Global News August 22, 2018

  1. BBC
  2. Global News August 22, 2018

“U.S. Stocks, Greenback Slip Amid Political Turmoil: Markets Wrap.”

U.S. stocks edged lower, while Treasuries rose as investors assessed the impact on financial markets from the latest legal drama engulfing Donald Trump’s presidency. The dollar declined.
The S&P 500 Index retreated for the first time in five days after touching an all-time high Tuesday. Equities took a knock from Michael Cohen’s guilty plea on campaign finance charges, though losses remain muted as the bull market became the longest on record. Target Corp. and Lowes Cos. both rose after reporting earnings.
The greenback extended its longest losing streak in six months to a fifth day, as the euro rallied on data showing the biggest jump in wages in six years. The 10-year Treasury yield dropped ahead of the release of Federal Reserve meeting minutes.
While all eyes focused on the legal drama in Washington, U.S. stocks remained near records amid double-digit corporate profit growth. At the same time, benchmark Treasury yields have held below 3 percent even as the Fed remains on track to raise rates amid a strengthening economy. Add to the mix trade wars and turmoil in emerging markets. Some clarity could come from a meeting of central bankers on Friday in Jackson Hole, Wyoming.
Elsewhere, oil futures rallied in New York after an industry group reported a steep drop in U.S. crude stockpiles. Mexico’s peso jumped as the nation edges toward a new Nafta deal.


“Jolted by ex-allies’ criminal cases, Trump faces election and legal risks.”

President Donald Trump suffered twin setbacks on Tuesday with two ex-advisers facing prison sentences – and one of them saying Trump told him to commit a crime – possibly hurting his Republican Party’s election prospects and widening a criminal probe that has overshadowed his presidency.
Within minutes of each other in separate courts, former Trump campaign manager Paul Manafort was found guilty on tax and bank fraud charges, while Trump’s former personal lawyer, Michael Cohen, pleaded guilty to a range of charges.
Cohen also testified that Trump directed him to commit a crime by arranging payments ahead of the 2016 presidential election to silence two women who said they had had affairs with Trump.
The setbacks refocused attention on Special Counsel Robert Mueller’s inquiry into Russian meddling in the 2016 presidential election, whether Trump’s campaign colluded with Moscow and whether Trump obstructed justice by firing then-FBI Director James Comey, who was formerly in charge of the investigation.
A Democratic victory in November would limit Trump’s ability to push through legislation and increase the risk of calls for his impeachment. Cohen’s lawyer, Lanny Davis, said late on Tuesday that his client was “more than happy” to tell Mueller’s legal team everything he knows about Trump. Democrats pounced on the Cohen and Manafort cases, saying they bolstered their argument that the Trump White House was weighed down by scandal.


BBC News
“Venezuela ‘paralysed’ by launch of sovereign bolivar currency.”

Venezuela came to a standstill on Tuesday as the country tried to deal with its newly introduced currency. Thousands of businesses closed in order to adapt to the «sovereign bolivar», and many workers stayed at home.
President Nicolás Maduro launched the new banknotes on Monday, revaluing and renaming the old bolivar currency. The government says this will tackle runaway inflation, but critics say it could make the crisis worse. The notes went into circulation on Tuesday. President Maduro had declared Monday to be a bank holiday.
Much of Caracas is eerily empty for a working day. Some in the opposition called for a strike but many people are simply staying at home out of uncertainty, too concerned about what the new currency will mean for the embattled nation to venture out.
The result is that Venezuela is, in essence, a paralysed country. Confusion reigns in the oil-rich nation and, historically, such moments in Venezuela can be extremely volatile.
As yet, there are no reports of significant protests or violence, but there is an increased deployment of the security forces across the country for the roll out of the new bolivar.
Earlier, cities across Venezuela were virtually deserted as people struggled to get hold of the country’s new banknotes. Venezuela’s black market in dollars was even frozen by the currency shift amid confusion and economic uncertainty.
The government announced several other key economic changes to accompany the new notes, including raising the minimum wage by 34 times its previous level from 1 September, raising VAT and cutting generous fuel subsidies. President Maduro also said the sovereign bolivar would be tied to the petro, a virtual currency the government says is linked to Venezuela’s oil reserves.


“SEC Could Face Backlash if Elon Musk Is Exonerated.”

For months, the U.S. Securities and Exchange Commission had been quietly and methodically scrutinizing Tesla Inc. Then Elon Musk tweeted, forcing the SEC to change its approach in an investigation that’s now putting intense pressure on the regulator.
Actions probed by the SEC aren’t typically so public and the agency prefers to keep it that way until it concludes whether laws were broken. The opposite has happened with Tesla, which has quickly become the highest-profile inquiry of SEC Chairman Jay Clayton’s tenure. One resulting sentiment within the SEC: The agency will take a beating from politicians and in the media if Musk avoids a sanction, a person familiar with the matter said.
“This is so visible that it’d be hard for the SEC not to do something,” said James Cox, a professor at Duke University School of Law. “There’s a lot of pressure on the SEC here.”
The SEC hasn’t confirmed it’s investigating Tesla, and agency spokeswoman Judith Burns declined to comment for this story. A Tesla spokesman didn’t respond to a request for comment.
The SEC hasn’t accused Musk of any wrongdoing and it can take years for the regulator to conclude that an executive has violated securities laws. But Tesla investors may not be so patient in light of the feverish attention on Musk for claiming that he was considering taking Tesla private and had lined up funding to do so.
After opening a new inquiry, lawyers in the agency’s enforcement division will often reach out to a company’s attorneys informally to discuss what kind of documents they want and who they might want to interview. In the Tesla probe, the SEC demanded information by issuing subpoenas within days of Musk’s Aug. 7 tweet, potentially shrinking its investigative timeline. And the New York Times reported Aug. 17 that agency officials were preparing to meet with Musk and Tesla directors as soon as this week.
The SEC almost always expects to face criticism from investors and lawmakers when it fails to bring cases over investigations that generate a heavy dose of headlines. Still, such concerns won’t prompt agency officials to sue executives if they don’t think the law merits an enforcement action.