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  • Like an errant student with their thesis, the UK has been granted an extension to October 31st to get parliamentary approval on the Withdrawal Agreement. Unfortunately, the differing views and arithmetic of the House of Commons has not changed and hence a cross party agreement, a second referendum and or a general election remain the most likely solutions in the short term. For Investors, May 2 (UK Local elections) is the next date of significance, followed by the EU Parliamentary elections of May 23-26.
  • The IMF released their biannual update on the Global Economy. Predictably, they reduced their forecasts for GDP growth for most economic areas. The exception being China where they increased their GDP forecast for 2019 to 6.3% (from 6.2%). Whilst the downgrades were not dramatic the IMF did warn authorities on the risks of the economic and trade policies that they might be tempted to pursue.
  • US Inflation figures provided comfort to investors in that they reflected an economy that was neither too “hot” nor too “cold”. Such a “Goldilocks” scenario should be positive for corporates, consumers and investors. However, the ascent in the oil price (+42% ytd) will begin to make its presence felt and will have possible consequences for the Federal Reserve’s future monetary policy.
  • The ECB conducted a meeting that provided very little in the way of headlines. One notable aspect was the official announcement of the review of their negative interest rate policy. Negative interest rates have been in place since 2014 (see chart). We have been of the view that whilst theoretically attractive, the negative interest rate policy has been detrimental to the Eurozone banking sector. Mario Draghi at the press conference highlighted that elevated cost/income ratios and a lack of technological investment has also been conducive to a weak bank sector. Deflecting blame possibly?