Posthaste: IMF’s gloomy global forecast too ‘optimistic’ — and UK calls first Saturday session since Falklands war to vote on ‘Great new Brexit deal’
“Where there is a will there is a deal — we have one,” European Commission President Jean-Claude Juncker tweeted early this morning, trumpeting the last-minute Brexit agreement reached with Britain. Juncker says he will recommend EU leaders approve the deal, but the outlook for British Prime Minister Boris Johnson is far less certain. With the Oct. 31 deadline ticking closer, Johnson hopes to get the agreement approved in an extraordinary session of the British parliament this Saturday (the first Saturday session since the Argentine invasion of the Falkland Islands in 1982). You may recall that Johnson’s predecessor Theresa May also took deals to Parliament and was defeated — three times. Johnson has no majority in the 650-seat parliament, and in practice needs 320 votes to get a deal ratified. So far, the Northern Irish party he needs to do that has refused to support it. That was enough to take the edge off the markets’ initial euphoria. The pound that spiked more than 1% on the news, nearing the US$1.30 mark, has since trimmed some of those gains.
🇪🇺🤝🇬🇧 Where there is a will, there is a #deal – we have one! It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that #EUCO endorses this deal. pic.twitter.com/7AfKyCZ6k9
The IMF’s forecast this week attracted attention when it warned of the global economy’s “synchronized slowdown and uncertain recovery.” But there were some who saw their outlook as too optimistic. Oxford Economics says in a report that it has a darker view than the International Monetary Fund for 2020. Its economists see global growth at 2.5% both this year and next, well below the IMF’s forecast of 3% and 3.4% — and the weakest performance since the eurozone crisis in 2012. Unlike the IMF, Oxford thinks the worst of the world’s industrial and trade weakness is yet to come, with uncertainty over the U.S., China trade dispute causing companies to be cautious about investment and hiring. It also suspects that the impact of monetary policy loosening will be less than the IMF thinks. Oxford says while it is more pessimistic than the IMF, there is “sound justifications” for the world avoiding a recession. “Still, risks are skewed to the downside, so we estimate a 30% probability of a global recession in 2020.”
Here’s what’s you need to know this morning:
CIX startup conference continues in Toronto
Energy Minister Sonya Savage holds a media conference in Edmonton to discuss legislative amendments that will restore investor confidence in Alberta’s electricity market
Premier John Horgan and Ravi Kahlon, parliamentary secretary for forests, lands, natural resource operations and rural development, hold a press conference in Vancouver with representatives from Pinnacle Renewable Energy and Mitsui & Co. Ltd.
Notable earnings: Philip Morris International, Morgan Stanley, BHP Billiton, Honeywell, Unilever
Today’s data: Canadian manufacturing sales, U.S. housing starts and building permits, Philadelphia Fed Index
China’s grip on the world’s rare earths is so tight that it is discouraging other countries, including Canada, from developing the sector. The country produced 70% of world supply in 2018 and controls 36.6% of reserves, giving it powerful sway over prices. Rare earths could also become a substantial weapon in the U.S., China trade wars, writes the Financial Post’s Gabriel Friedman. That idea was hinted at earlier this year when Chinese President Xi Jinping, accompanied by a trade negotiator, visited a rare earth magnet factory for a photo op.