Is it odd that any week that doesn’t contain a high-ranking Administration official being charged with a felony or with an ultra-powerful member of the glitterati being accused of sexual impropriety seems like a slow news week? This week, there are only the rumblings of widespread violence in the Middle East, a semi-booming US jobs market, and a long-awaited divorce agreement coming together to capture our attention. Perhaps we’ll have something more exciting next week…
Here is a curated list of important stories outside the main headlines that caught our attention this week.
It’s Official: Lebanese Prime Minister Not Resigning After All (NY Times, 5-minute read) Last month, Saad Hariri was detained (or entertained) by Saudi Crown Prince Muhammed Bin Salman in Riyadh at which time he suddenly decided to resign his position. Hariri (whose father had also been PM of Lebanon until a ton of TNT ended his political career) was rescued from the Saudi capital by the President of France, Emmanuel Macron. One month after his resignation by mobile phone, he announced that, after all, he had decided to stay put as Prime Minister. The wars in Syria and Yemen, the Saudi Crown prince shaking down his relatives in the Riyadh Ritz-Carleton, and now what looks like an attempt by the Saudis to kidnap a foreign head of state all speak to the possibility of a Black Swan-type surprise in the Middle East. What might be the trigger? Keep reading…
Trump recognises Jerusalem as capital of Israel (FT.com, 5-minute read). In a 21st century tradition among US presidents of doing what they can to further complicate the sensitive balance of power in the Middle East, on Wednesday, President Trump announced that the US recognized Jerusalem as Israel’s capital. The announcement received quick condemnation of European (former-)allies and leaders in the region. In a strange twist, President Trump will continue to sign semi-annual waivers to postpone the move of the US embassy from Tel Aviv to Jerusalem. The Wednesday announcement was meant to throw some red meat to Evangelicals, but anyone that read the paper will realize that the situation on the ground hasn’t changed since 1995. Palestinians have been protesting since, and there is the possibility that Palestinian and Arab impotency regarding this announcement might stir ill-will among the Arab populace for their own leaders.
Solid US job report clears way for rates rise (FT.com, 3-minute read). First Friday of the month — time for the employment numbers. The headline number from the businesses survey (228,000 positions added) was better than expectations; the headline number from the household survey was as expected, with the unemployment rate holding steady at 4.1%. The one confounding factor is that wage growth is still tepid — an annualized rate of only around 2.5% per year. Bond yields dipped a bit on the report, but the reaction was not extreme, and in fact, the volatility of bond prices reached a 40-year low in November. No one is worried about either equity volatility or bond volatility — could it be that investors are hedging geopolitical risk by buying Bitcoin?! (See also Framework’s news from last week for another story on BTC.)
UK reaches historic Brexit divorce deal (FT.com, 5-minute read). Britain has finally passed the first hurdle to its divorce from the EU. Thorny issues related to the border between Northern Ireland (a UK dominion) and Ireland (an independent European member state) were resolved, the “alimony” payment determined (EUR45-65 billion), and residency arrangements for EU citizens living in the UK sorted out. Observers say that the final agreement is closest to the EU side’s position going into negotiations, but that Britain received some important concessions. We continue to believe that the trend toward nationalism and protectionism, exemplified by Brexit, the election of Trump, and the ascension to power of right-wing groups throughout Europe, all bode ill for long-term economic growth.
