Brexit: DUP talks with government said to continue later today

The Brexit mess looks set to get even messier as the clock winds down

Brexit

Multiple sources are reporting that the key issue in talks with the DUP is that of consent as highlighted here. Arlene Foster has already left Downing Street but reports are saying that more talks are scheduled for later today to try and officially break the deadlock.

According to BBC political editor, Laura Kuenssberg, there is “no sense of an imminent breakthrough” just yet and other sources are reporting similar sentiment that there are still gaps and the DUP feels that more is needed for them to fully get on board.

Meanwhile, the 1922 committee meeting has been brought forward to 1530 GMT as sources are saying that it could free up time for Boris Johnson to dash over to Brussels in order to secure any last-minute agreement.

In short, Brexit talks are happening all over the place so just keep your eyes and ears peeled for any potential headlines during the day.
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28 Days Later, Anti-Draghi Revolt at ECB Still Won’t Die

(Bloomberg) — Mario Draghi just isn’t being allowed a victory lap during his final weeks in office as European Central Bank president.

The outgoing chief, hailed as the savior of the euro for pledging to do “whatever it takes” to defend the currency in 2012 and vanquisher of German-led opposition to quantitative easing three years later, faces a backlash that won’t go away. It may soon enter its second month.

Draghi’s insistence on pushing ahead with more bond purchases at the Sept. 12 policy meeting, relying on governors from southern economies and the euro’s smallest countries to defeat opposition from colleagues in the region’s core, now has another twist. It turns out the panel of officials advising policy makers on what to do was against QE as well.

The leak of that information to the Financial Times extended a narrative of controversy that burst into the public domain with a flurry of interviews starting on Sept. 13 from governors on either side of the debate, followed by the resignation of an ECB board member, and then a further exchange of blows as former policy makers weighed in.

The schism looks increasingly likely to scar Draghi’s legacy — and the longer it lasts, the more it also threatens to spill into the reign of his successor, Christine Lagarde, who takes office on Nov. 1.

While Bank of France Governor Francois Villeroy de Galhau said on Friday that the Governing Council is “turning the page,” that remains to be seen. With his Italian, German, and Dutch colleagues all scheduled to deliver speeches next week around the International Monetary Fund meetings, the argument might keep going.

The FT story prompted a warning on Thursday from Olli Rehn, head of the Finnish central bank, about the damage the spat can cause.

“I myself am a product of democratic culture and football teams,” he told Bloomberg TV. “If you are divided you tend to lose games. If you are united, you tend to score and tend to win.”

Rehn was one of the first governors to defend the decision in September. At the time, his dissenting colleagues were mounting a rapid assault.

Bundesbank President Jens Weidmann, Draghi’s most prominent and longstanding critic, told Germany’s tabloid Bild newspaper that the ECB delivered a package out of proportion with an economic prognosis that “isn’t that bad.” Dutch Governor Klaas Knot even released a statement explaining his opposition. Austria’s Robert Holzmann said the stimulus may have been a mistake.

The ECB’s chief economist, Philip Lane, and the governors of the Spanish, Greek and Cypriot central banks later followed Rehn in coming publicly to Draghi’s aid, in a signal of concern that the hawks were dominating the public narrative.

The president himself chose to give only a brief response to the controversy in his last appearance to the European Parliament, on Sept. 23, saying that communication of dissent shouldn’t “undermine the effectiveness of our decisions.”

The matter could have ended there, but it didn’t. The next day, Villeroy Bank of France Governor Francois Villeroy de Galhau broke his silence to admit he too opposed bond purchases.

A day later, Sabine Lautenschlaeger became the third German Executive Board member in a row to quit without finishing their eight-year term. She was also against more QE, though she didn’t say if that was a reason for her exit.

The past week has seen former senior policy makers join the fray. Two ex-chief economists of the ECB, Otmar Issing and Juergen Stark, along with some previous heads of the German, Austrian and Dutch central banks, published a memorandum criticizing Draghi’s policies. In a direct riposte, Peter Praet, who left as chief economist earlier this year, told Bloomberg that “this sort of noise at the end of the mandate is not helpful.”

The ECB’s own account of the September meeting published on Thursday reinforced the message that it was a messy debate. Policy makers agreed on the need for action but split on almost every element of the package. Some even rejected a rate cut, the most conventional option on the table.

The revelation on the Monetary Policy Committee’s advice provides an extra glimpse on the extent of disagreement. One former top policy maker, speaking on condition of anonymity last month, wondered aloud if the president’s insistence on overriding such opposition might prove in the long run to have damaged the institution.

Ensuring that the ECB can shake off this controversy will be a key challenge for Lagarde. In an interview with Bloomberg Television on Sept. 24, she gave a hint of how she will approach the matter — in words similar to those of Rehn.

“Making sure that we are a team, that we disagree amongst ourselves and then, once the disagreement is settled, once there is a common line, that we all move together — I think that has a huge impact,” she said.

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Heads up: Fed chair Powell to speak again later today

In case you missed out on his remarks from yesterday:

Powell
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For today, he is scheduled to speak at around 1430 GMT (agenda says it is at 1500 GMT though) as he participates in a roundtable session in a Fed Listens event in Missouri. 

The event is hosted by the Kansas City Fed so Powell will be joined by Esther George in the discussion, where we will be hearing a range of economic issues, such as labor market conditions, local banking, community development challenges and other topics.

In any case, I wouldn’t expect Powell to deviate from his stance yesterday as he continues to keep all options on the table ahead of the next Fed meeting.

The FOMC meeting minutes release later today as well as US CPI data and US-China trade talks later this week will be more impactful for the dollar and risk in my view.

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Heads up: ECB speakers on the agenda later in the day

A couple of ECB speakers are due before Powell takes up the mantle today

Here is the agenda:

1205 GMT – ECB member Benoit Coeure speaks in Frankfurt

Coeure will be delivering the opening remarks at the Foreign Exchange Contact Group meeting. He may very well touch on currencies and monetary policy but is not expected to refer to anything new in his comments.

1300 GMT – ECB vice president Luis de Guindos speaks in Luxembourg

de Guindos will be delivering the opening remarks at a conference on ‘Investment, Technological Transformation and Skills’. Given the topic, it’s unlikely he’ll be mentioning much on monetary policy – if at all.

1520 GMT – ECB chief economist Peter Praet speaks in Luxembourg
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Praet will be chairing a panel discussion at the same conference as de Guindos. The discussion will center around “Investment finance in Europe – a system fit for growth?”. He could touch on the economy a little here but expect any comments here to follow the same theme from ECB speakers over the last few months and that is to brush aside the slowdown in the economy as temporary.

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