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LGT Navigator: Brexit within reach

October 18, 2019

Following a successful outcome and agreement yesterday between the United Kingdom and the European Union, Boris Johnson's efforts to convince his Parliament of the new Brexit deal are beginning today.

As before, this is a challenge because Johnson does not have a majority in the chambers and the topic deeply divides British politicians. He is now obliged to gather enough votes in the House of Commons prior to the vote. Ten votes from the Northern Ireland Democratic Unionist Party (DUP) may fall away as the party has withdrawn its official support because of the inner-Irish border issue. The inner-Irish border has been one of the biggest problems since the beginning of the Brexit negotiations. The DUP will not support the deal in its present form. It remains to be seen what the deputies will effectively vote for in tomorrow's big vote.

The left-wing Labour Party continues to demand a second referendum and said that Johnson's "sell-out contract" must be rejected. EU Commission President Jean-Claude Juncker announced that the deal was "fair and balanced".

Chinese economy continues to lose momentum

The expected slowdown of the Chinese economy has proved to be true and has been even stronger than economists had predicted. Asia's largest economy grew by +6.0% year-on-year in the third quarter of 2019, 0.1% less than expected and 0.2% less than in the previous quarter. Weak domestic demand and the trade war are taking their toll.

The gloomy economic data of recent months clearly points to weaker domestic and international demand. The Chinese economy does not have an ideal position, as the indebtedness of both private companies and state institutions is very high, which limits the scope for new impulses and investments.

Trade frictions between the US and EU intensify

New US tariffs on goods from the European Union are due to come into force today. Duties will be levied on up to USD 7.5 billion of European products, including cheese, wine and Scottish whisky. This happens after the World Trade Organization has rebuked European subsidies from certain states to the aircraft manufacturer Airbus and in return has approved the imposition of these US tariffs as compensation. For its part, the EU has threatened further retaliatory measures.



Economic Indicators October 18

MEZ Country Indicator Last
04:00 China Retail sales (y/y) 7.5%
04:00 China Industrial production (y/y) 4.4%
04:00 China GDP (y/y) 6.2%
16:00 USA Conference Board US Leading Indicator (m/m) 0.0%

Earnings Calendar October 18

Country Corporate Period
USA American Express Q3
USA Coca Cola Q3
USA Schlumberger Q3



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Source: LGT Bank (Switzerland) Ltd.

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Quelle: LGT Bank (Schweiz) AG
Core Personal Consumption Expenditure
MEZCountryIndicatorLast08:00DERetail Sales (y/y)-1.7%08:45FRConsumer Prices EU Harmonized (y/y)1.4%09:00ESGDP (y/y)2.4%09:55DEUnemployment Rate5.0%11:00EUGDP (y/y)1.2%11:00EUCore Consumer Prices (y/y)1.1%11:00EUUnemployment Rate7.5%11:00ITConsumer Prices EU Harmonized (y/y)0.8%12:00ITGDP (q/q)0.12%14:15USADP Employment Report102k20:00USFederal Funds Target Rate2.5%
08:00DEExports (m/m)-0.89%08:00DEImports (m/m)0.49%08:45FRIndustrial Production (y/y)0.11%10:00ITIndustrial Production (y/y)-1.80%10:30GBIndustrial Production (y/y)-0.80%14:30USConsumer Prices (y/y)1.81%14:30USInitial Job Claims (thousands)219.45
USAAlcoaQ3NetherlandsASMLQ3USABank of AmericaQ3USAIntelQ3SwitzerlandTemenosQ3

Stagnating European banks