Key Points from This Week
Trump Facing Second Impeachment
Following the ultimatum thrown down by democrats in the wake of the Capitol Hill riots last week, and Mike Pence’s refusal to remove Trump via the 25th amendment, the House of Representatives this week voted in favour of impeachment. Charged on one count of inciting insurrection, Trump will now become the only president to ever face two impeachment trials in the Senate. The trial, which will take place sometime after Biden’s inauguration will require 17 Republicans to vote against trump in order to secure impeachment.
Biden Unveils US Stimulus Proposal
Biden made good on his campaign pledge to make a further US stimulus package his first priority if elected. The incoming president this week unveiled a $1.9 trillion proposal including $1 trillion in direct, $1,400 payments for all Americans. Biden also talked about his plans to fight the virus which includes enhanced resources for vaccinations, testing and contact tracing.
Global COVID Cases Soar
The second wave of COVID intensified further this week. The US is now seeing over 4k deaths a day while the UK saw its deadliest day of the pandemic so far at more than 1500 deaths. Globally, the number of new cases and the number of deaths, both hit record highs with health authorities warning that further mutant strains of the virus will exacerbate the pandemic.
UK Economy Facing Double Dip Recession
In the UK expectations of a double dip recession (the first since the 1970s) ratcheted higher as November GDP was seen at -2.6%. Many now fear that the reintroduction of lockdowns over Q4 will see negative Q4 growth. Similarly, the broadened and enhanced measures over Q1 raise the risks of further economic contraction over the current period, putting further pressure on the BOE ahead of its Feb 4th meeting.
Key Events Next Week
January BOC Meeting
The return of lockdowns over Q4 in Canada is raising expectations that the BOC might look to adjust its monetary policy lower next week. Recent data showed that the country shed jobs last month for the first time since April and many are forecasting a further downturn over January as a result of the lockdowns. The BOC has maintained the option of easing further and expectations are now primed ahead of the Wednesday meeting.
January ECB Meeting
Despite the worsening pandemic, the ECB looks likely to stay on hold next week. ECB head Lagarde this week stood by the bank’s previous economic projections advising that, despite the uptick in the pandemic, the eurozone is still on course for a firm recovery this year. With vaccinations now underway across the eurozone, albeit at a slow pace, the bank looks likely to maintain its wait and see mode.
US, UK & EZ PMIs
The latest set of PMI readings will be closely watched next week. The manufacturing sector has been the standout star of the recovery, improving even while lockdowns have returned, fuelled by the boom in online orders. Traders will now be keen to see whether that trend continued last month.
Keep an Eye on
The FBI has warned over the prospect of further violence in the capital and nationwide next week as Trump hands over power. Up to 20,000 National Guard will be in the capital in response to warnings of up to 4000 armed Trump supporters planning a further siege on Capitol Hill.
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