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The News That Shaped the Month – April


General Economics – Yana Chernysh

The US dollar has been rising constantly, as a result of the country’s strong economy and with the other countries in the world facing economic problems. The current exchange rate is 1.07$/1€. Economists predict that euro can even go below 1 dollar in the future years.

Over the last month, the US imports price has fallen by 0.2%, and the exports price has risen by the same amount.

In the UK the unemployment has been decreasing and weekly earnings have been increasing in the past few months. In general, the labor market was becoming stronger. However, due to the high inflation rate of 2.3%, the real wage growth is very close to 0, which is the slowest growth the UK experienced since 2014.

The French economy is becoming much weaker. The predicted GDP growth is only 1.4%, which is the lowest in Europe. Government debt is now at the 90% of GDP, whereas only 10 years ago it was 58%. The unemployment rate is high, especially for the youth (24%). These topics are highly discussed now, due to the French elections.

Global financial stability has continued to improve, according to the IMF April report. Several reasons for that are: increased interest rates in many countries, which lead to increased earnings of banks and insurance companies, and oil prices are recovering from its recent low levels. Still, IMF points out several risks to the global financial stability. One of them is an increasing debt level in some countries.

Is the U.S. Dollar a bargain? – Mostafa Al Shikh

Right after the Trump’s inauguration day, analysts of several investment banks foresaw a positive outlook for the U.S. Economy.  Expectations were that the dollar would gain strength after long periods of a stabilized Euro-Dollar exchange rate. The Banks thought that the Dollar would appreciate versus the major currencies such as the Euro, Renminbi and the Pound. After a few months of speculation and a more expensive dollar, the currency began to show signs of recovery towards its intrinsic value. There could be several reasons why this is happening. Firstly, the growth rates in America are slightly shadowed after positive changes in European macro-economic indicators. A minor example is the significant Dutch budget surplus which could have led to an decrease of the Euro-Dollar exchange rate. Secondly, in contrast to the expansive fiscal policy of Donald Trump, the Federal Reserve tries to keep a hold on this policy with hikes in the interest rate through government bond sales. However after minor adjustments to U.S. GDP growth, this might cause some hesitation at the FED and could postpone its interest rate adjustments.


French Elections – Tsz-Tian Lu

By the time you are reading this text, the result of the first round of the 2017 French presidential election will be already released. It took place on 23 April 2017, and if no candidate wins 50% of the votes, the two candidates with the most votes will go into a run-off on 5 May 2017. The result of this election is very significant for the following reasons: It will determine whether France is going to vote to leave the EU, and also determine the policies on immigration restrictions as well as how the new government is going to deal with refugees. Among the four candidates with the highest supports in the opinion polls, which are Marine Le Pen, Emmanuel Macron, Francois Fillon and Jean-Luc Melenchon, two of them are hostile to the European Union and NATO. Marine Le Pen, who is often said to be the French Trump, is very likely to make it to the second round. She is known for promoting protectionism and populism, and stated that once she is elected, she will embark on negotiation with the Brussels on a new EU, followed by a referendum if the negotiations may fail. Meanwhile, the poll suggested that the biggest rivalry for Marine Le Pen is Emmanuel Macron, who represented a party that is “neither left nor right”. Macron has a high chance of defeating Marine Le Pen if he reaches the run-off. Thus, it is not difficult to see why this election is worth keeping an eye one — the financial and societal stability of the EU are at stake.

According to the latest exit polls, Marine Le Pen and Emmanuel Macron gathered enough votes to make it to the run-off.

British Snap Elections – Raffaele Di Carlo

British Prime Minister Theresa May surprised everyone on the 18th of April by announcing her plan to lead the United Kingdom to a sudden general election by the 8th of June, despite her reiterated claims of aiming at elections by 2020. The Parliament is likely to be dismissed on May 3, allowing for a one-month electoral campaign. Many consider this decision a risky gamble that might throw the country in a period of further instability in such a delicate period of its history, others see it as an inevitable turn of events, especially considering that the Tories are lately enjoying an extremely favorable electoral environment: the division and weakness of the Labour party, combined with the sudden step-down of the campaign leaders, left the moderate right-wing to reap the consensus of a vast majority of the population, as the opinion polls seem to suggest. It only seems logical then that Mrs. May would press this advantage to try and consolidate her now limited majority in the Parliament. The Fixed-term Parliaments Act 2011 states that two-thirds of MPs must vote in favor, for early elections to be approved. Mrs. May indeed presented the motion to the House of Commons on April 19, and a striking majority was reached, as the Labour party also seems to be favorable to early elections.

A Day Without Coal in the UK- Omar Osman

On Friday April 21st, Britain went a full day without using coal to generate electric power for the first time since the industrial revolution. The national decision of a coal-free day is to remark the intended transition towards cutting coal use for power generation, for the sake of environmental protection. The UK government plans to phase out Britain’s last plants by 2025 in order to cut carbon emissions. Coal powered Britain for more than a century, and it has remained the dominant energy source until the early 90’s. However, in the past several decades, power sources were diversified and reliance on coal was diminishing. Currently, around half of British energy came from natural gas, with about a quarter coming from nuclear plants.

Coal and other fossil fuels are considered to be among the main air pollutants and major sources of greenhouse gases. 80% of world energy still comes from fossil fuels.  However, as Britain’s “one day without coal” symbolizes, there is a strong world movement to shift towards clean energy dependency, for the preservation and sustainability of the environment.

Turkish Referendum – Evrim Öztamur

The Turkish constitutional referendum ended with an ‘Evet’ vote last Sunday with a 51.4% to 48.6% ratio. Reminiscent of the close margins of the British vote to leave the European Union, the nation voted to abolish the position of the Prime Minister and replace the entire political system with an executive presidency. In other words, the current President of the Turkish Republic, Recep Tayyip Erdoğan, acquired complete control of the country’s affairs, both foreign and domestic.

The Republic is still in a state of emergency that was enacted after the 15th of July coup attempt last year, which likely contributed to the success of Erdoğan’s campaign in favour of the constitutional changes. With several videos of voting directors stamping ‘Evet’ votes on unmarked ballots surfacing on social media, voters against the changes are currently working towards litigation to account for these irregularities. However, it is not certain if these irregularities account for more than 1.4% of the votes to cause a shift in the results.

Reactions from sovereign states has been mixed so far, ranging from the United States and Russia congratulating the Turkish peoples and Mr. Erdoğan, to several European Union countries making note of the irregularities in the results. Austrian Foreign Minister Sebastian Kurz expressed that he is opposed to Turkey’s EU accession talks; which had effectively stopped after the purges of military divisions and civil servants began following the coup attempt.

US Foreign Affairs: How Trump handles China and North Korea – Hải Đăng Vũ

This edition of our news recap marked the 95th day of Donald’s Trump presidency of the United States. During his first months, domestic issues were his primary concerns – which some have sparked much controversy that expanded its remarked influence in other countries. Conversely, his handling of his first jobs in foreign affairs were tested against its two closest allies, the United Kingdom and Canada. His cabinet was well-prepared enough not to leave these meetings out of control.

The bar was raised higher this time when in the previous month, President Donald Trump received a welcoming visit of their most powerful political and economic counterpart, China. Prior to the meeting, the relationship between the two administrations has not been particularly well – Trump’s phone call to Taiwan earlier this year angered Beijing and left them guessing on what approach they should take to the meeting. Asides from bilateral economic trade deals that were brought to the table, the summit was centered around their discussion on the prevention of military threat of North Korea ahead of the birthday celebration of its founder, Kim Il-sung. Previously believed to financially supporting North Korea, China is now concerned about unnecessary rising tension in the region. Despite information indicating that a missile test failed last week, Pyongyang is still determined to conduct weekly weaponry tests to answer Trump’s allegedly over-aggression on military activities around the area.

In other related developments, Russia has reportedly believed to have responded by sending mass of troops to establish their military presence in North Korea, preemptively taking actions to prevent heightened pressure in the Korean Peninsula.

Pandamonium – Michael van Rhee

April saw part of our country get obsessed with a bit of a hype. It might not be of the same scale as Pokemon Go last summer, but still… You see, we’ve been given two giant pandas by the Chinese government, and their reception has been nothing less than spectacular. Would you expect anything less for these superstars? In terms of their names, one’s called ‘Wu Wen’, which means ‘beautiful, powerful cloud’, and the other’s called ‘Xing Ya’, which means ‘elegant star’ — obviously. It actually took more than 15 years of lobbying to finally get these pandas here, and some negotiations even saw past Prime Ministers get involved in the whole process — time very well spent, as you can tell. All jokes aside though, we’ve been given these pandas as a gesture. It’s a sign of trust whenever the Chinese government lends rare animals, such as these giant pandas, to other countries. Just don’t think that any of this is free, for the price tag of these cute little pandas runs into the millions. Ouch!

(For those of you who are curious: you can see the pandas in Ouwehands Dierenpark, a zoo nearby Utrecht.)

The South African Downgrade – Leonie Ernst

The 31st of March, Jacob Zuma, president of South-Africa, fired nine of his 35 ministers. Among them was Pravin Gordhan, the minister of Finance. Gordhan was known for his stable policy, and predicted significant economic growth for the country that is still recovering from the 2009 recession. Zuma stated that the dismissal of the ministers was meant ‘to achieve a radical socioeconomic transformation’ in order to improve the lives of the poor.

However, the dismissal of the ministers is certainly not providing a better life for the poor on the short-term, since it led to the downgrade of the country by credit rating agency Standard & Poor’s. Due to political instability, the country was downgraded to junk status. Investors are pulling back their investments from the country and this led to a severe decrease in economic activity, which is driving up the interest rates, and is weakening the South African Rand.

In Johannesburg and Cape Town, the people started to protest against the controversial president. They want the president to step down, something the opposition has also called for quite some time. The political instability in the country is now also leading to economic instability. Some financial experts fear the country is going to face stagflation, which will harm the economy as a whole. One of the biggest fears is that the already high unemployment rate (±25%) will become even higher.

In search of World War III – Alma Rottem

The past weeks seemed to be filled with potential calamities, and a few actual ones. A worldwide sense of panic emerged as tensions soared up in volatile regions such as North Korea and Syria. Last week, Google revealed that the search term “World War Three” has never been more popular among users. It seems that people are preparing themselves for the scenario of a global war, or at least they are interested in the implications of the term.

It is hard to forget the images of the suffocating children from the Syrian city of Idlib, where a suspected regime-ordered gas attack killed dozens. The Syrian military denied any responsibility for the deaths as world leaders were shocked and outraged. So outraged, that a few days later the US launched an airstrike on a Syrian airfield in response to the chemical attack. Although lacking any strategic prospect, President Trump was commended for his quick response, while Russia, an ally of the Syrian president Assad, expressed its strong discontent with the intervention.

Later, tensions rose between the US and North Korea regarding the latter’s nuclear program. A failed missile test and overt threats against South Korea, Japan and the US have reached an unprecedented boiling point. The Americans are no longer ruling out the possibility of a limited nuclear conflict. A few days later, the US dropped “The Mother of All Bombs”, the biggest American non-nuclear bomb, on a reported ISIS branch in Afghanistan. It was a showcase of American power, sending a clear message to the North Koreans. Nervous speculations continue to mount as the actual threat of a renewed global conflict has reached a point of near realization. Or at least that is what Google users think.


Dortmund football team attack – Atma Jyoti Mahapatra

In a shocking revelation, the terrifying attack on the Borussia Dortmund football team was carried out by a market trader, refuting links with radical Islamic terrorism. This comes after three letters claimed responsibility for the attacks, which also included far-right motivations.

Sergej W, a Russian-German national, has been accused of murder, explosion and causing serious injury. He was found in Tuebingen, 450 kms from Dortmund and 30 kms from Stuttgart. According to reports, he stayed in the same hotel as the football team. He later carried out the attack, on the 11th of April, in which footballer Marc Bartra was seriously injured. Two bystanders were rushed to a nearby hospital and a police officer was treated for the shock following the three consecutive blasts.

Sergej bought 15,000 put options, priced at 78,000 euros. He bet that share prices would collapse, and would have made almost 4 million euros. The dynamics of this plot have been likened to sophisticated insider trading, where information asymmetry is used to expeditiously make money.

General Business Nando Slijkerman

According to Bloomberg, Trump is coming with his tax plan in the last week of April. President Donald Trump’s tax plan next week will most likely not include the border-adjusted tax that House Speaker Paul Ryan has proposed, a senior administration official said. The plan – which Trump said will be released Wednesday – will contain the administration’s priorities, according to one of the officials. Both asked not to be identified because discussions of the plan are private.

Tensions between the U.S. and Russia became noticeable since Exxon Mobil Corp. will not be allowed to bypass U.S. sanctions against Russia to resume drilling for oil in a joint venture that seeks to tap billions of barrels of that country’s crude. Treasury Secretary Steven Mnuchin said the decision was made after consultation with President Donald Trump, according to a statement on Friday. Exxon initially requested the drilling waiver in 2015 and pushed for approval every few months since then, according to a person with knowledge of the matter who wasn’t authorized to speak publicly

Markets are underpricing the prospect of Marine Le Pen emerging victorious in the French elections as a sea of undecided voters throws into sharp relief pronounced apathy for center-leftist Emmanuel Macron – the front-runner by a whisker – and the backlash against the European Union project. That’s the conclusion drawn by Charles Gave, founder of Hong-Kong based asset-allocation consultancy GaveKal Research, who predicted the triumph of Donald Trump in the U.S. election, and is now betting on a win for the anti-euro National Front candidate.

Let’s have a look at the numbers. Growth continues for Europe in April; AEX rose with a small 0.52% this month, and our German neighbors (DAX) increased 1.21%. S&P remained constant by increasing as much as 0.01%, and the Dow Jones decreased by 0.55%.

Let’s monitor the developments with respect to the elections closely, and see you on the markets next month!

Tesla Over FordBrunno Fontanetti

Elon Musk. If you haven’t heard this name until now, you either don’t have internet or just don’t care much about technology. Why is he so important you may ask, well, Musk is the CEO of multiple tech companies. In the past years Musk has dedicated his life into investing in alternative energy sources, space traveling and electric cars, and last week one of this company’s surprised the world by surpassing Ford and becoming the most valuable car company in the United States. That’s right, Tesla, the electric car companies ran by Musk, has a bigger stock market value than Ford. Why is this so surprising?

For starters, Tesla is not even close to being the biggest retailer of cars in the USA. With reported 83,922 cars sold in 2016, Tesla is far from the 6,396,369 cars sold by Ford in 2015. What makes it’s value so high, even with such a lower production? Its future value.

Tesla invests most of its profits in R&D, and because of that, they have one of the most innovative cars in the market. Moreover, Tesla not only produces cars, but also energy. On April of 2015, Tesla announced that it would start selling its own production battery, the Powerwall. They also announce, in the beginning of 2012, that they would start producing charging stations for electrical cars, and by the end of 2016, more than 600 stations were spread out around the world.

Tesla is the proof that not always monetary profits run over social profits. And what’s even better: Tesla might be showing us that investors are starting to realize that. What a win for the future.


Sefa Lustrum – Daphne Sweers

As students of Economics & Business and Sefa members, you probably have noticed that we are celebrating this year; Sefa exists for 95 years! This is a great opportunity to have some festive activities, which we of course did not let unexploited. We are proud to present you a great program of two weeks from the 8th of May until the 21st of May. As attending a Sefa Lustrum is a once in a study-lifetime experience, I can recommend you to join during one of our events! Check out the amazing programme below:

We kickstart the Lustrum with an opening party on the 8th of May in the E-hal starting at 12:00. Everyone is welcome to join! Feel more like going outside and enjoying the May weather? We have the boat tour planned on the 17th of May. Do you want to have an amazing dining experience with unlimited wine and the best company you can imagine? We have a grand dinner on the 19th of May at Cafe de Paris. Do you consider a tour boat too small? The closing party on the Supperclub Cruise is the party for you! Don’t forget to invite all your FEB friends! Get your tickets now here. We look forward to welcoming you during this Lustrum and hope it will be an event that you will even remember when you turn 95 yourself!


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