Farewell. Joe Biden will join world leaders in London for Queen Elizabeth II’s funeral, as mourners worldwide tune in watch the proceedings. King Charles III hosted a reception at Buckingham Palace yesterday evening for the assembled dignitaries. Liz Truss was scheduled to meet the US president but that meeting was postponed to Wednesday, at the UN General Assembly, Politico reported. London markets are closed today.

The Hike Race

Central banks are intent on driving the world economy perilously close to a recession. Late to see the worst inflation in four decades coming, and then slow to crack down on it, the Federal Reserve and its peers around the globe now make no secret about their determination to win the fight against soaring prices — even at the cost of seeing their economies expand more slowly or even shrink. About 90 central banks have raised interest rates this year, and half of them have hiked by at least 75 basis points in one shot. Many did so more than once, in what Bank of America Corp. chief economist Ethan Harris labels “a competition to see who can hike faster.”

Losing Patience

The European Union unleashed an unprecedented punishment on one of its own, signaling that patience has worn out with Hungary — and Prime Minister Viktor Orban’s determination to engage with Russian President Vladimir Putin, while eschewing the democratic values of the bloc. On Sunday, the EU triggered for the first time a process that may withhold 7.5 billion euros ($7.5 billion) earmarked for Hungary unless it takes steps to curb fraud and corruption. EU governments must make the final decision within a month on whether to freeze Hungary’s funding, with the possibility of extending the deadline by as much as two months.

Defending Taiwan

US military forces would defend Taiwan if there was “an unprecedented attack,” President Joe Biden said, underscoring America’s commitment to the island as Chinese incursions mount near its shores. Biden, speaking in a “60 Minutes” interview that aired Sunday, distanced himself from the question of whether Taiwan is or should be independent, but followed up with a pledge when asked if US forces would “defend the island.” Biden has made similar statements before, spurring outrage in Beijing. Tensions with China have flared after House Speaker Nancy Pelosi visited Taiwan to signal support for its government and for democratic values. 

Porsche IPO

Volkswagen is looking to raise as much as 9.4 billion euros ($9.4 billion) from the initial public offering of its iconic sports-car maker Porsche AG in what could be Europe’s largest listing in more than a decade. The German carmaker said late Sunday it is seeking a valuation of 70 billion to 75 billion euros for the listing, below an earlier top-end goal of as much as 85 billion euros, with the deal going ahead at a time of deep market upheaval. European markets have been largely shut to IPOs for most of the year, with companies shying away from seeking new listings because of the region’s energy crisis, rising interest rates and record inflation.

Coming Up…

European equity futures inched up as Asian stocks declined at the start of a busy week for interest rate decisions. UK markets and government agencies are closed as global dignitaries attend the funeral of Queen Elizabeth II. World Bank President David Malpass addresses the Economic Club of New York. ECB’s Luis de Guindos speaks in Madrid. The OECD launches its 2022 States of Fragility report, examining the impact of crises around the world. Expected data include Portugal PPI inflation figures for August. AutoZone reports results.

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(Source: Bloomberg, Sept. 19-2022)