Overview of TOP weekly news

When will the ECB provide incentives?

Ignazio Visco, who heads the ECB and as governor of the Italian central bank, gave a closer look at EU direction in an interview with Bloomberg. According to him, the ECB should ensure that the stimulus is not set too soon. The bank must consider the risks associated with possible financial instability. This may appear especially in the non-banking part of the financial system.

Visco also focused on the outlook for the Italian economy, which he said has cyclical as well as structural problems. According to him, Italy must maintain an accommodation policy, due to cyclical developments. However, the country must also address its problems associated with the low efficiency of government structures. EU money should be used for the education and employment of young people, innovation and the diffusion of technologies that provide access to high-speed internet.

The growth of the central bank’s balance sheet does not mean a depreciation of the currency

The growth of the central bank’s balance sheet does not automatically equal high inflation and the consequent destruction of the currency, as we can see from both a historical and a theoretical point of view. If that were the case, for example, the Swiss franc would already have to be in the markets somewhere at the level of the Zimbabwean dollar.

The Swiss National Bank has the highest balance sheet of all developing economies due to more than a decade of unconventional monetary policy. The strength and status of the safe harbour that the franc has led to the central bank’s balance sheet growing. Because the SNB is trying not to allow the franc to strengthen to levels that would jeopardize the domestic economy. The central bank’s balance sheet and money supply grow at a time when the demand for money is growing, which means “no” inflation growth.

The Swiss currency essentially “refutes” Friedman’s theory that inflation is always a monetary phenomenon. Should high long-term inflation come, central banks would in principle have to lose control of monetary brakes.

Sweden has banned Huawei

Sweden joins countries that have banned Chinese telecommunications groups Huawei and ZTE from using 5G mobile networks. The reason is espionage from Beijing. The telecommunications regulator has decided to ban Huawei and ZTE from installing new installations ahead of next month’s 5G spectrum auctions. It gave telecom operators an ultimatum by 2025 to remove equipment manufactured by companies from their current infrastructure.

Sweden’s chief of security, Klas Friberg, said: “China is one of the biggest threats to Sweden.”

Anders Ygeman, Sweden’s energy and digitization minister said: “The new conditions would provide a much more secure 5G network.”

Antitrust proceedings against Google

The US Department of Justice has filed antitrust proceedings against Google. The main reason for research on the company’s business in the field of search and advertising. According to the lawsuit, 11 Attorneys General joined the Ministry of Justice.

The lawsuit is the most significant antitrust measure taken by the US government since the battle with Microsoft in the 1990s.

Performance of the Alphabet’s shares (Source of the graph: Tradingview)

Excessive fees of payment companies

Visa and Mastercard are accused in Britain of benefiting from over-charging at a time of coronavirus crisis. Local stores are said to be at a disadvantage in not being able to negotiate lower fees.

“It is essential that the government takes action against excessive card costs. “Increasing the fees of a telecommunications or energy company in this way would cause a stir,” said Andrew Cregan of the British Retailers’ Association.

 

Performance of the Visa’s and Mastercard’s shares (Source of the graph: Tradingview)

Watch this week:

Thursday, October 22, 2020

The United States will announce the sale of existing homes in September. It is expected to increase slightly compared to the previous month to 6.3 million.

Friday, October 23, 2020

The eurozone will publish the development of the market composite PMI index in October. A decrease from 50.4 to 49.3 points is expected.

The United Kingdom will publish the development of retail sales in September. Analysts expect a more modest 0.4% growth on a month-on-month basis.

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

Disclaimer: The content of the Reports constitutes Marketing Communication and does not constitute Investment Advice or Investment Research or an offer for any transactions in financial instrument. The content of the Reports represents the view of our experts on a generic basis, and does not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the Reports have not been prepared in accordance with legal requirements designed to promote the independence of Investment Research, and are not subject to any prohibition on dealing ahead of the dissemination of Investment Research. Readers using the Reports should consider the possibility of encountering substantial losses. The past performance is not a guarantee of future results. Therefore, Goldenburg Group Limited shall not accept any responsibility for any losses of traders due to the use and the content of its Reports.