News of the week summary - 10/01/2023
Senators support bipartisan agreement to avert shutdown
Senate leaders, representing both Democratic and Republican parties, have come to an agreement aimed at preventing a government shutdown until November 17. This bipartisan deal also includes the allocation of $6 billion in aid to Ukraine (but still falling short of Joe Biden's request for $24 billion in aid).
However, its smooth passage faces challenges, primarily in the Republican-controlled House, where potential gridlock could occur. In particular, Speaker Kevin McCarthy is grappling with resistance from conservative hardliners who oppose the bipartisan approach.
Further complicating matters, Republican Senator Rand Paul from Kentucky, is leveraging procedural obstacles over the inclusion of Ukraine aid. In an effort to bypass these roadblocks, moderate House Republicans may attempt to force a vote on a bipartisan funding plan, though they may not be able to do so before the looming shutdown deadline.
France leading for a tougher EU position on China
France is leading a tougher European Union stance toward China, driven by concerns about Beijing's trade practices posing a significant threat to vital industries.
Paris has played a pivotal role in shaping this policy shift, driven by the belief that inaction could lead to long-term damage to the EU's economy. This concern is reminiscent of a past incident when cheap Chinese imports adversely impacted Europe's solar industry. There is now apprehension that Europe's auto industry could face a similar fate, leading to a binary choice for the EU – either affirm its power or concede to China.
However, this tougher stance has raised concerns, including potential trade wars and Beijing's response to investigations into Chinese subsidies for electric vehicles. Additionally, Tesla is among the companies identified during EU evidence-gathering for benefiting from these subsidies.
While the EU's intention is not to engage in a direct trade battle with China, the goal is to establish a level playing field among the world's largest economic blocs. President Emmanuel Macron envisions Europe as a stabilizing force between the U.S. and China, allowing for the cultivation of special relationships with potential allies like India.
US bank deposits fall year-on-year for the first time
The U.S. banking industry has recorded its first-ever year-over-year decline in total deposits, based on data dating back to 1994. Total deposits at U.S. banks reached around 17.3 trillion dollars, marking a 4.8% decrease from the previous year.
This decline is attributed to various factors, including the impact of higher interest rates, which incentivized depositors to withdraw cash from their checking and savings accounts in favor of higher-yielding alternatives. The environment of rising interest rates and a series of bank failures further motivated withdrawals.
Charles Schwab experienced the most substantial deposit decrease, primarily due to outflows from brokerage accounts, with deposits falling by 31% to 305 billion dollars.