Astute Market Overview - 30th August 2023
Hello, and welcome to the Astute Market Overview.
The Jackson Hole Economic Symposium took place at the end of the week, an annual gathering in the US of central bankers, policymakers, academics and economists from across the world, to discuss global economics.
Jay Powell, the chair of the US Federal Reserve, restated that inflation remains too high – which is clear to see given that the last reading in the US was 3.2%, and the central bank’s target is 2%. He expressed the appetite to keep increasing interest rates in the US until the members of the Federal Open Market Committee are convinced that inflation is moving sustainably down towards 2%, showing that they’ll be led by the data, before their next interest rate decision on 20th September.
In the UK, policy is restrictive (I asked Astute Investment Management’s Dr Scott Osborne about this in our latest Quarterly Market Update). One of the members of the Bank of England’s monetary policy committee, Ben Broadbent, was at the symposium. Whilst restrictive territory is unlikely to be sustained for the long-term, he said that rates in the UK may well have to remain in restrictive territory “for some time yet”.
In other news: BRICS. This is an acronym for Brazil, Russia, India, China and South Africa, originally coined as “BRIC” by an economist to highlight 4 emerging market economies that were likely to be successful, and to dominate the global economy in future. In recent history, BRICS has come to represent a geopolitical bloc, who regularly attend summits, and act as a counter to the western-led global order.
The bloc have now invited 6 new members to join: Argentina, Ethiopia, UAE, Iran, Saudi Arabia and Egypt. The 6 countries wouldn’t only bring with them a more challenging acronym, they would more than double the percentage of the world’s oil production produced by the bloc.
Adding to their might, the addition of Argentina would bolster their share of the world’s lithium supply. In 2022 Argentina mined nearly 5% of the world’s lithium, and has nearly 10% of the global reserves, according to United States Geological Survey, with lithium batteries a key component for the energy transition to a sustainable source.
And to end on a topic that caught our eye this week, turning to the country that put the I in BRICS, India made history, becoming the first country to ever land on the south pole of the moon, and fourth country to make it to the moon full stop!
Before our next overview, we’ll be watching out for China PMI and US non-farm payrolls.
See you next time.