December 4th – The BESA Times
Twenty-ninth Edition - Sunday, December 4th
Every week, a complete snapshot of what happened around the world in the past seven days
Notable Headlines
On Wednesday, November 30th, Vienna hosted the OPEC 171st Meeting. In 2014 Saudi Arabia convinced its OPEC partners into letting market forces drive the oil prices, which fell by half during the two years. The arrangement proved to be so ineffective that caused the OPEC oil producers as much damage as to non-OPEC producers and almost lead some of them to collapse because of the tight margins. The meeting anticipation and theories that predicted both the cut or the pump at will to continue have caused the oil prices and US futures to rebound heavily. On Wednesday they agreed to cut the production by 1,2 million barrels a day. If the non-OPEC members decide to collaborate in such actions, the overall cut could amount to 2% of the global oil output. The successful deal resulted in the Brent’s biggest weekly gain since 2009, US Crude’s highest rise since 2011 and a new Russia’s post-Soviet output high. The price before the deal has been floating around 40$ a barrel, after the deal, it reached 50$ and if the future agreements are to be successful, the price could surpass 60$ per barrel in a few weeks. The cuts are to start on the January 1st and will last for at least 6 months.
India’s currency reform came into effect, and shops stopped accepting the two highest value, 500-rupee and 1,000-rupee, banknotes, worth about $7,30 and $14,60 which accounted for 86% of India’s cash. Instead, people can now change those banknotes for smaller-value or the new 500-rupee or 2000-rupee banknotes until the of the year. The reform targets mainly black economy, which accounts for 20% of the India’s GDP according to the world bank. Demonetisation also boosts the use of electronic banking which makes the control of taxation and transactions way easier. The reform was at first popular as it targeted those who gained and stacked large amount of “black money” in cash. However, critics suggest it proves to be harmful rather than beneficial. India is not the first one to have implemented such policies; Burma, the Soviet Union and North Korea carried out similar reforms. The banks in India struggle to meet the demand for new cash, and a lot of Indians have problems meeting daily payments.
Donald Trump broke the protocol by speaking to the leader of Taiwan - the relations between Taiwan and US were cut in 1979, with the establishment of full diplomatic relations between the People’s Republic of China and the US. During the call, according to Trump’s campaign, both sides noted close political, economic and security ties between Taiwan and the United States, moreover, they congratulated each other on recent achievements, leading to Beijing formally protesting over the phone call.
What to remember of last week’s news?
Fidel Castro, the enigmatic Cuban leader passed away. The leader of Cuban revolution who established a communist state on the US doorstep died aged 90. His brother, Raul Castro, Cuba’s current president, announced his death on national television in the early hours of last Saturday. Because of medical problems, Fidel Castro handed the government and party functions to his brother Raul ten years ago, and has been active in political life only through comments on current events since then.
The four most cited US Stocks hit highs because of the expectations on Trump’s campaign promises; the S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite and the Russell 2000 reached an all-time.
Understand in pictures…
The Italian reforms could ease the bureaucratic strain on Italians and make the country a better place both for the investors and the banks, however, the referendum implies more variables. Watch here
A week in the financial markets
Our Homemade Article
by Yiannis Kontinopoulos for BESA
What to expect for next week?
Today, Italians are voting in a constitutional referendum. The changes proposed by Renzi are designed to strengthen the power of the government by making it easier and faster to pass laws. Some perceive the referendum as a decision about constitution while some view it as a plebiscite on the prime minister. The referendum was the main source of market volatility after the OPEC meeting as some suggest that the Renzi’s resignation if the NO prevails can lead to a high instability of the European union. A YES, however, would provide Renzi an opportunity to continue the reforms and make Italy a better place for investors and banks.
Did you know?
There had been several leaks about Apple developing an autonomous car, however, the company had never before officially revealed any plans. Yesterday, the Wall Street Journal reported that Apple addressed a letter to U.S. regulators, offering feedback on proposed rules for the dawning technology of self-driving cars, thus confirming its presence in the future on the roads. Rumours suggest that Apple has been working on the “Project Titan” since 2014. Allegedly, 1000 employees have been developing an autonomous driving technology which could be used in the case of partnering with car manufacturers or of producing its own cars.
WRITTEN BY JAN ERIK PERŠOLJA FOR THE BESA RESEARCH TEAM
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