Europe Stocks Rise as Investors Weigh U.S. Shutdown
Dynamo Kyiv EuroFootball/Getty Images For some teams, being fifth in the table might represent a fairly good start. Certainly, if the likes of Real Betis, Swansea City, Montpellier or Lazio were fifth, they’d likely be relatively happy. When you play for Dynamo Kyiv in the Ukraine Premier League, though, you might as well talk in the same tones as if you were in the relegation spots. Dynamo Kyiv havenever finished a season outside the top three, aside from last year, since the reformation of the Ukraine top flight in the early 1990s. Prior to that, it was a case of winning the league or finishing second. Usually, aclose second. Right now though, Dynamo are struggling to even remotely keep pace with the likes of Metalist Kharkiv and Dnipro Dnipropetrovsk at the top of the table, and they are currently 11 points off the top after 11 games. Their latest result, a 2-2 draw against VorsklaPoltava, was nearly a defeat, but thanks to a 90th-minute Lukman Haruna goal, Dynamo pulled off the equaliser. Kyiv have won one from their last four, and they are under pressure to quickly improve. 7. AC Milan Dean Mouhtaropoulos/Getty Images It really could have been worse for AC Milan, but they rose two places in our standings this week after taking four points from two games.
It does have an effect on our relationships around the world and it cuts straight to the obvious question: can you rely on the United States as a reliable partner to fulfill its commitments to its allies? Defense Secretary Chuck Hagel said to reporters this week. It does cast a very significant pall over America’s credibility to our allies when this kind of thing happens. A loss of confidence in the US? While a long-term shutdown would impact the global economy and thus Europe, it doesn’t directly mar transatlantic policies, such as the trade agreement negotiations that are underway. But it is the expression of a deeper problem of failed checks and balances that will impact American ties with Europe, says Josef Braml, a transatlantic expert at the German Council on Foreign Relations in Berlin. If the superpower has no room to maneuver, it will have to shift burdens to foes and friends, he says, which will then create a wedge. “We already see it in security policy, Dr. Braml says, especially the waning US commitment to NATO and its focus on Asia. Europe and especially Germans have to think of how they take care of their own security . It’s not that Europe is a stranger to political crisis. Governments from Greece to Italy to Portugal have fallen since the start of the continent’s sovereign debt crisis. And as Europe has been clawing out of its recession, the US has pointed fingers at Brussels and Germany, which powers Europe, for focusing too much on austerity and not enough on growth. As a presidential candidate, Mitt Romney singled out Spain in presidential debates, saying he didn’t want to go down the path to Spain. But now Europe is on the other side, looking at the US as a political system it would not want to emulate. The French daily Le Monde on Tuesday ran the headline : Jefferson, Wake Up. They Have Become Fools! “It is incomprehension, says Arun Kapil, a political science professor at the Catholic University of Paris.
Insight: As Ukraine looks west to Europe, Russia’s shadow looms
President Barack Obama and congressional leaders yesterday failed to break a budget impasse in their first face-to-face talks since the government began its first partial shutdown in 17 years on Oct. 1. The move has placed as many as 800,000 federal employees on unpaid leave, closed national parks, museums and Internal Revenue Service call centers. Shutdown Cost A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists in a Bloomberg survey, with the costs accelerating if the closure persists. The standoff raises concern the budget dispute may affect talks to increase the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17. The U.S. wont have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31 without action by Congress, according to the Congressional Budget Office . In China, the non-manufacturing purchasing managers index rose to 55.4 in September from 53.9 in August, the National Bureau of Statistics and Federation of Logistics and Purchasing said in Beijing.
Nearly all the partnership countries do the vast majority of their trade with Russia and rely on it for gas. Moscow is concerned about a flood of European goods entering the country if Kiev signs a free trade agreement with the EU. Trade is particularly sensitive: Russia was Ukraine’s biggest trading partner but not any longer. Now it is the EU, with 27 percent of Ukraine’s exports and 34 percent of its imports, and the volume growing by double digits annually. Russia is also wary of the EU’s broader agenda. Drawing in countries in the region could over time help Europe secure a degree of influence over vital gas and oil supply routes towards the West at the expense of Russia’s dominance. As a result, Putin has threatened to impose punitive tariffs and other restrictions on imports via Ukraine if it goes ahead with the EU agreement. “We would somehow have to stand by our market, introduce protectionist measures,” Putin said last month. “We are saying this openly in advance. As if to underline the message, Russia has taken steps against Lithuania, an EU member state that currently holds the union’s presidency, imposing extra customs checks on Lithuanian trucks and heavy losses for Lithuania’s large trucking industry. And in the back of the minds of all the partnership countries is the 2008 war between Russia and Georgia, when Moscow made very clear its power over a former republic.
The likelihood that the ECB will offer a new [long-term refinancing operation] or introduce other new instruments in the coming months has just gone down and a new LTRO no longer sounds like the favored instrument, said Frank land, senior economist at Danske Bank, in a note. In Italy, Prime Minister Enrico Letta won a Senate vote of confidence after a surprise move by Silvio Berlusconi to support the governing coalition. The vote was initially called after former Prime Minister Berlusconi over the weekend withdrew his support from the government and ordered five ministers representing his People of Freedom party to resign. In a Senate debate leading up to the vote, Berlusconi, however, reversed his position and said he would support Letta, after several allies in recent days expressed their dissent with the hard line on the government Bloomberg News ECB President Mario Draghi says the recovery remains weak. The FTSE MIB stock index /quotes/zigman/1482176 XX:FTSEMIB +0.40% rallied 0.7% to 18,098.44, while the yield on 10-year Italian government bonds /quotes/zigman/4869096/delayed IT:10YR_ITA +0.75% fell 10 basis points to 4.36%, according to electronic trading platform Tradeweb. Click to Play Watch BlackBerry, Monsanto John Shipman takes a look at which stocks traders are watching during market action, including BlackBerry, Monsanto, and Global Payments. Photo: Getty Images. It is positive for Italy that the government seems to be able to continue. It is even more positive for Italy if this means Berlusconis political career will come to an end. Berlusconi has been a risk factor in Italian politics for a long time. If this risk factor disappears, the Italian yield spread over Germany could move quite a bit lower. It would also be positive for the rest of the euro area and move us one step further away from the debt crisis, land said. In the U.S., the government shutdown moved into a second day as lawmakers still didnt agree on a budget for the fiscal year, which started on Tuesday.