– Europe: The macroeconomic data presented today by Europe continue to be disastrous. Particularly when it comes to the two main economic powers of the Euro zone, Germany and France. In the case of Germany, it has published an economic contraction rate for Q4 2023 of -0.3%, closing the year with an analyzed growth rate of -0.2%.
France, on the other hand, has published a growth rate for Q4 2023 of 0.0%, closing the year with a growth rate of 0.7%. The published data for the Euro zone show a Q4 growth rate of 0.0% and an annualized growth rate of 0.1%.
A stark contrast between the European economy and the US economy, which last week presented a Q4 growth rate of 3.3%, with a growth rate of 4.9% for Q3.
– US: On the US side, Consumer Confidence & Jobs Opening data will be released today
– Asia: Japan will release industrial production data.
Geopolitics & International Events:
The attack on US troops on Sunday by terrorists backed by Iran was the first fatal attack on US forces since the Israel-Hamas conflict broke out in October and signaled a significant escalation in the tensions that have enveloped the Middle East.
John Kirby, the spokesman for White House National Security, stated yesterday, that while the US does not desire a larger conflict with Iran or in the region, “we got to do what we have to do.”
There is pressure on Biden’s administration to react forcefully to the drone attack without starting a larger conflict. Additionally, it has been attempting to help Hamas, the organization in charge of Gaza, free the more than 100 hostages that the terrorists took during their murderous raid into southern Israel on October 7.
Political storm in Europe with the blocking of Russian assets:
As a first step towards using their windfall gains from Russian central bank assets that were frozen in Europe, EU member states unanimously decided on Monday to set aside billions of euros for the rehabilitation of Ukraine in the future.
Out of the €260 billion in Russian foreign reserves that the US, EU, Japan, and Canada immobilised in 2022, €191 billion is kept in Europe, primarily in the financial services firm Euroclear, which is situated in Belgium.
According to a draft text, the agreement reached on Monday calls for profits to be recorded separately and will not be distributed as dividends to shareholders until all EU member states have agreed to establish a “financial contribution to the [EU] budget that shall be raised on these net profits to support Ukraine.”
According to EU authorities, this might produce between €15 and €17 billion over the course of four years, which could be given to Ukraine.
This proposal has faced reservations from France and Germany, as well as concerns from the European Central Bank (ECB) about potential impacts on the euro’s confidence and global markets. The proposal did not include seizing profits and transferring them to the EU common budget, due to these concerns and the fear of financial instability and retaliatory measures from Russia. Additionally, a separate push led by the US, supported by the UK, Japan, and Canada, to confiscate all of Russia’s assets is meeting resistance from European G7 members, particularly Germany, Italy, and France. While confiscating Russian assets and giving them to Ukraine could relieve the burden on the West to finance Ukraine’s war efforts, European officials consider it legally risky.
Hungary in the eye of the hurricane:
The European Union is attempting to disassociate itself from Financial Times (FT) claims: Brussels is covertly getting ready to “sabotage” Hungary’s economy in the event that Prime Minister Viktor Orbán of that nation rejects a four-year financial plan for Ukraine during Thursday’s special summit of EU leaders.
“EU funding cannot just be suspended because the European Council says so (…) That’s not how it works. There has to be some legal ground… Vetoing an EU position is not a legal ground to suspend funding.” Zsuzsanna Vegh, an associate researcher at the European Council on Foreign Relations (ECFR) said.