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Good morning. The U.K. is expected to ask for a delay to the Brexit deadline, the European Central Bank’s president will take center stage and trade chatter shows no signs of quieting down. Here’s what’s moving markets this morning.
Delay on the way?
The European Union is said to be anticipating that U.K. Prime Minister Theresa May will request a three-month delay to the March 29 Brexit deadline, on the assumption that when she brings a rejigged deal back to Britain, lawmakers pass it. Thursday ended without any agreement in place and next week is going to be pivotal. If indeed a new accord is hammered out, with altered legal language around the Irish backstop, it should head back to MPs with no guarantee that they will vote in favor. Once the U.K.’s out, Spain’s eyeing a bigger role.
European Central Bank President Mario Draghi will be the main event on Friday, rounding out what has been a very busy week for central bank speakers globally. His words will be parsed forensically for any indication on ECB policy direction. Most of his colleagues on the ECB board have followed other policymakers into dovish territory in recent weeks and have brought up the subject of whether new long-term loans will be extended. Draghi and Co. are heading towards a meeting in about a fortnight where they’ll decide if the slowdown in Europe is sufficient to warrant taking action.
Plenty to watch on the trade front. U.S. President Donald Trump is said to be set to meet with China's top trade official on Friday with only a week left until the temporary truce between the two nations expires. EU Trade Commissioner Cecilia Malmstrom, meanwhile, sounded upbeat on the potential for a trade deal with the U.S., only a day after Trump had repeated a threat to slap tariffs on European cars. Recent data have laid bare how much export economies, like Germany for example, need a deal to get done, not to mention the collective headache trade tensions are causing in Asia.
A new generation of consumers seeking out healthier food options is biting hard for some American staples. Kraft Heinz Co. shares were hammered late Thursday after it took a giant $15.4 billion writedown on the value of its brands like Kraft and Oscar Meyer. The big food names in Europe have been investing heavily in bringing healthier options under their umbrellas to cope with shifting millennial tastes, but the size of the hit for Kraft Heinz could reverberate a little through the sector.
We move into the European session with futures pointing to a mixed start after drops in Asia and the U.S. A very busy week of central bank speakers comes to a close. ECB President Draghi is the headliner, with able support from Sweden’s Riksbank Governor Stefan Ingves and no less than four Federal Reserve policymakers later in the day at a single event. There will also be business confidence data from Germany, oil rig count data in the U.S. and then, mercifully, the weekend.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The $9 trillion problem posed by China’s shadow banking system.
- Firing bankers in Germany is going to get easier in a post-Brexit world.
- Italy is gripped by the alleged kidnapping of the North Korean ambassador’s daughter.
- What 12 empty supertankers reveal about today’s oil market.
- When in Rome… these are the 18 best pasta dishes in the Italian capital.
- The hotel with rooms that clean themselves.
- The world's biggest bee, thought extinct, is back.
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