Frank Kelly’s Geopolitical Week Ahead | March 17, 2024

European Union leaders gather for a European Council Summit

This week will be quite busy politically and for the markets globally.

Starting with the geopolitical outlook, European Union (EU) leaders will gather for a European Council Summit this week to discuss a heavy agenda ranging from how to aid Ukraine further, the Gaza War (as Israel prepares to move militarily on Rafah, which the EU and U.S. oppose), EU enlargement, greater EU defense cooperation and funding, migration policy, and agricultural policy (in the wake of ongoing and increasingly strident protests by farmers across the EU against climate rules). If that were not enough, EU leaders will also discuss a groundbreaking policy of taxing profits generated by almost $300 billion in frozen Russian assets.  

NATO Defense chiefs will meet in Germany

Also, this week, the NATO Defense chiefs will meet in Germany to discuss how to get more military aid to Ukraine as the beleaguered country begins to run low on ammunition. We would note that the U.S. Congress still has no plan to pass a $60 billion military aid package, suggesting that it will take another month (at least) before it can be done.

South Korea will host the Summit for Democracy

Meanwhile, in Asia, South Korea will host the Summit for Democracy, attended by more than 40 nations dedicated to advancing democratic principles. While the agenda focuses on how best to foster democracy for future generations, the situations in Russia, China, and the Middle East will be significant issues discussed on the sidelines.

U.S. Congress: Appropriations bills deadline

In the United States, Congress faces yet another deadline to get appropriations bills done (by Friday) or face a partial government shutdown.

Hectic week for central banks

On the global economic radar screen this week, it will be a hectic week for central banks – and perhaps a historic one, too.

• The Bank of Japan meets this week, and it appears they have been poised to raise rates for the first time since 2007.
• The U.S. Federal Reserve’s (Fed) Open Market Committee meets this week (although unlikely to lower rates), and
• The Bank of England meets to perhaps lower rates.
• But that’s not all: More than a dozen other significant central banks are making interest rate decisions this week, including those of six of the ten most traded currencies.

Major economic data reports

Regarding major economic data reports, Japan releases consumer price index (CPI) prints, and China releases several economic data reports, which will give a good glimpse into how strong — or not — the Lunar New Year holiday was for consumers and sellers. Germany releases both the ZEW and Ifo surveys.

U.S. financial regulatory week ahead

You know spring is here when the major financial services trade groups hold big annual meetings. The American Bankers Association (ABA), SIFMA, and the Investment Company Institute are all holding conferences this week, with the ABA’s Washington Summit being the largest and likely most news-making. Several regulators and members of Congress are speaking at these conferences, and we will be listening carefully to what is said. 

Outside of the trade association conferences, we will be watching five hearings the House Financial Services Committee is holding this week. It is our sense House Republicans are ramping up their focus and criticism of several regulatory proposals – mainly at the SEC but also the Consumer Financial Protection Bureau (CFPB) and Fed – as they prepare to begin moving Congressional Review Act (CRA) legislation to try and repeal the regulations in advance of a June 7 deadline to use the CRA. Otherwise, the new Congress in 2025 would have to pass repeal legislation to get any regulations repealed.

Speaking of regulations, as we predicted in our note last week, the SEC was likely to face a series of lawsuits over its new Carbon Disclosure rules. Well, those lawsuits came flying into federal courthouses fast and furious from various companies and trade associations (including the U.S. Chamber of Commerce), with one causing the 5th Circuit Court of Appeals to issue an order temporarily blocking the rule. 

However, it wasn’t just businesses suing the SEC over the rule: The Sierra Club filed a federal lawsuit against the SEC, saying the rule did not go far enough and would leave investors unable to understand a company’s climate risk fully.