Welcome to Factal Forecast

For the week of Feb. 21-28

Welcome to Factal Forecast, a look at the week’s biggest stories and what they mean from the editors at Factal. We publish our forward-looking note each Thursday to help you get a jump-start on the week ahead. If this email was forwarded to you, and you like what you see, you can subscribe for free.

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A look ahead:

Feb. 20/  European Union budget summit: The European Union on Thursday will hold a budget meeting  — its first since the UK left the bloc — to set out a financial plan for the next seven years.

• What's happened so far: The EU met with leaders of member countries over the past week ahead of this meeting. The so-called Frugal Four nations — Netherlands, Austria, Denmark and Sweden — came out against a European Commission proposal of a 1.1 percent member contribution, the equivalent of €1.25 trillion over seven years. The group wrote in a Financial Times article that the EU's the financial burden "is increasingly being put on the shoulders of a small number of member states"
• The impact: Some member states are instead pushing for a 1 percent budget contribution, arguing that would lead increase all member states' contributions and would mean more money, in nominal terms, than the current financial framework. Wealthier EU governments, however, face demands to stump up more money to close the Brexit gap and fund priorities such as climate change. Many believe this long-term budget will set out the future of the union post-Brexit.

Feb. 20/ Roger Stone sentencing: Roger Stone, the longtime confidant of U.S. President Donald Trump, will be sentenced Thursday, despite interference from Trump himself.

• What's happened so far: In November, a jury convicted Stone on seven counts, including obstruction, witness tampering and lying to investigators. Prosecutors initially recommended a sentence of seven to nine years in prison, but Attorney General William Barr reduced that recommendation shortly after Trump tweeted that it was “very unfair.” That led all four prosecutors on the case to withdraw, with one resigning. Despite that, the judge said she will not delay Stone’s sentencing but will postpone the punishment while she considers Stone’s request for a new trial.
• The impact: This case represents another instance of Trump violating norms regarding the Justice Department. It also led thousands of former DOJ employees to call for Barr’s resignation. If Stone’s sentence falls within the original recommended range, Trump could continue to interfere with the case or attack the judge. If it doesn’t, this could show the president that he can influence the Justice Department.

Feb. 21/ Iran legislative elections: Iran heads into polls Friday with hardline backers of Supreme Leader Ali Khamenei poised to cement their hold on power despite a struggling economy and the violent crackdown on protesters that left hundreds of people dead.

• What's happened so far: Iran’s Guardian Council, controlled by hardliners, has disqualified more than half of the 14,000 candidates that intended to run, including about a third of current assembly members. That includes most moderates and some conservatives who advocated for more social and economic reforms. Analysts have drawn parallels with the 2004 election, where similar candidate-vetting occurred, leading to the 2005 rise of hardline President Mahmoud Ahmadinejad.
• The impact: While hardliners are expected to control the parliament, voter turnout will be crucial to lend it —and Khamenei’s regime — legitimacy. The leader and his allies have pushed Iranians to show up at the polls, even declaring the act a “religious duty,” amid growing voter apathy.

Feb. 21/ Ontario public school system closure: More than 2 million students in Canada's largest province will miss another day Friday, as contract negotiations between the provincial government and education unions remain at a near standstill. 

• What's happened so far: Teachers have been without a contract since Aug. 31, with bargaining sessions in the months since yielding few results. The two sides remain apart on issues of class size, mandatory e-learning, special education funding, hiring practices, and compensation. Friday's joint strike is the largest labor action impacting Ontario schools in more than two decades, but parents have grown increasingly frustrated with weeks of rotating one-day strikes.
• The impact: With the Ontario Legislature resuming this week, back-to-work legislation looms as an option if a deal isn't reached, though government officials say such a bill has not been prepared.

Feb. 21/ Colombia national strike: A fresh day of protests is due to take place across Colombia on Friday following failed negotiations between organizers and President Ivan Duque's government.

• What's happened so far: National strikes first broke out in November, with Colombians protesting economic reforms, lack of jobs, corruption and drug-related violence. Several people died and hundreds were injured in clashes in November, and strikes continued in December and January. Friday's strikes will focus on new pension and labor reforms. Meanwhile, teachers’ association Fecode called for two days of protests against violence against teachers starting today.
• The impact: Previous strikes have lasted for several days and resulted in violent clashes between protesters and police. The teachers’ association has also announced plans to hold a large national strike on March 25, as well as protests during International Women’s Day on March 16 and Workers’ Day on May 1.

Feb. 22/ Nevada Democratic caucus: Voters in Nevada will caucus Saturday to award the state’s 36 pledged delegates as the Democratic Party nominating process rolls toward Super Tuesday.

• What's happened so far: Following a chaotic start to primary season at the Iowa caucuses, Democrats will be hoping for a clean finish. The two contests held so far have produced a split decision, with Pete Buttigieg narrowly coming out on top in Iowa and Bernie Sanders winning a closer-than-expected finish in New Hampshire. Although former New York Mayor Michael Bloomberg made his inaugural appearance at the NBC debate Wednesday night, he is not on the Nevada ballot.
• The impact: Sanders is tipped to win Saturday's contest, with at least one poll showing a 19-point lead. Moving into South Carolina and Super Tuesday, Minnesota Sen. Amy Klobuchar is looking to broaden support after a surprisingly strong finish in New Hampshire. Massachusetts Sen. Elizabeth Warren and former Vice President Joe Biden are hoping to rebound after lackluster performances.

Feb. 22/ G20 finance leaders' meeting: The international forum of global leaders and central bank chiefs begins on Saturday in Riyadh, Saudi Arabia, with a focus on taxing large tech companies.

• What's happened so far: EU politicians have long complained that companies like Google, Amazon and Facebook have been paying an effective tax rate in the single digits on profits outside of the United States. France has already introduced a digital tax but delayed it after President Trump threatened tariffs. The EU is urging G20 leaders to come up with a comprehensive plan. A draft document shows the G20 will give a political endorsement of a tax on large tech companies.
• The impact: The EU want to increase taxes on large companies in order to fight climate change and reduce wealth inequality, but the United States has called these planned taxes “discriminatory” against large American companies. If an agreement can’t be reached, a long, drawn-out trade war could be on the horizon.

Feb. 24/ Trump visit to India: U.S. President Donald Trump will head to India for a two-day official visit starting Monday, his first trip to the South Asian nation since taking office.

• What's happened so far: The visit comes months after Indian Prime Minister Narendra Modi traveled to the United States and appeared with Trump at an event in Houston that drew an estimated 50,000 attendees. The two countries have inched toward a trade deal, with increased urgency in recent talks in hopes of reaching an agreement before Trump's visit. Trump, however, has downplayed the potential for any major trade breakthroughs, saying he's "really saving the big deal for later on."
• The impact: Both Trump and Modi could benefit from a trade deal announcement during the trip, which would allow Trump to claim tough tactics are paying dividends in an election year, while Modi could use it as evidence his government is not hostile to foreign companies.

What else matters:

Coronavirus on cruise ships: At least 621 passengers and crew aboard the Diamond Princess cruise ship off Japan have been diagnosed coronavirus since Feb. 5, when the ship's outbreak began. Several countries, including the United States and South Korea, evacuated nationals from the ship before the quarantine ended, and remaining passengers who tested negative have disembarked. Elsewhere, the Westerdam cruise ship, which docked in Cambodia after being turned away elsewhere, confirmed a coronavirus case in a passenger who returned to Malaysia — raising fears that others who disembarked could spread the virus.

• Watch for: Some experts are concerned the virus may be carried off the Diamond Princess ship in Japan, and it continues to spread among crew members still aboard. In Cambodia, health authorities estimated more than 400 passengers returned to their home countries before the first case was confirmed, creating the possibility of widespread infection. Both incidents have impacted the cruise industry, with some lines changing itineraries or cancelling cruises altogether. Royal Caribbean has warned that the cancellations will cut into its earnings.

Winter storms hit Europe: As of Thursday, 120 flood warnings remain in place in the UK as the country reels from Storm Dennis and last week’s Storm Ciara. The successive storms caused major travel disruptions across the country and in western Europe. South Wales has been affected the worst with "unprecedented” rains cutting off a number of villages and leading to major incidents being declared in several towns. Storm Ciara, known as Sabine in Germany, brought heavy rain and hurricane-force winds to the region, killing at least seven in Europe and causing $731 million worth of damage in Germany alone.

• Watch for: British Prime Minister Boris Johnson has been criticized for not visiting flood-affected areas. The government, however, said it is investing in long-term solutions to prevent flooding damage in the future. Further heavy rain is expected in the wake of Storm Dennis, but meteorologists are not forecasting another named storm in coming days. Some areas could get "a month's worth of rain" in 24 hours. 

Extended outlook:

What’s on our radar in the coming weeks

Feb. 20: Roger Stone's sentencing; Trump rally in Colorado Springs; European Union budget summit; Colombia national strike

Feb. 21: Iranian legislative elections; Trump rally in Las Vegas; Ontario public school system closure

Feb. 22: Nevada Democratic caucus; Togo presidential election; G20 finance leaders' meeting

Feb. 24: Trump visit to India; new proposed negotiations between Catalonian and Spanish governments

Feb. 29: Parliamentary elections in Slovakia; South Carolina Democratic primary

March 1: Legislative elections in Guinea; parliamentary elections in Tajikistan

March 2: Guyanese general election; Israeli legislative elections; Trump rally in Charlotte, N.C.

March 3: U.S. Super Tuesday

March 4: U.S. Supreme Court hears major abortion case

March 5: OPEC meeting in Vienna

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