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Good morning. There seems to be a modicum of Brexit optimism, everyone’s waiting for Powell and Peppa Pig has been acquired. Here’s what’s moving markets.
Perhaps it is time to accept that if you are a big fan of certainty, Brexit is not the place for you. Currency traders this week seemed to take Prime Minister Boris Johnson’s visits with Germany’s Angela Merkel and France’s Emmanuel Macron well, seeing some light at the end of the tunnel towards getting a deal done and avoiding hard Brexit. Yet, there seemed to be precious little in what Merkel or Macron said that made anything about the negotiations any clearer. Next up for Johnson? The G-7 summit and a Sunday breakfast with President Donald Trump.
In a week when we've had minutes from the latest Federal Reserve and European Central Bank meetings, it speaks volumes that the speech Fed Chairman Jerome Powell will make at the Jackson Hole symposium on Friday is the monetary policy event of the week. Powell is expected to signal another rate cut but he’ll be speaking after three regional Fed presidents pushed back against the idea that the U.S. needs more policy easing. So while a cut in September is almost certainly on the cards, traders or indeed presidents expecting more than that may ultimately be disappointed.
One country where potential stimulus is even more keenly in focus is Germany. The Bundesbank doesn’t think Germany needs anything to prop up the economy, even if it does expect another contraction of output in the second quarter. Importantly, however, borrowing money has not only never been cheaper, but borrowers are paying to lend Germany money across most maturities now, so should Merkel and her colleagues decide they do need to pump more into the economy, borrowing the money to do so has never been so cheap.
Parents of the world, beware. If you think there’s already a lot of Peppa Pig merchandise on the market, think again. U.S. toy giant Hasbro Inc. will pay $4 billion to buy Entertainment One Ltd., the U.K.-listed film and television producer of children’s shows like Peppa and PJ Masks. Expect EOne shares to surge on the news. Elsewhere on a quiet day for scheduled releases, watch European software firms for any read-across from expectation-beating results from Salesforce.com Inc.
Stocks in Asia were marginally higher, as are European and U.S. equity futures and Treasury yields, as investors await Powell’s Jackson Hole address. Oil is headed for a second consecutive weekly gain on better noise around the trade war and easing monetary policy signs. It’s quiet on the economic data and earnings front, so eyes will be trained on headlines out of Italy, where President Sergio Mattarella is making clear he wants a new coalition, not new elections, and has given parties until Tuesday to work it out.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- WeWork is jamming folks into half the space other offices use.
- Microlending is creating some serious debt stress in Africa.
- An airline is testing 20-hour flights to see if passengers can take it.
- The challenges of being a tooth-straightening startup.
- The battle for supremacy in carbonated water.
- An artificial tongue that detects fake whiskey.
- Divers are going to visit the wreck of the Titanic for the first time in 14 years.
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