20 November 2023
- The Pentagon has failed an independent audit of its accounting systems for the sixth consecutive year, according to Mike McCord, the Defense Department’s chief financial officer. Secretary of Defense Lloyd Austin emphasizes the need to improve and speed up the auditing process. The Pentagon is aiming for a “clean” audit, but achieving this is still years away. The audit, consisting of 29 sub-audits, requires all to pass for overall approval. Despite the progress, McCord acknowledges it’s insufficient. Seven sub-audits were passed this year, the same as last year, and no fraud was found. The annual audit, mandated by law, assesses the record-keeping processes for the Pentagon’s weapons systems, military personnel, and global property. While the audit has revealed progress and aided in locating and tallying arms, it also highlights ongoing challenges in the Pentagon’s financial accountability.
- Israel and Hamas have not reached an agreement on a temporary ceasefire, according to a White House spokesperson. The U.S. is actively working to facilitate an agreement between the two parties. Earlier reports suggested a Qatari-brokered deal for a five-day ceasefire in exchange for the release of 50 or more hostages, but no deal has been finalized so far. The conflict between Israel and Hamas has entered its seventh week, with ongoing tensions and casualties reported on both sides.
- IMF Managing Director Kristalina Georgieva emphasized the importance of the recent meeting between U.S. President Joe Biden and Chinese President Xi Jinping, considering it a necessary signal for increased global cooperation. While the Biden-Xi meeting produced tangible progress such as resuming communications and agreements on issues such as fentanyl production, the meeting did not change the existing national security-driven trade and investment restrictions between the U.S. and China. Georgieva noted the positive impact of the U.S.-China thaw on cooperation, especially in addressing global challenges such as climate change. She also highlighted the ongoing devastating impact of the Israel-Hamas war on Gaza’s population and economy, with potential repercussions for neighboring economies. In addition, Georgieva discussed the IMF’s consideration of augmenting Egypt’s loan programme due to the economic challenges posed by the conflict. She emphasized the limited global economic impact of the Israel-Hamas war, but warned of potential escalation consequences. Furthermore, she underscored the need for IMF shareholding reforms to strengthen the organization’s representation of developing economies.
What to watch out for this week
- In the United States, attention is directed towards the release of FOMC meeting minutes on Tuesday, which will provide insights into future monetary policy directions as Fed policymakers balance the risks of excessive or insufficient action amid slowing inflation pressures and signs of easing in the labor market. The economic calendar includes the anticipated release of durable goods orders and flash S&P Global PMI survey. Projections suggest a 3% decrease in new orders for manufactured durable goods in October, partially offsetting the previous month’s 4.7% increase. November’s PMIs are expected to unveil modest growth in service business activity and a slight contraction in the manufacturing sector. Other notable data include existing home sales, the Chicago Fed National Activity Index, and the final reading of the Michigan consumer sentiment. US markets will observe closures on Thursday and early closure on Friday due to the Thanksgiving Day holidays.
- In the Euro Area, the focus is on flash PMI releases, anticipating a modest decline in overall business activity in the Euro Area, Germany, and France, with both manufacturing and services output expected to decrease at a slower rate. Germany’s Ifo Business Climate is projected to reach a five-month high in November. Other data includes the final reading for Germany’s Q3 GDP and producer prices, business and consumer sentiment in France and Turkey, and Switzerland’s trade balance. Interest rate decisions are expected from Sweden and Turkey.
- In the United Kingdom, the Chancellor of the Exchequer will deliver the 2023 Autumn Statement on November 22nd. The economic calendar features flash PMIs, GfK Consumer Confidence, CBI industrial trends orders, and public sector net borrowing. Similar to other European countries, the UK’s manufacturing and services sectors are anticipated to contract at a milder pace.
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