Good morning,

The EU were dealt a blow yesterday as Poland and Hungary both voted against the terms of a new seven year budget. They didn’t like the idea that funding received from the EU pot would be linked to countries respecting the rule of law and as such vetoed it. Both countries are gradually taking steps to more authoritarian governance, which the EU was trying to put a stop to by going down this route. This puts the EU in a dilemma though, as the budget releases 750bn EUR of funding that is to be distributed to help bounceback from covid, which puts principles at loggerheads with practicalities. If the EU dial back the budget requirements to try and get both countries back on board, it is likely the situation gets referred to the European Commission who in turn could then put the brakes on the funding. This is going to be a very tricky situation to navigate and it’s likely Angela Merkel will have to be the one to step up and lean on both countries to find a compromise. One paragraph really doesn’t do it justice. Here’s the take from the New York Times.

Trump is really going all out before he leaves the White House… USA News are reporting that last week he asked for options for attacking Iran and he’s also fast tracking drilling permits in the Arctic National Wildlife Refuge, some 19 million acres of almost untouched land in Alaska. On top of that he’s trying to build a legacy in the Federal Reserve, pushing through his choice nominee, Judy Shelton, next week. Republicans control the House which would vote Shelton into the role by a 53-47 majority, but three Republicans have said they’ll vote against the nomination, potentially leaving a tie for Mike Pence to decide on.

The US market had another good day yesterday as the Moderna Vaccine is almost 95% effective. The news bumped markets up all over the world, despite more talk of lockdowns in the US. The big market mover was Tesla though which on, a day that saw Elon Musk’s Space X deliver four astronauts to the International Space Station, also got confirmation that it would be admitted to the S&P500 index. The share price jumped 14% on the news and Elon Musk’s fortune grew by $15bn. Being part of the S&P500 means the company will have a lot more share trading and access to liquidity, as it’s the most passively invested index in the world.

In other news: The Sun think a Brexit deal might be done as early as next Tuesday, despite Boris apparently not ready to roll back on his red lines. This hasn’t moved the markets in the slightest, but if they do get it done on Tuesday, you heard it there/here first!

Have a great day


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