August 2, 2019 / 7:40 AM / 7 months ago

Daily Briefing: Europe snagged on name for IMF job

LONDON (Reuters) - European governments have started a series of internal ballots this morning designed to break a deadlock on who to nominate as the next chief of the International Monetary Fund, succeeding Christine Lagarde.

FILE PHOTO: International Monetary Fund (IMF) logo is seen outside its headquarters in Washington, September 4, 2018. REUTERS/Yuri Gripas/File Photo

They were supposed to have come up with a name by the end of last month but could not agree on the candidate.

The five declared runners are: Jeroen Dijsselbloem, the Dutch former head of euro zone finance ministers; Nadia Calvino, the Spanish economy minister; Olli Rehn, the Finnish central bank governor; Mario Centeno, the Portuguese chairman of euro zone finance ministers; and Bulgaria’s Kristalina Georgieva, the World Bank chief executive.

An as-yet-unnamed British candidate - who is not expected to be Bank of England governor Mark Carney - will join them.

The big take-away from yesterday's by-election in Brecon and Radnorshire is clearly the defeat of Boris Johnson's Conservatives to a pro-European Union LibDem candidate, cutting Johnson' working majority in parliament to one seat.

In any future stand-off with parliament over a no-deal Brexit scenario, that could prove to be decisive.

Yet the vote also contained a clue as to how Johnson might still navigate around any Remain obstacles to get a hard Brexit: his Conservatives and the Brexit Party together won the most votes, easily outpacing the pro-EU vote in this Leave constituency.

That could add to speculation over a future Tory-Brexit Party tie-up.

Opposition Labour was punished for the confusion over its own Brexit policy, crashing into fourth place with just 5.3 percent of the vote.

NATO Secretary General Jens Stoltenberg will hold a news conference on the day the United States is set to pull out of the Intermediate-range Nuclear Forces Treaty.

Washington said last year it would withdraw from the pact, accusing Russia of failing to comply with it.

Moscow denies it has violated the treaty and says Washington is pulling out because it wants to pursue a new arms race.


Just when you thought it was safe to go on summer holiday, U.S. President Donald Trump launched a barrage of tweets that said he said he would impose a 10% tariff on $300 billion of Chinese imports from Sept. 1, the latest escalation in the U.S.-China trade war.

Citi economists estimate the tariffs would further reduce China’s exports by 2.7% and drag down its economic growth by 50 basis points.

The previous 25% on $250 billion worth of Chinese goods caused a 5.6% drop in exports and a 1.04% cut in growth.

That capped off a critical week for global markets after the Federal Reserve’s much-anticipated interest rate cut.

Investors are suffering from whiplash and scrambling for safety.

U.S. 10-year yields dropped to their lowest since 2016 and two-year yields plunged as traders increased bets on Fed cuts to another half point this year.

The safe-haven Japanese yen surged to a five-week high against the dollar and a 2 1/2-year peak against the pound after Trump's tweets.

The surge wiped out the dollar’s recent rally against the yen.

Oil prices fell more than 7% overnight as investors fretted about the damage to the global economy.

They recovered some of their lost ground this morning.

Assets considered riskier, like equities, have been punished by Trump’s tantrum as well.

All three major U.S. stock indices fell and the CBOE Volatility Index, a gauge of investor anxiety, shot to its highest reading since June 4.

Wall Street futures are indicating another weak open later.

In Europe, stocks were sharply lower in early trading.

Germany’s export-heavy DAX fell 2.2% to two-month lows.

Trade-sensitive sectors from car makers and auto suppliers to miners and chips are suffering the biggest falls in early deals.

The region’s stocks have had a tough week as investors fret about the potential damage to the euro zone economy from a no-deal Brexit alongside a slowing Chinese economy.

The euro zone STOXXE benchmark was already on track for its worst weekly performance since late May before the tariff news.

A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Josephine Mason. The views expressed are their own. 

Editing by Larry King

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