Greek election, China trade data, Qatar/Trump meeting
The FT's Josh de la Mare on some of the top stories the FT will be watching this week, including latest trade and inflation figures from China as the trade war with the US continues, a snap election in Greece threatening incumbent Alexis Tsipras, PepsiCo second- quarter results, and the emir of Qatar meets Donald Trump in Washington
Written by Lucy Hornby, Simon Greaves, Alistair Gray, Andrew England and Kerin Hope. Produced by Josh de la Mare.
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JOSH DE LA MARE: Here are the top stories we'll be watching this week. A snap election in Greece threatens to unseat Prime Minister Alexis Tsipras. Markets will watch the latest economic figures from China closely to see the impact of the trade war with the US. PepsiCo results will show how it's dealing with the declining popularity of salt, sugar, and fat. And the emir of Qatar meets Donald Trump as tensions in the Gulf over Iran remain high.
First, to China and important data out this week on the balance of trade and consumer price inflation, which will give lots of clues as to where its economy is heading.
LUCY HORNBY: It's a hot summer day here in Beijing and, also, almost time for a reckoning. Chinese statistics coming out over the next 10 days will show whether, and how much, the trade war has cooled down Asia's largest economy. Inflation is likely to have hit an eight-year high in the second quarter, but most of that is due to an unusual, one-off factor-- the epidemic of African swine fever, which swept across the country starting last year, decimating China's pig herd.
Inflation of 3% is likely to be the highest since 2011 when China's economy was booming. But strip out the pigs, and China's economy doesn't look so hot. Producer prices are soft. People are pretty careful about their spending. And everyone is nervous that the trade war will threaten the hard-won gains of the past 40 years. Overall, the Chinese economy likely held its own in the second quarter. Not too hot, not too cold, but certainly not as sizzling as the weather.
JOSH DE LA MARE: In Greece, the centre-right New Democracy party, led by Kyriakos Mitsotakis, is poised to win a snap general election. Opinion polls show New Democracy leading the ruling left-wing Syriza party of Alexis Tsipras, the prime minister, by almost 10%, unchanged since the campaign began four weeks ago.
Most pollsters predict Mr Mitsotakis will secure an overall majority of up to 15 seats in the 300-member parliament. Mr Tsipras, once a firebrand radical, has delivered economic stability and modest growth during Syriza's five years in power.
ALEXIS TSIPRAS: [SPEAKING GREEK]
JOSH DE LA MARE: But for all the fighting talk from Mr Tsipras, middle-class Greeks hit hard by high taxes are attracted by the pledge of the conservative New Democracy party to reduce personal income and corporate tax rates and accelerate investments that would create new jobs.
Second-quarter results are due on Tuesday from PepsiCo, which is facing the challenge of a rapidly changing fizzy drinks and snacks market. Revenues, in fact, are expected to be up with strong growth in Latin America, Asia, and North Africa offsetting declines in North America. The bottom line, however, is a different story. Earnings are forecast to decline 7% year on year.
ALISTAIR GREY: The declining popularity of salt, fat, and sugar in diets is a challenge for PepsiCo given it makes fizzy drinks as well as many other products, like Frito-Lay's crisps. The company's new chief executive, Ramon Laguarta, is pouring hundreds of millions of dollars in marketing and innovation to deal with the pressures. In the short term, that's weighing on profitability, but hopes are running reasonably high on Wall Street that the investments will pay off. Shares are up about 21% so far this year.
JOSH DE LA MARE: And finally, the emir of Qatar, Sheikh Tamim bin Hamad Al Thani, is to meet the US president, Donald Trump, at the White House. On the agenda are regional politics with the growing US pressure on Iran likely to be the main item as well as security and counterterrorism.
ANDREW ENGLAND: Sheikh Tamim's visit to the White House to see Donald Trump comes at a critical point for the Middle East. In recent weeks, we've seen heightened tensions because of the standoff between the US and Iran. We've seen the US accuse Iran of being responsible for oil tanker attacks in the Gulf.
Now, Qatar is slightly unusual in that it hosts the biggest US military base in the region, and it also has ties to Iran. So Qatar is very keen to see a de-escalation, is the biggest exporter of liquefied natural gas. Its gas goes through the Gulf. And I think Sheikh Tamim will use this trip to talk to Donald Trump about Qatar's concerns about these tensions leading to something more dangerous.
For Qatar, it's very important that it has strong ties to the US. In 2017, its Arab neighbours, Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt, imposed an extraordinary regional embargo on Qatar. They accused Qatar of sponsoring political Islamist groups, terrorists. And it was also partly because of those ties to Iran.
Initially, it seemed that President Trump would side with Saudi Arabia and the Emirates. But since then, the US has been trying to broker a resolution to the dispute between the Gulf states. Now, that hasn't been successful. But again, this will be another key topic of discussion between the emir and President Trump.
JOSH DE LA MARE: And that's what the week ahead looks like from the Financial Times in London.