Frank Kelly’s Geopolitical Week Ahead | September 29, 2024

Death of Hezbollah’s leader Nasrallah

With the confirmation of the death of Hezbollah's Hassan Nasrallah, markets and world leaders are asking the question: What happens next?  The risk of war between Israel and Hezbollah and possibly Iran has reached dangerous new levels.  Nasrallah's death is a massive blow to Iran's power and prestige in the Middle East, and it is unclear if or how Iran could retaliate. The only clear thing is Israel is determined to cripple Hezbollah's military threat to Israel permanently, as we saw over the weekend as Israel continued to pound Hezbollah positions with airstrikes.

The U.S. vice presidential candidates to debate as U.S. dockworkers prepare to strike

Meanwhile, in the United States this coming week, Vice Presidential candidates Senator J.D. Vance (R-OH) and Minnesota Governor Tim Walz will debate on Tuesday.  This will happen as the International Longshoreman's Association is expected to go on strike on both coasts, shutting down 36 major ports just as imports ramp up to meet Christmas shopping demand.  The union and port owners have been stalemated over a new contract for over a year.

Mexico inaugurates a new president

Elsewhere in the Americas, Mexico will hold the historic inauguration of Claudia Sheinbaum as the country's new — and first female — president.  Succeeding President Andrés Manuel López Obrador (AMLO), she is expected to continue pursuing his controversial populist agenda, which includes the recent much-criticized reform of the national judiciary and possibly a ramp-up of nationalization of foreign-owned assets in the country. 

New Prime Minister in Japan

In Asia, Japan's parliament will formally vote to approve a new Prime Minister — former Defense Minister Shigeru Ishiba — to succeed Fumio Kishida. The significance of this transition is that Ishiba is a strong military defense hawk who advocates a significant ramp-up of Japan's military and military as well as the creation of an “Asian NATO” – which would mean stationing Japanese troops in other countries including the US.  He has also advocated legislation that would allow women to become reigning empresses, something opposed by many of his fellow Liberal Democratic Party lawmakers.

Global economic radar screen

On the global economic radar screen this coming week, markets will be looking closely at the US jobs report, ISM indicators, and JOLTS reports for signs of where unemployment is going.   Additionally, Fed Chair Jay Powell will give an important speech on the economic outlook. 

In Europe, German and Italian CPI figures will be a significant focus of the markets.  Markets are also listening for European Central Bank President Christine Lagarde's remarks before a European Parliament Committee hearing this week. 

In Asia, the Bank of Japan's (BoJ) summary of opinions will be released, as well as the BoJ's Tankan Survey and labor market figures.  China celebrates the 75th Anniversary of the establishment of the People's Republic of China and the beginning of the Golden Week holidays, which run through October 7.  It also releases on Monday much-watched manufacturing PMIs.