Brussels Edition: Trading Carefully

(Bloomberg) -- Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

European trade ministers gather in Innsbruck, Austria, today and tomorrow to talk about the opportunities and perils of the fragile transatlantic truce. After Donald Trump and Jean-Claude Juncker struck an accord over the summer, work is under way on a bilateral trade agreement and to address U.S. concerns about the “shortcomings within the WTO,” according to a note distributed to the ministers and obtained by Bloomberg. That’s a tall order. And the ministers know only too well that a new wave of tariffs targeting the continent’s car industry could be just a tweet away.

What’s Happening

Getting Closer | Today marks the start of the 14-day window between the end of the U.K.’s Conservative Party conference and October’s European Council, when officials on both sides of the Brexit talks aim to remove the biggest roadblocks to a deal, including the Irish border issue. In a sign the impasse is easing, Irish Prime Minister Leo Varadkar is in Brussels to lunch with European Council President Donald Tusk and chat with chief Brexit negotiator Michel Barnier.

ECB Trial | The EU’s highest court will give a non-binding opinion today in a challenge to the European Central Bank’s bond-buying plan. Critics told the Luxembourg-based judges at a packed hearing in July that the Frankfurt-based bank had overstepped its powers with the policy. A binding ruling by the top EU court is expected within four to six months. 

Sanctioning Daimler | The top court will also give a binding decision in a case against Germany in which the European Commission accused the nation of violating the law by allowing some Daimler cars to use a refrigerant with excessive greenhouse gas potential. The EU also rebuked Germany for not sanctioning the carmaker.

Russian Games | NATO Secretary General Jens Stoltenberg will host a press conference today after yesterday’s meeting of member countries’ defense ministers, where the U.S. envoy threatened to “take down” Russian missiles for breaching arms-reduction commitments. One NATO official described the recent Vostok exercise where Russia mobilized some 300,000 troops as potentially provoking a “major conflict.”

In Case You Missed It

Clearing Access | In a rare EU move, financial-markets cop ESMA asked for concrete solutions to avoid chaos under a no-deal Brexit. Chairman Steven Maijoor said yesterday that EU-based banks will need continued access to London's derivatives clearinghouses even if the U.K. crashes out of the bloc next March. The call adds pressure on the EU Commission — which didn't want to comment on Maijoor’s speech — as well as on other policy makers who still need to wrap up a Brexit-related bill on derivatives clearing.

Italian Compromise | Italy set next year’s deficit target at 2.4 percent of output with a commitment to reduce it in 2020 and 2021 in a partial concession to the EU, which pressured Finance Minister Giovanni Tria to contain the populist coalition’s spending plans. In anticipation of such a compromise, Commissioner Pierre Moscovici earlier welcomed the move and left out a part of his prepared speech criticizing the Italian government’s “resolute” xenophobia.

Estonian Laundromat | Danske Bank’s Estonian accounts may be just the tip of the iceberg in Europe’s dirty-money machine. The Danish bank has admitted that much of $235 billion in non-resident flows between 2007 and 2015 can be deemed suspicious. Though a huge figure, it represents less than a quarter of foreign-client transactions that passed through the country at the center of the saga, according to figures provided to Bloomberg by the central bank in Tallinn.

Jupiter Descending | French President Emmanuel Macron is trying to recover from a series of gaffes and economic setbacks that have pulled him to the lowest poll results for a French leader after 15 months in power. He’s now contending with a messy resignation of his earliest political ally and most senior minister, the second major figure to leave his government in three months. 

Chart of the Day

Brussels Edition: Trading Carefully

The world economy has generated unprecedented prosperity over the last 30 years, but the gains have been spread unevenly, according to an analysis by Bloomberg Economics. The increase in inequality has stoked resentment and probably hindered economic growth, undermining support for globalization and the market economy itself in many developed economies. The rich have gotten richer nearly everywhere. Cumulative income gains of the poorest two thirds of the world’s population from 1988 to 2008 have been phenomenal, but not for the middle classes.

Today’s Agenda

All times CET.

  • European Union trade ministers meet in Innsbruck, Austria
  • NATO defense ministers meet in Brussels, with the alliance’s secretary general giving a press conference at around 1 p.m.
  • 2:30 p.m. European Council President Donald Tusk, Ireland’s Leo Varadkar give press statements in Brussels
  • 4:30 p.m. EU Commission President Jean-Claude Juncker delivers a speech at the event in Vienna commemorating the centenary of the founding of the Republic of Austria; he also participates in a citizens’ dialogue with Wolfgang Katzian, president of the Austrian trade union federation
  • EU top court decides on a case against France for failing to fully apply a previous ruling that found French tax rules seeking to avoid double taxation of dividends were discriminatory

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