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Good morning. It's the Bank of England's decision day, LVMH's fight with Tiffany escalates, and Boeing's 737 MAX crashes are in the spotlight again. Here's what's moving markets.


Today, Bank of England policy makers have the opportunity to signal to investors and economists whether they're right to predict more monetary stimulus this year. While no change to the bond-buying program or interest rates is expected when the decision is published at noon in London, the vote split and minutes of the meeting will be critical for insight into the Monetary Policy Committee's intentions. Market expectations are that quantitative easing will be expanded again in November, and rates could be cut to zero or lower next year. The U.K.'s initial economic rebound from coronavirus lockdowns was strong, but it's now showing signs of fading. New social restrictions have been imposed to stem a surge in infections, just as the government prepares to end its wage-support programs.

Highly Uncertain

Officials at the U.S. Federal Reserve held interest rates near zero and signaled they would stay there for at least three years, vowing to delay tightening until the U.S. gets back to maximum employment and 2% inflation. The Fed also improved its outlook for this year's gross domestic product contraction to 3.7%, compared with its June estimate of a 6.5% contraction. Chairman Jerome Powell said that the U.S.'s recovery has been faster than feared, but ``the path ahead remains highly uncertain,'' with the pace of activity likely to slow down. The cautious comments were followed by a dip in U.S. and European equity futures. Separately, the Bank of Japan left interest rates and stimulus measures unchanged, while noting signs of a gradual economic pick-up.

Luxury Drama

LVMH and Tiffany & Co. are escalating their fight over fast-tracking a lawsuit aimed at preventing the owner of bag-maker Louis Vuitton from pulling out of a $16 billion buyout of the luxury jewelry brand. Tiffany said Wednesday that LVMH's filing in Delaware Chancery Court that opposes fast-tracking was another attempt by the would-be buyer to "run out the clock" on the deal. Friction between LVMH and Tiffany first emerged in March as the depth of the economic fallout from the pandemic became apparent. Tensions have only risen since then, culminating in LVMH's move earlier this month to unilaterally cancel the purchase.


Boeing Co. concealed dangers of the anti-stall feature that downed two of its now-infamous 737 MAX airliners in late 2018 and early 2019, according to a scathing final report released by the U.S. House of Representatives. The 245-page document describes a ``culture of concealment'' at the aerospace giant, where engineers' and test pilots' concerns over the new feature's safety were dismissed in the interest of a fast certification. It also lambasts the Federal Aviation Authority for not grounding the 737 MAX after its first crash, allowing a second, similar catastrophe to happen only five months later.

Coming Up…

Futures are pointing towards a negative open after a session of losses in Asian markets. Up next, European car sales data for the summer will reveal whether June's easing of the pandemic-driven slump gained traction. The morning's earnings agenda includes retailer Next Plc, retail broker IG Group Holdings Plc, and aspiring Covid vaccine maker Oxford Biomedica Plc. After the BOE's rate decision, the afternoon holds U.S. jobless claims and housing starts data. 

What We've Been Reading

This is what's caught our eye over the past 24 hours. 

And finally, here's what Cormac Mullen is interested in this morning

With the resurgent yuan shining a spotlight on China's recovering economy, it seems European investors are clambering for Chinese exposure. A Goldman Sachs Group Inc. basket of European companies which have high sales exposure to China is up more than 5% so far this month, and is close to trading at a record high relative to the Stoxx Europe 600 Index, according to data compiled by Bloomberg. Figures this week showed China's economic recovery accelerated, spurred by a consumption rebound and larger-than-expected gains in industrial output. And the OECD upped its forecasts for the Chinese economy in a report Wednesday -- it is now forecast to grow modestly, the only Group of 20 country with such a prospect. Strength in the basket suggests investors are shrugging off the threat from the continued increase in U.S.-China tensions. Whether that's because they are expecting an imminent change in U.S. leadership or just don't see as much of an impact as an investor from 2018 would have is another question.

Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo.

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