Week in a Glance: Retail Reports, Bank of Turkey, Japan

22 nov. 2021

The past week did not seem to bring anything radically new to the balance of power in the financial markets, and there were no important planned events either. But as a result, a lot of things have accumulated, starting with the signing of an infrastructure plan by Biden and the adoption by Congress of a social spending plan for almost 2 trillion, ending with another shot by the Bank of Turkey in the leg of the lira and the announcement of a new large-scale stimulus program in Japan.

The week began with an interview with the head of the ECB, Christine Lagarde, in which it was very clear: no rate hike in the foreseeable future, because the economy needs to be saved and the hell with inflation will dissipate by itself. The Bank of Turkey was more categorical in this regard: the rate was cut by 1%. And this is with inflation at 20%. It turns out that it is possible to fight fire anyway - by filling it with gasoline. The Turkish lira, as expected, burns, continuing its fall into the abyss.

It's not just Turkey or the US that suffers from inflation. Data from the UK was released last week, showing the fastest growth in consumer inflation in the last 10+ years. And retail prices have risen so much, unprecedented since 1991. On this occasion, everyone again looked towards the Bank of England (we are talking about the expectations of a rate hike by the Central Bank).

Perhaps the only country that now has no problems with inflation is Japan. But it has problems with the economy - GDP in the third quarter dipped by 3%. As a result, it was decided to spend about 56 trillion yen ($ 490 billion) on the stimulus package.

In general, the past week was a week of retail: the largest US retailers reported (easily beat the forecasts for both profit and revenues), and also published statistics on retail sales in the US, China and the UK (the data came out much higher than forecasts).

This gave a reason for the US stock market to grow further. But in general, in light of the fact that all good things have already happened (the reporting season is almost over, Biden's infrastructure plan has already been adopted), there are big questions about his future. After all, there are no fewer threats on the horizon, on the contrary, there are more and more reasons for concern. Austria, for example, is introducing a nationwide lockdown. And it is very likely that this is only the first sign, since the pandemic situation in Europe is rapidly deteriorating. And then Yellen reminded of the public debt ceiling and that the Treasury will run out of money by mid-December, and there, without a new law, there will be default. And there is no law, as well as the desire of the Republicans to help the Democrats pass it.