Beginning of the end
The United Kingdom formally began the process of withdrawing its European Union membership this week by triggering Article 50 of the Lisbon Treaty. The UK and EU now enter into a two-year negotiation to iron out such thorny issues as the legal status of EU citizens residing in the UK and that of UK citizens living within the EU, "hard" or "soft" borders and how —and how much it will cost-- to extract the UK from the EU’s finances. EU president Donald Tusk said a free trade agreement can only be discussed once sufficient progress has been made on the divorce process. Also this week, the Scottish parliament voted 69–59 to authorize a second referendum on independence from the UK. Scotland voted to remain in the EU in last June’s Brexit referendum.


Will Trump play it safe or go big?
After suffering a stinging defeat in his first major legislative initiative, President Donald Trump is likely to turn his focus to taxes in the hope of unifying the Republican congressional caucus. That may prove easier said than done, as the approximately $1 trillion in savings over 10 years that was expected from the repeal of Obamacare and its replacement with the American Health Care Act (AHCA) is now off the table. Trump must now decide whether to risk further political capital by advocating an ambitious comprehensive tax reform plan or to play it safe and advocate a smaller program of tax cuts. Should negotiations drag on, markets may not receive the fiscal stimulus that they’ve been expecting this year. Some fear stimulus could be smaller than expected and later in arriving, perhaps not until 2018.


US growth revised up
Q4 US gross domestic product was revised up to a 2.1% annual rate this week from an earlier 1.9% reading. Corporate profits showed healthy growth of 9.3%, though the persistent US trade deficit restrained economic growth. Sluggish growth is expected to persist into the first quarter of 2017.


Cutting a Gordhan-ian knot
South African president Jacob Zuma fired his market-friendly finance minister Pravin Gordhan this week in a move that risks prompting a downgrade of the country’s sovereign debt ratings. Zuma and Gordhan are longtime political rivals and have differed sharply over South Africa’s public finances. Zuma is expected to sharply increase public expenditures now that Gordhan has been sacked. South Africa’s rand has fallen 7.5% this week against the US dollar as the battle between Zuma and Gordhan has played out.


US to seek modest NAFTA changes
A leaked draft of a US Department of Commerce memo this week showed that the Trump administration will seek quite modest changes to the North American Free Trade Agreement, countering more bombastic proposals made on the campaign trail by President Trump prior to his election. Trade jitters have been receding in recent weeks, but investors will keep a close eye on the first meeting between Trump and Chinese president Xi Jinping in Palm Beach, Florida, on 6–7 April.


German unemployment falls to record low
Unemployment in Germany, Europe’s largest labor market, fell to a post-reunification low of 5.8% in March, as joblessness fell by 30,000. That was more than the 10,000 that economists had predicted.


Ousted South Korean president jailed
Former South Korean president Park Geun-hye has been arrested and jailed over corruption allegations. Prosecutors have 20 days to build their case while Park is in custody. A snap election to replace Park will take place on 9 May.



  • The Bank of Japan releases its Tankan report on Monday, 3 April
  • Global manufacturing purchasing managers’ indices are released on Monday, 3 April
  • Euro-area retail sales are reported on Tuesday, 4 April
  • Global service sector PMIs are released on Wednesday, 5 April
  • The US Federal Reserve releases the minutes of its March Federal Open Market Committee meeting on Wednesday, 5 April
  • Trump and Chinese president  Xi meet in Palm Beach on Thursday–Friday, 6–7 April
  • The United States releases its March employment report on Friday, 7 April 




Stay focused and diversified
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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News;Financial Times;;;


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