This week: U.S. raises interest rates though Trump is displeased, mega mergers and Scrabble makes certain slang official.
The U.S. Federal Reserve (Fed) increased U.S. interest rates by a quarter point on Wednesday. U.S. President Donald Trump wasn’t pleased. Fed chair Jay Powell gave little away at the post-meeting press conference. He stuck with his preference to let the data do the talking.
But Trump wasn’t the only one irked at the prospect of higher interest rates. The markets showed concerned that rising borrowing costs could put a lid on the current economic boom. It led to a negative week for U.S. shares.
The S&P 500 index fell 0.5% over the week to Thursday’s close, underperforming other global markets. The FTSE 100 was up 0.7% and the FTSE World Europe (ex-UK) index rose by 0.4%.
Of the rate rise, Senior Global Economist at Aberdeen Standard Investments James McCann said: “That stance is fine right now because the Fed’s job is relatively straightforward. The changes in trade policy haven’t kicked into the numbers yet. The economy is still feeling the stimulus effect of Trump’s fiscal push, and the ripples that the Fed’s tightening have sent through global markets haven’t washed back onto U.S. shores yet.” He continued, “But all of these things are going to change next year.”
Merger mania returns
In North America, the business world seemed to ignore mounting trade-war portents and uncertainty over the upcoming midterm elections. Instead, it embarked on what the Financial Times dubbed a “global dealmaking spree.”
Comcast fought off 21st Century Fox and Disney to take over Sky in a deal worth an eye-watering £30.6 billion ($40 billion). Analysts hailed the success of the U.S. cable group, which has ambitions to compete with Netflix and Amazon as a content provider.
Investors appeared unnerved by the hefty price tag. Comcast shares fell 7% in the wake of the announcement.
U.S. fashion group Michael Kors is undergoing an expensive makeover, agreeing to buy Milanese catwalk stalwarts Versace for $2.1 billion. It’s the latest stage in CEO John Idol’s strategy to transform Michael Kors into a seller of European high-end luxury goods. Last year, he oversaw Kors’ $1.2 billion acquisition of Jimmy Choo, the purveyor of high-end high heels.
Meanwhile, Canada’s Barrick Gold agreed to buy its rival, FTSE 100-listed Randgold Resources, in a $6 billion deal that is expected to create the world’s biggest gold miner. As the merged entity will be listed in New York and Toronto, this means London loses its biggest gold stock.
The summer heatwave may be a distant memory for those in the UK as the weather reverts to its default setting of relentless drizzle. But it remains uppermost in the minds of shareholders in travel operator Thomas Cook. Their investments took a 28% hit on Monday as the package holiday giant revealed that northern Europe’s unseasonably hot summer burned a hole in its profit forecasts.
UK holidaymakers took their sojourns close to home in June and July. It compelled Thomas Cook to offer deeply-discounted holidays to the Mediterranean in August and September. Although summer bookings were up in numerical terms compared to 2017, its operating profit forecast has been downgraded by more than £40 million ($52 million) to £280 million ($365 million).
It’s been an important week for Scrabble fanatics. Publisher Merriam-Webster added 200 new words to its Official Scrabble Dictionary. The new additions include slang terms that have become commonplace in modern speech.
These include bestie (a person who someone likes very much); bizjet (a small airplane used for business); twerk (to dance by shaking the buttocks while squatting); beatdown (an overwhelming defeat); and zomboid (resembling zombies).
As mastery of two-letter words is a vital weapon for top Scrabble players. As for two-letter expansions, ew (an expression of disgust) joins a list of 105 other two-letter words in the dictionary. So, too, does OK.
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