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The Lastest Macroeconomic News

27.06.2016 13:18 World economy signals investor caution

Many investors focus on the stock market in isolation of the U.S and world economies. And some feel they are “entitled” to the oft-quoted 10 percent annual return no matter what. These are views destined to lead to disappointment. While the markets and the economy don`t move in lockstep, they are linked over time. In general, economic growth throughout the world has been lackluster for several years and perhaps will be for several more. Over the last 18 months, many of the world`s stock markets have begun to reflect this. For example, the S&P 500 index was recently up less than 2 percent since Jan. 2, 2015. It`s true that in 2014 the U.S. market had a double-digit gain while the economy in the U.S. and the rest of the world was at best mediocre. But this was in the context of a cheaper U.S. market, the Federal Reserve`s low-interest-rate policy and widely held expectations of worldwide economic improvement.

24.06.2016 19:59 Why Brexit is grim news for the world economy

NIGEL FARAGE, the leader of the UK Independence Party, told elated supporters that June 23rd should go down as Britain`s Independence Day. The reaction in financial markets to Britain`s vote to leave the European Union was rather less euphoric. During the Asian trading day, the pound plunged against the dollar by over 10% to $1.32, a 30-year low. It fell far harder against the yen, a frequent bolthole for the anxious. Investors have started to flock to the safety of US Treasuries. As Europe`s markets opened, the main stock indices followed the lead set overnight in Asia and fell by around 10%. Investors hate uncertainty and the result of the referendum gives rise to a surfeit of it. But the falls in Asia`s equity markets are also in large part an early judgment about the impact on the world economy. Of course, markets often overreact. Britain accounts for just 3.9% of the world`s output; it is not big enough to make the global economic weather in the way America or China can. Then again, America`s economy has been sluggish of late and there are grave worries about China`s ability to escape the shadow of its mountainous debts. Britain`s economy looms large in Europe, where it is a reliable consumer in an otherwise high-saving continent. And any disruption to European growth is particularly unwelcome now.

22.06.2016 13:07 Brexit`s impact on world economy

The febrile behaviour of financial markets ahead of the United Kingdom`s referendum on June 23 on whether to remain in the European Union shows that the outcome will influence economic and political conditions around the world far more profoundly than Britain`s roughly 2.4 per cent share of global GDP might suggest. There are three reasons for this outsize impact. First, the “Brexit” referendum is part of a global phenomenon: populist revolts against established political parties, predominantly by older, poorer or less-educated voters angry enough to tear down existing institutions and defy “establishment” politicians and economic experts.

20.06.2016 11:56 The World Economy Is Stagnating Like It`s 1937

A financial crisis sends the global economy into recession. The U.S. government responds with a fiscal and monetary stimulus. Growth recovers, and unemployment drops, but the debts and psychological scars of the downturn linger. Consumers repair their balance sheets instead of taking trips to the mall. Investors hoard their capital among fears of low demand. Everyone wants government bonds, pushing benchmark interests rates toward the zero-bound. Inflation remains tepid. Still, policymakers see enough signs of recovery to cut public spending and tighten monetary policy. Is this a description of the economic landscape of 1937 or 2016? Economists at Morgan Stanley warn that the pattern describes both, and to avoid a repeat of 1938`s recession, the Federal Reserve must slam the brakes on raising interest rates, and the federal government must start running up the deficit.

17.06.2016 08:41 US vs China: 3 flash points between the world`s biggest economies

These are not easy times for relations between the world`s two largest economies. Against the backdrop of a slowing Chinese economy and a fiery U.S. presidential election campaign, economic tensions are rife. U.S. Treasury Secretary Jack Lew is part of a team visiting Beijing on Monday and Tuesday for annual talks with top Chinese officials. Here are some of the key points of friction between the two sides: 1. Too much steel. 2. Currency concerns. 3. Feeling less welcome.

15.06.2016 09:28 What lies ahead for the world economy in 2016? Here`s what you need to know

Is there an end in sight to the global economy`s slowdown? Not yet, says the World Bank, which just cut its growth forecast because of a worse-than-predicted performance by commodity-exporting countries. In its latest Global Economic Prospects report, the bank said the impact of the commodities slump, alongside sluggish growth in advanced economies, weak trade and diminishing capital flows, would push global growth down to 2.4% this year, from the 2.9% estimated in January. The World Bank`s downgrade follows a similar move by the International Monetary Fund, which cut its global growth forecast in April to 3.5%, down from 3.6% in January.

13.06.2016 10:44 Russia sees economic growth as `imminent`

Russia`s economy could show signs of recovery by the second half of 2016, assuming an average annual oil price of $40 per barrel, the Central Bank said. The Central Bank of Russia said it was cutting its key interest rate by a half percent to 10.5 percent per year. The bank said growth in the economy was "imminent" with inflation moving toward the target rate of 4 percent by late 2017. The rate cut is the first in nearly a year. The Russian economy has been hobbled by the low price of oil and by Western economic sanctions imposed on Russia in response to its involvement in Ukraine and its annexation of Crimea in 2014. In defending the rate cut, the bank said the worst of the downturn may be in the past as growth starts to take shape. Quarterly growth in gross domestic product is expected no later than the second half of the year. Growth of 1.6 percent in GDP is expected in 2017.

10.06.2016 18:24 Why is Russia`s return to debt market proving problematic?

Russia on May 25 sold its first bond since the country was placed under international sanctions over Ukraine, but its pricing was delayed and the bond was almost half the size that had been expected. Part of the problem for many potential buyers was linked to the role of market utilities which help settle bond transactions. What are settlement houses? All transactions have to pass through the global financial market infrastructure network somewhere. In this case, it is the settlement house, an unobtrusive market utility that serves as the final link in the chain. It is where both the asset and cash meet and are swapped, and the deal is treated as final. Many countries have domestic versions of this ledger, known as a central securities depository. To help international banks and investors frequently moving cash across borders, there are two international CSDs: Belgium`s Euroclear and Luxembourg`s Clearstream, which is owned by Deutsche Börse. The US market typically settles through DTCC, which has less of an international presence.

09.06.2016 12:32 Do China`s Whims Control World Economy?

A well-read and increasingly discussed book, “The Collapse of China” is frightening in its potential actuality, but is realistic enough for a chance to happen. The acknowledged engine behind the world`s pre-“great financial recession” economy, never got back on its feet in 2010, as Europe, the U.S., Germany, and Japan could not extract themselves from the deflationary mire of that disastrous period. When pointing to a watershed that ended China`s amazing economic outburst, spanning a 20 plus year period, instigated by the wisdom of President Deng Xiaoping in 1990, an equally abrupt reversal unfolded with current dictatorial President Xi Jinping. From the beginning of his reign some two years ago, he resumed a Mao-tse-Tung-like crackdown of tightening controls over the “media, internet, and open expression,” considered injurious to his inflexible leadership. This has ushered in a series of economic missteps, slowing Beijing`s growth to its slowest pace in 25 years. While glorifying “entrepreneurship,” Jinping has taken steps to return to the economically unfriendly dictums of the Communist Party.

07.06.2016 14:24 Uncertainty clouds outlook for the global economy

The prospects for a sustained and strong recovery in the world economy are increasingly in doubt. The outlook for global growth remains clouded as economic risk is compounded by political uncertainty. Last week the president of the European Central Bank (ECB) said the pace of the recovery in the euro area may be slowing; although the bank has revised upwards its growth forecast for 2016 from 1.4 to 1.6 per cent. Nevertheless, Mario Draghi considers the risk to growth is “tilted to the downside”. Likewise, the OECD has warned that the global economy could stall this year. Excessively loose monetary policy employed to help boost growth, which began in the US and UK in 2009 and was followed later by the ECB, has resulted in historic low interest rates and huge purchases of sovereign debt by central banks. These measures, the OECD says, have been in place too long and may now be counter-productive.


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