes that political change could bring the economy back from the brink.
Argentina's local elections in September and October are seen as a gauge of the popularity of President Javier Milei's radical economic transformation. Chile votes for a president in November, while next year Colombia elects its congress in March and president in May. Peru holds a presidential election in April and Brazil does so in October 2026.
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Reuters
a minute ago
- Reuters
Zelenskiy arrives at White House for high-stakes Trump meeting
WASHINGTON, Aug 18 (Reuters) - U.S. President Donald Trump said on Monday that the United States would "help out" Europe in providing security for Ukraine as part of any deal to end Russia's war in Ukraine, as he and President Volodymyr Zelenskiy began a hastily arranged White House meeting to discuss a path to peace. Speaking to reporters in the Oval Office with Zelenskiy seated beside him, Trump also expressed hope that Monday's summit could eventually lead to a trilateral meeting with Russian President Vladimir Putin, adding that he believes Putin wants the war to end. Zelenskiy and a group of European leaders arrived in Washington facing increased pressure from Trump to reach a resolution to end the war on terms more favorable to Moscow, after Trump and Putin met in Alaska on Friday for nearly three hours. "We need to stop this war, to stop Russia and we need support - American and European partners," Zelenskiy told reporters. Trump greeted Zelenskiy outside the White House, shaking his hand and expressing delight at Zelenskiy's black suit, a departure from his typical military clothes. When a reporter asked Trump what his message was to the people of Ukraine, he said twice, "We love them." Zelenskiy thanked him, and Trump put his hand on Zelenskiy's back in a show of affection before the two men went inside to the Oval Office, where their last meeting in February ended in disaster after Trump dressed Zelenskiy down in front of television cameras. This time, the leaders of Britain, Germany, France, Italy, Finland, the European Union and NATO joined Zelenskiy to demonstrate solidarity with Ukraine and push for strong security guarantees in any post-war settlement. Trump is pressing for a quick end to Europe's deadliest war in 80 years, and Kyiv and its allies worry he could seek to force an agreement on Russia's terms after the president on Friday in Alaska rolled out the red carpet - literally - for Putin, who faces an arrest warrant from the International Criminal Court for war crimes. The European leaders will meet with Trump afterwards in the White House's East Room at 3 p.m. EDT (1900 GMT), according to the White House. Such a high-level gathering at the White House on such short notice appears to be unprecedented in recent times. Russian attacks overnight on Ukrainian cities killed at least 10 people, in what Zelenskiy called a "cynical" effort to undermine talks. Trump has rejected accusations that the Alaska summit had been a win for Putin, who has faced diplomatic isolation since Russia's invasion of Ukraine in 2022. "I know exactly what I'm doing, and I don't need the advice of people who have been working on all of these conflicts for years, and were never able to do a thing to stop them," Trump wrote on social media. Trump's team has said there will have to be compromises on both sides to end the conflict. But the president himself has put the burden on Zelenskiy to end the war, saying Ukraine should give up hopes of getting back Crimea, annexed by Russia in 2014, or of joining the NATO military alliance. Zelenskiy "can end the war with Russia almost immediately, if he wants to, or he can continue to fight," Trump said on social media. Zelenskiy has already all but rejected the outline of Putin's proposals from the Alaska meeting. Those include handing over the remaining quarter of its eastern Donetsk region, which is largely controlled by Russia. Ukrainian forces are deeply dug into the region, whose towns and hills serve as a crucial defensive zone to stymie Russian attacks. Any concession of Ukrainian territory would have to be approved by a referendum. Zelenskiy is also seeking an immediate ceasefire to conduct deeper peace talks, a position that his European allies have also backed. Trump previously favored that idea but reversed course after the summit with Putin, instead indicating support for Russia's preference to negotiate a comprehensive deal while fighting rumbles on. Ukraine and its allies have taken heart from some developments, including Trump's apparent willingness to provide post-settlement security guarantees for Ukraine. A German government spokesperson said on Monday that European leaders would seek more details on that in the talks in Washington. The war, which began with a full-scale invasion by Russia in February 2022, has killed or wounded more than a million people from both sides, including thousands of mostly Ukrainian civilians, according to analysts, and destroyed wide swaths of the country. Russia has been slowly grinding forward on the battlefield, pressing its advantages in men and firepower. Putin says he is ready to continue fighting until his military objectives are achieved. Officials in Ukraine said a drone attack on a residential complex in the northern city of Kharkiv killed at least seven people, including a toddler and her 16-year-old brother. Strikes in the southeastern city of Zaporizhzhia killed three people, they said. Russia says it does not deliberately target civilians, and the Defense Ministry's daily report did not refer to any strike on Kharkiv. Local resident Olena Yakusheva said the attack hit an apartment block that was home to many families. "There are no offices here or anything else, we lived here peacefully in our homes," she said. Ukraine's military said on Monday that its drones had struck an oil pumping station in Russia's Tambov region, leading to the suspension of supplies via the Druzhba pipeline.
The Independent
3 minutes ago
- The Independent
Trump isn't ruling out sending US troops to Ukraine as part of a NATO-like security role with European partners, saying ‘we'll be involved' — but they'll talk more about it later
President Donald Trump on Monday refused to rule out sending American soldiers to enforce any peace deal between Russia and Ukraine and said he would be discussing the U.S. commitment to a future settlement with European leaders during a multilateral sit-down between him, Ukrainian President Volodymyr Zelensky and a group of European heads of state and government who'd travelled to the White House for talks. Speaking during a brief media availability alongside Zelensky in the Oval Office,Trump told reporters that both Europe and the United States would be involved in securing a post-war peace for Ukraine, but he refused to say outright that American troops would not be put on the ground to maintain that peace. 'We're going to work with Ukraine. We're going to work with everybody, and we're going to make sure that if there's peace, the peace is going to stay long term. This is very long term. We're not talking about a two year peace, and then we end up in this mess again. We're going to make sure that everything's good. We'll work with Russia. We're going to work with Ukraine. We're going to make sure it works. And I think if we can get to peace, it's going to work. I have no doubt about it,' he said. Pressed further on any guarantees for Kyiv by reporters, he said there would be 'a lot of help when it comes to security' in any post-war settlement, but he stressed that Europe would 'be the first line of defense' albeit with some American assistance. At the same time, the American leader seemed to rule out a future NATO membership bid for Kyiv, echoing a social media post he'd made earlier in the day, while hedging and telling the press that there hadn't been any such discussions yet. 'We're going to be discussing it today, but we will give them very good protection, very good security,' he said. Trump added that the European leaders who were waiting to meet with him and Zelensky were 'very like minded' on the matter. He also said he'd be speaking with Putin after his meetings with Zelensky and the assembled European leaders.
The Herald Scotland
3 minutes ago
- The Herald Scotland
It's time to explode the Establishment myths against a wealth tax
This rebuttal largely goes unchallenged by the national media, yet it has at its heart a number of misleading premises. The first is that wealth creation ceases when the wealthy leave. This stems from the myth that the ruling class create wealth through their ingenuity and risk-taking, as opposed to all financial wealth originating from human labour. It would therefore take a mass exodus or nationwide risk to life for wealth creation in a country to cease – we need only look at the hit private profit would have taken during the pandemic had the state not stepped in to shore it up to see the primacy of human labour evidenced. Read more The second is that existing wealth itself is mobile and can "leave" with the wealthy. Some wealth is, of course, mobile, in the form of fine art, precious gems, other luxury items and the king of capital; cash, which is exactly why currency controls and export restrictions and limits exist. However, a significant proportion of wealth is in immobile assets like land, property and British-based businesses whose wealth is generated by, you guessed it, human labour. This wealth cannot up sticks and leave with an individual. The resources remain in the country and are subject to taxation. The third is the Laffer Curve itself which purports to visualise the relationship between tax rates and tax revenue, the idea being that there is an optimum rate of tax which raises the maximum revenue, above which revenue starts to decrease as taxpayers are deterred from remaining in the tax system. This theory, though influential, is unfounded. The concept of trickle-down economics, that tax cuts raise more revenue by encouraging investment and thus benefit society, has not been borne out in data. Tax cuts have not been found to reduce inequality. UK taxes are considerably lower than in most other western European countries, yet we face significant and persistent income and wealth inequalities. Research from the Joseph Rowntree Foundation found that in the UK the top 10% own a staggering 57% of the wealth, while 2 in every 10 adults and 3 in every 10 children, are in poverty. So, if wealth creation doesn't stop when the already wealthy leave, if the super-rich can't take their British resource-dependent wealth with them, and if tax cuts have not been found to reduce inequality, why is the Establishment so opposed to taxing wealth? The other half of their argument is on what may happen in future. Their fear, they say, is that if we make the country less profitable for wealthy individuals, even slightly so through a modest wealth tax, they will leave, and private interest as a whole will be less likely to invest in our economy. How likely this is has been contested by organisations like Tax Justice UK and Patriotic Millionaires UK, so it seems likely that at least some of the millionaires will stay, but regardless the important question is: what do the rest of us stand to gain from any potential risk of flight? We know that waiting for wealth to trickle down has not worked, that inequality has remained high while the rich get richer. We know we won't lose wealth creation as long as we have a fit and able population to do the work. We know we won't lose all existing wealth as long as we have natural resources, built heritage and, yes, a fit and able population to do the work. In fact, the greatest risk to wealth is workforce shortages caused by a public health service on its knees, an undervalued public education system and a cost-of-living crisis deterring new parents. In short, the greatest risk to wealth is continuing to let it go untaxed. Inequality has remained high while the rich get richer (Image: Getty) Yes, we may lose some wealthy individuals who don't want to pay their fair share, we may see fewer corporate lobbyists on their payroll and fewer freebies for the politicians in their pockets – I'll shed no tears for them – but what we stand to gain is a fairer system. A system that addresses inequality and says clearly and proudly, if your private interest has benefitted from our public services: our health, our education, our labour (in every sense!), you will contribute a proportion of that benefit back into the system. There would be no wealth without us, all we are asking is that we all receive our fair share. A wealth tax is a modest policy whose time has well since come. So let there be no shame in calling for one and in doing so declaring that we will not reward greed and excess, we will build a society in which we all have enough. This Labour Government has an opportunity like no other: a mandate, a majority, and a moral imperative. It must embrace it. Mercedes Villalba is a Scottish Labour MSP for the North East Scotland Region.
