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olko71 · 1 year ago

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Eurozone interest rates raised to all-time high

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By Michael Race

Business reporter, BBC News

Eurozone interest rates have been hiked to a record high by the European Central Bank (ECB).

The bank raised its key rate for the 10th time in a row, to 4% from 3.75%, as it warned inflation was “expected to remain too high for too long”.

The latest increase came after forecasts predicted inflation, which is the rate prices rise at, would be 5.6% on average in 2023.

But the ECB signalled that Thursday’s hike could be the last for now.

“The governing council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target,” the bank said.

It added that it expected inflation in the 20-nation bloc to fall to around 2.9% next year and 2.2% in 2025.

As in other parts of the world, the eurozone has been hit by rising food and energy prices that have squeezed household budgets.

What are interest rates? A quick guide

Central banks have been increasing interest rates in an attempt to slow rising prices.

The theory behind increasing rates is that by making it more expensive for people to borrow money, they will then have less excess cash to spend, meaning households will buy fewer things and then price rises will ease. But it is a balancing act as raising rates too aggressively could cause a recession.

Interest rates in the UK are currently higher than in the eurozone at 5.25%, but UK inflation is also higher at 6.8%, and the Bank of England is expected to raise rates again next week.

The ECB said it was determined to see inflation fall to its 2% target in a “timely manner”.

However, policymakers admitted they had lowered their economic growth projections for the bloc “significantly” due to the impact of higher rates.

Economists at Pantheon Macroeconomics said the ECB’s communication around its latest decision was a “clear indication” that rates would not rise further.

“We now see a high bar for anything other than a holding operation in the October and December meetings,” they said.

“Looking further ahead, we still see a narrow window for rate cuts next year, though there is no way that you can get the ECB to even contemplate that scenario at this point.”

ECB president Christine Lagarde did not rule out further rate rises, but said the “focus is going to move, going forwards, to the duration, but that is not to say – because we can’t say that now – that we are at peak”.

In June, revised figures showed the eurozone fell into recession last winter. Revised data from Germany – Europe’s largest economy – contributed to the economic slump.

A recession is generally defined as when an economy shrinks for two three-month periods, or quarters, in a row. A contracting economy can be bad news for businesses and result in job losses.

More on this story

Eurozone interest rates reach joint record high

27 July

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ukimmigrationmatters · 2 years ago

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Has The Worldwide Property Crash Begun?

Property prices are tumbling in the US, Germany, Sweden, Denmark and the UK.

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Higher interest rates and borrowing costs are hitting the property market across the globe.

The FT reports that there will be a global property meltdown this year, especially in overheated markets like Canada and New Zealand.

The property market in China is now at the slowest pace since records began in 1992 – down 26% last year.

Home prices in several US cities are crashing, following a recording boom from 2020-22, including Houston, Sacramento and Las Vegas.

The cost of a 30-year fixed rate mortgage hit 7% recently, more than double the rate in 2022 and the highest since 2008.

Mortgage demand in the US is at its lowest for 25 years and house sales fell by a quarter last year.

Denmark has suffered the biggest fall in a decade, where house prices fell 3.8% in the third quarter of 2022 despite an interest rate of 1.75%, according to Yahoo Finance. In neighbouring Sweden, house prices have crashed by 20% in the last five months, say Yahoo.

Prices have fallen for the fifth consecutive month in the UK, where fixed mortgage rates reached 6% last year pushing affordability beyond the reach of average buyers.

Average property prices are close to ten times average incomes and much higher in parts of London and the south east of England.

Renters are also leaving London in droves to escape unaffordable rents and in search of cheaper properties to buy.

The Bank of England increased base lending rates by 0.5% last week to 3.5% in a bid to control the inflation their actions largely caused.

UK mortgage rates fall below 4%

Virgin and HSBC are offering fixed rates at 3.00% as lenders slash rates to stimulate demand. However, the headline rates required a 40% deposit and are usually for residential mortgages as opposed to buy-to-let loans.

Experts believe the property market will fall this year, but not at the same rate as in Sweden and Denmark.

Despite demand for housing in the UK, prices in popular areas are unaffordable and will have to come down unless the market simply stagnates. Transactions are down by 30% and buyer enquiries are at the lowest level since 2008 (excluding 2020).

Like the overheated stock markets, property markets regularly go through a 10-12-year boom and bust cycle. The current boom has been fuelled by an unsustainable central bank money printing on an industrial scale since the 2008 financial crash.

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beardedmrbean · 2 years ago

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The euro has taken a major beating against its US peer since Russia's invasion of Ukraine in February, falling to its lowest level in 20 years as surging gas prices and uncertainty around the Russian energy supply stoke recession fears in the eurozone.

The shared European currency was trading as low as around $1.0007 on Tuesday — a swift slide from the $1.15 level before Russia launched the war in Ukraine. The sharp drop has brought the euro close to hitting parity against the US dollar for the first time since late 2002.

Why is the euro falling?

The general worsening of the eurozone's outlook amid soaring gas prices and fears of Russia cutting off natural gas supplies is dragging down the shared currency. The oversized reliance of major economies such as Germany and Italy on Russian gas has left investors unnerved, with economists forecasting a much quicker and more painful recession in the euro area than in the US.

Added to that is the difference in interest rate levels in the US and the eurozone. The US Federal Reserve has been raising interest rates aggressively to bring down inflation, while the European Central Bank (ECB) has so far resisted steep hikes.

"The interest rate in the US is expected to go up to 3% versus 1% in Europe. So, the money would go to the place with a higher yield," Carsten Brzeski, chief economist for Germany and Austria at ING, told DW.

The US dollar is also benefiting from its safe-haven appeal. Amid all the gloom and doom and uncertainty around the global economy, investors are taking comfort in the relative safety the dollar offers being less exposed to some of the big global risks right now.

What is dollar parity and why is it a big deal for the euro?

Parity basically means that $1 buys €1. It is nothing more than a psychological threshold for market participants who are well-known for their fondness for round figures.

"Financial markets always love to find some kind of symbolic meaning," Brzeski said.

Viraj Patel, a foreign exchange strategist at Vanda Research, said the parity level could be a point at which the euro bulls and bears lock horns to determine which way the currency goes from there.

"More recently, we've started to see investors betting on the euro falling below parity. But you can equally imagine that more investors will start buying euros as we get closer to that level," he told DW.

How does a weaker euro impact consumers?

A sliding euro will add to the burden on European households and businesses already reeling from record-high inflation. A weaker currency would make imports, which are mostly denominated in dollars, more expensive. When those items are raw materials or intermediate goods, their higher costs can further drive up local prices.

In normal times, a weak currency is viewed as good news for exporters and export-heavy economies such as Germany, because it boosts exports by making them cheaper in dollar terms. But then these are hardly normal times thanks to global supply chain frictions, sanctions and the war in Ukraine.

"In the current situation with geopolitical tensions, I think the benefits from a weak currency are smaller than the disadvantages," Brzeski said.

For US travelers heading to Europe this summer though, a weak euro is a blessing. For example, at the parity level, theoretically they would be able to exchange their $1,000 for €1,000 instead of less than €900 in February. In other words, their dollar would be worth a lot more. For businesses importing European goods, things would be cheaper in dollar terms.

Where is the euro's bottom?

Bets that the euro would continue its fall below parity have increased in recent days as the energy crisis in Europe worsens.

"The euro is trading as if a crisis in Europe is on the doorstep. So, you need to see more bad news now in terms of that whole narrative around gas supplies and potentially geopolitics for the euro to weaken beyond parity," Patel said.

Nomura International strategists forecast that the euro could fall to as low as $0.95. Deutsche Bank's head of foreign exchange research, George Saravelos, has a similar prediction. A "move down to $0.95-$0.97 would match the all-time extremes seen in exchange rates since the end of Bretton Woods in 1971," he wrote in a July 6 note to clients.

What does a weaker euro mean for the ECB?

A weak euro and the additional inflation that it brings adds to the challenges of the ECB, which is already under scrutiny for being slow off the blocks in its fight against inflation.

To make matters worse for the central bank that has the mandate to tame inflation, the euro hasn't just weakened against the dollar but also against other currencies like the Swiss franc and the Japanese yen.

"This is now starting to become a bit more broad-based euro weakness and therefore it becomes more of an inflation problem for the ECB," Patel said.

The ECB intends to raise its benchmark interest rates by 25 basis points next week, its first increase in over 10 years.

"A weaker euro supports the view of a more aggressive rate hike," Brzeski said. "The argument behind it would be that if we go for a 50 basis points hike next week rather than 25, that could immediately stop the fall of the euro because it would surprise financial markets."

However, some experts say an economic downturn will put the bank in a bind, holding it back from any aggressive monetary policy tightening. That in turn would ensure that interest rates in the eurozone remain suppressed vis-a-vis the US. Such an expectation is already playing a role in the euro's fall.

#nunyas news

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billehrman · 5 years ago

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The Trend is your Friend

George Soros’ (a former partner for 9 plus years) unparalleled success was predicated on his uncanny ability to recognize a new trend before anyone else; add to his position over time often using leverage as long as he believed it was not fully recognized by others, and then selling the position when it was recognized by others and selling at full value. Naturally, he was quick to reverse his view if he felt he was wrong.

We, at Paix et Prospérité, have the same philosophy however we are primarily stock investors rather than buying/selling futures/options on stocks indices, currencies and commodities as George did. We combine both a top-down global perspective analyzing economic, monetary, fiscal, trade and regulatory policies by region combined with a bottom up stock specific approach to investing utilizing our independent research. We do hedge our portfolios if we deem it prudent. And, as we have said before, our long-term record of outperformance speaks for itself.

As you know we turned bearish last year when the Fed tightened policy way too much jeopardizing our economy while Trump was tweeting incessantly about trade tariffs against any country, most notably China, that was not trading on a level playing field with us and stealing our IP. However, we shifted our stance at the end of last December after the Fed finally reversed its monetary stance easing policy, lowering rates, and acknowledging that it would do all in its power to sustain the economic expansion while trying to raise the inflation rate up to its 2% target. We wrote many times this year that all monetary authorities globally were now overly accommodative providing more liquidity to the system than was needed by the global economy such that the excess liquidity would move into financial assets thereby increasing prices for stocks and bonds while forcing investors further out on the risk curve. We recognize that there is a lag time between monetary authorities easing policy and the global economy responding by expanding once again. This was further complicated by a sharp slowdown in global trade such that the countries relying on exports/production, like China, Germany and Japan, suffered much more than the countries, like the U.S, who were much more reliant on consumption. It also helped the U.S that Trump added tremendous fiscal stimulus and regulatory reforms to our economy whereas Germany and Japan had refused to budge. China’s economy was hurt the most as its economy was so reliant on production/exports and the shift to consumption was just in its early years. Our portfolios were concentrated domestically in defensive stocks with yields far above the 10 and even 30-year Treasury rates. The U.S was by far the best/safest house on the block to invest in.

We began to shift our view 8 weeks ago when we recognized that the global economy was nearing an inflection point such that growth was finally basing and would begin to accelerate as we entered 2020. Therefore, we slowly began to transition our portfolios to more economically sensitive stocks domiciled in the U.S selling at recession valuations with above average yields generating significant free cash flow while also shrinking their market capitalizations. Technology was then and remains today the largest area of concentration in our portfolios as corporations would invest in it earning a significant return on their tech investments while enhancing their competitive position.

Beside our view that all this excess monetary creation would find its way into financial/risk assets, we held firmly to our belief that the stock market multiple would trend up over time to 20 times earnings moving above the historic trend of 13 to 17 times earnings as interest rates were 300-600 basis points below their historic norm while bank capital/liquidity ratios(risk) were moving well above historic highs, too. We eventually became far less concerned about trade tariffs/conflicts recognizing that most of the tariffs were eaten by the overseas manufacturers, the strength of the dollar and supply chain movements.

These trends/core beliefs were and remain our friend as we are more convinced today that:

· The global economy is bottoming out and 2020 will be a better year;

· Trade is far less a problem to the U.S than perceived with China at risk as its economy continues to weaken thereby jeopardizing China 2025 putting the U.S in the driver’s seat due to the inherent strength of our economy bolstered by strong consumer demand and tremendous fiscal stimulus;

· Global monetary policy remaining overly accommodative in excess of economic needs therefore boosting the value of financial assets while forcing investors further out on the risk curve;

· Low inflation is not transitory due to global competition, technological advancements and disruptors everywhere;

· Stocks market multiples will trend higher over time as the Fed/ investors become more convinced that low inflation is here to stay such that interest rates will remain 300-600 basis points below their historic norms with bank capital/liquidity ratios remaining at all-time highs

· Most corporations are running lean and mean with dividend yields above the 10- and 30-year government bond rates while generating large amounts of free cash flow;

· Investors are significantly over-weighted bonds just as the yield curve has begun to steepen and under-weighted equities even after the 20+% advance this year

Let’s take a look again at the four key issues that investors are focused on: trade, monetary policy, Brexit and Trump.

Trade: We believe that the odds of a Phase 1 trade deal continue to increase as evidenced by both the comments and actions out of the U.S and China last week. China began the process Friday of waiving tariffs on imports of U.S pork, soybeans, cotton, corn, and sorghum. Let’s be clear that China needs our agricultural goods as food inflation has risen out of sight. Trump, on the other hand, realizes that the U.S is in the catbird seat such that the President said at the NATO conference that he may be willing to wait until after elections to finalize a trade deal with China. In our opinion, China cannot afford to wait running the risk that companies will only accelerate their supply line shifts elsewhere and the Democrats, if elected, may take a more aggressive stance against China especially for environmental reasons (coal).

Trump also showed that he is more than willing to use tariffs to combat trade issues. He proposed duties of $2.4 billion against French products in retaliation to a French tax against U. S tech companies and he also reinstituted tariffs on steel and aluminum from Argentina and Brazil as he criticized them for cheapening their currencies to the detriment of U.S farmers.

Japan’s Parliament approved the trade deal with the U.S.

Monetary Policy: All of the major monetary bodies continue to support overly accommodative policies. ECB President Christine Lagarde joined Fed Chairman Powell stating that the ECB will be “resolute” on hitting its 2% inflation mandate. Good luck! By the way, the Fed pumped another $70.1 billion liquidity into the markets last week.

Brexit: It appears that Johnson will receive a mandate at this week’s upcoming election on 12/10 to pass his Brexit bill. If not successful, we still do not expect a hard Brexit as it would hurt both the British and European economies which both can ill afford.

Trump: We continue to believe that Trump recognizes that he needs a strong economy and stock market to win the election, therefore, it is doubtful that he will do anything that would jeopardize his chances to win. We expect him to propose a new round of tax cuts benefitting the lower and middle classes and pay for it by closing loopholes that benefit only the wealthy, an infrastructure plan, and a healthcare/drug pricing plan.

Now, let’s take a brief look at the most recent data points that confirm that the U.S is doing just fine while other economies continue to struggle. However, they appear to be bottoming out especially if, as we expect, global trade picks up after Phase 1 of a trade deal is reached between China and the U.S, and we pass the one-year anniversary of tariffs making year over year comparisons easier.

United States: The economic data points reported last week were overwhelmingly positive supporting our view that the U.S economy can sustain 2+% growth in 2020 and, even more if a Phase 1 of a trade deal is reached and if the U.S/Canada/Mexico trade deal is passed; U.S consumer sentiment hit a seven-month high of 99.2; the index of buying conditions rose to the highest level in a year; longer term inflation expectations fell to a record low of 2.3%; consumer credit increased to $18.9 billion in October which is up to a 5.5% annualized rate; wholesale inventories rose slightly after falling 0.7% in September; the trade gap fell to $47.2 billion as both imports and exports fell; the consumer confidence index rose to 61.7; factory orders rebounded 0.3% led by a surge in capital goods orders sans aircraft (Boeing issue); the IHS Services Index rose to 51.6 in November; the new orders index rose to 57.1 and the employment index was at 55.5%.

On the other hand, the IHS Manufacturing Index fell to the lowest level in a decade at 48.1; new orders were at 46.7 and employment at 46.6. We firmly believe corporations are reducing their inventories at a record clip which may present an upside surprise early next year.

The big shocker reported last Friday was the employment data: payrolls rose 266,000 after a 41,000 positive revision to the prior two months; the GM strike ending only added 41,300 to the numbers; the jobless rate dipped to 3.5%, the lowest level since 1969; and wages rose at a 3.1% annualized clip beating inflation. The U.S has added over 2 million jobs this year boosting annual incomes by over $600 billion. Some slowdown!

China: No real changes in our view that their economy continues to decelerate with financial risks rising without a trade deal. China’s default rate is about to break a record exceeding $17 billion this year. China needs a deal and fast.

Eurozone: Germany’s economy continues to slide as evidenced by a 0.4% decline in orders and industrial output due to weak demand. We cannot fathom why this country does not institute a huge fiscal stimulus program to offset rising deflationary pressures. We were pleased to see that Merkel’s party is losing elections. Change is needed here and fast!

Japan: We were pleasantly surprised to see Japan’s government pass a $120 billion fiscal stimulus plan funded by selling bonds. Thank heaven the interest cost will be so low that it won’t hurt the country’s budget. Are you listening Germany, France, India?

Investment Summary

We see no reason to alter our current investment view/ portfolio structure since all the trends/core beliefs that we saw 8 weeks ago are still progressing as we had anticipated. Our portfolios are concentrated in technology, especially semis; global capital goods, industrials and machinery companies; housing related retailers as well as other retailers who have successfully transformed themselves and will be revalued over time; financials; low cost, cash flow positive industrial commodity companies; some healthcare companies with major new product introductions; and many special situations where management is focused on closing the gap between current valuation and intrinsic value. We do not own bonds as we expect the yield curve to steepen nor are we long the dollar any longer.

Our Investment Committee webinar will be held on Monday morning, December 9th at 8:30 am EST. You can join by typing https://zoom.us/j/9179217852 into your browser.

Remember to review all the facts; pause, reflect and consider mindset shifts; look at your asset mix with risk controls; do independent research and…

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

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its-veso · 6 years ago

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Forex Weekly Outlook Jan. 14-18 – After the Fed’s dollar downing, Brexit vote in focus

After the US Dollar was on the back foot amid optimism for a US-Chinese trade deal, the focus shifts to the UK with the all-important Brexit vote in a busy week that features other top events. Here the highlights for the next week.

The US and China reported progress and reports came out saying Trump wants a deal. The advance in stock markets, already buoyed by Powell’s dovish words, sent money away from the safe-haven US Dollar and Japanese yen. the greenback got a further boost when FOMC member Bostic opened the door to a rate cut. Moreover, the meeting minutes were dovish, calling for patience on raising rates. Concerns about a recession in Germany surfaced after industrial output plunged. The debate in the UK heated up, and the government was defeated on a minor vote, signaling things to come.

UK Parliament votes on Brexit: Tuesday. The UK government delayed the vote that was scheduled for December due to prospects of a defeat. PM Theresa May toured Europe in an attempt to secure concessions about the Irish backstop issue, but her counterparts were only willing to provide clarifications but no changes to the legal text. She was hoping that the ticking clock towards Brexit Day on March 29th would push MP’s to support the agreement. At the moment, it seems like the government is set to lose. Parliament secured the right to curb the government’s powers in case of a no-deal Brexit, in a humiliating defeat for the government. What will May do if the deal is rejected? One option is to push for a no-deal Brexit which would send the pound plunging. Another is to hold a second referendum. The public has slightly shifted to the Remain camp but anything can happen, and uncertainty will prevail. A snap election is also an option and markets would fear a Labour government led by Jeremy Corbyn. Postponing Brexit is also on the cards, even if it is currently denied by the government. It could push the pound higher. All in all, only one thing is clear: uncertainty will trigger high volatility.

US PPI: Tuesday, 13:30. Producer prices impact consumer prices down the line. Headline PPI rose by 0.1% in November as energy prices cooled. Core PPI surprised with a significant increase of 0.3%. The headline is projected to drop by 0.1 while Core PPI to advance by 0.2%.

Mario Draghi talks Tuesday, 15:00. The President of the European Central Bank presents the annual report before the European Parliament in Strasbourg and will have the opportunity to share his views about the economy. Recent signs have been worrying, with growing chances of a recession in Germany and in Italy. On the other hand, unemployment is down and inflation is steady. He may also express his opinions on the global economy.

UK CPI: Wednesday, 9:30. Inflation has been cooling down in the UK, mostly thanks to energy prices. Headline CPI rose by 2.3% in November, a deceleration in comparison to the previous month. Core CPI was at 1.8%, and the Retail Price Index (RPI) stood at 3.2%.

US Retail Sales: Wednesday, 13:30 – may be postponed due to the government shutdown. The US economy is centered on consumption. The volume of sales in November was more modest than in previous months but satisfactory. Sales increased by 0.2% and upwards revisions were recorded as well. Core sales rose by 0.2% as well.

FOMC’s John Williams talks Friday, 14:05. Williams is the New York Fed President and considered No. 3 at the central bank. He has been quite optimistic about the economy in recent speeches but has not had his chance to voice new opinions in quite a while. In his speech in New Jersey, it will be interesting to hear if Williams goes dovish.

US Consumer Sentiment: Friday, 15:00. The University of Michigan’s consumer survey hit 98.3 points in December according to the final version, off the highs but reflecting optimism. We will now receive the preliminary data for January which is expected to fall to 96.1 points.

*All times are GMT

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newstfionline · 2 years ago

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Saturday, September 10, 2022

Cattle and drought (NPR) Roughly 60 percent of the cattle in the United States are currently affected by drought, which is going to have long-term ramifications on food prices and agriculture in the United States. The immediate impact is that the price of beef is surprisingly low in the U.S., but that’s because some ranchers are deciding to slaughter livestock early amid the drought, which long-term is going to likely lead to higher prices for beef. More beef cows were slaughtered in July than in any month on record going back to 1986, and that means there are simply going to be fewer calves next year than otherwise.

Killing of Mexican public workers reflects cartel brutality (AP) The killing of two utility workers in northern Mexico may be related to the scorched-earth tactics of warring drug cartels, Mexico’s president said Thursday. Drug cartels in Mexico have increasingly targeted civilian communities in their turf battles, isolating towns that don’t support them by cutting off roads and electricity, or forcing residents to leave. On Tuesday, assailants opened fire on two trucks carrying workers from the state-owned electrical power company on a highway. Two workers escaped and two were killed. In the western state of Michoacan, warring drug cartels have periodically cut off villages that appear to support a rival gang, by downing power lines or digging trenches across roadways. But the attack Tuesday was unusual, because up to now cartels have largely avoided going after public workers trying to reconnect roads or power lines.

After a lifetime of preparation, Charles takes the throne (AP) Prince Charles has been preparing for the crown his entire life. Now, at age 73, that moment has finally arrived. Charles, the oldest person to ever assume the British throne, became King Charles III on Thursday following the death of his mother, Queen Elizabeth II. No date has been set for his coronation. After an apprenticeship that began as a child, Charles embodies the modernization of the British monarchy. He was the first heir not educated at home, the first to earn a university degree and the first to grow up in the ever-intensifying glare of the media as deference to royalty faded. He also alienated many with his messy divorce from the much-loved Princess Diana, and by straining the rules that prohibit royals from intervening in public affairs, wading into debates on issues such as environmental protection and architectural preservation, “He now finds himself in, if you like, the autumn of his life, having to think carefully about how he projects his image as a public figure,” said historian Ed Owens. “He’s nowhere near as popular as his mother.”

Shock Waves Hit the Global Economy, Posing Grave Risk to Europe (NYT) Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession. The fallout from the war is menacing the continent with what some fear could become its most challenging economic and financial crisis in decades. While growth is slowing worldwide, “in Europe it’s altogether more serious because it’s driven by a more fundamental deterioration,” said Neil Shearing, group chief economist at Capital Economics. Real incomes and living standards are falling, he added. “Europe and Britain are just worse off.” On Friday, ministers of the European Union are set to meet to debate a plan to intervene in the energy markets in a bid to tame prices. Several countries, including Germany, the region’s largest economy, built up a decades-long dependence on Russian energy. The eightfold increase in natural gas prices since the war began presents a historic threat to Europe’s industrial might, living standards, and social peace and cohesion. Plans for factory closings, rolling blackouts and rationing are being drawn up in case of severe shortages this winter. The risk of sinking incomes, growing inequality and rising social tensions could lead “not only to a fractured society but a fractured world,” said Ian Goldin, a professor of globalization and development at Oxford University. “We haven’t faced anything like this since the 1970s, and it’s not ending soon.”

Dodge Sanctions? Aluminum Can (Reuters) Despite multiple waves of international sanctions on Russia following the invasion of Ukraine, the E.U. and U.S. have both increased their imports of Russian industrial metals compared to 2021 during the war, according to a report by Reuters. E.U. imports of Russian aluminum increased by 13% in the March-June period of this year, while U.S. imports of Russian nickel grew by 70% compared to the same period in 2021. These increases account for $1.98 billion headed to Russia in exchange for the metals. The news comes as the Russian economy bounces back after being buffeted by sanctions following its invasion of Ukraine—the Russian ruble stabilized last month as oil and other exports helped the country’s economy stabilize even in the face of broad international sanctions. While international sanctions hit a variety of Russian industries, they did not target the industrial metal sector. Russian companies are the biggest exporters of both metals, leaving businesses with few other options. Also, at least for the U.S., the next largest exporter of aluminum in the world is China, and the U.S. is very hesitant to get anything from there.

N.Korea’s parliament meets in effort to build ‘socialist fairyland’ (Reuters) North Korea’s rubber-stamp parliament convened this week to pass legislation aimed at turning the country into a “beautiful and civilized socialist fairyland,” state media reported on Thursday. The North Korean Supreme People’s Assembly (SPA) met for its first session on Wednesday, and adopted laws on landscaping and rural development, state news agency KCNA reported. The two laws will help advance the ruling party’s efforts to bring about “a radical turn in the rural community and its policy on landscaping to achieve a rapid development of the Korean-style socialist rural community and spruce up the country into a beautiful and civilized socialist fairyland,” KCNA said, citing a deputy’s speech to the gathering. North Korean leader Kim Jong Un has vowed to improve people’s livelihoods and boost rural development amid spiralling economic crises caused by self-imposed COVID-19 lockdowns, international sanctions over the country’s nuclear weapons programme, and natural disasters. Aid organizations have warned of rampant food shortages.

China’s Chengdu, a city of 21 million, extends its coronavirus lockdown (Washington Post) Chengdu, the capital of Sichuan province in southwestern China, extended its week-long lockdown with no end date in sight, as authorities try to stop transmission of the coronavirus as part of the country’s goal of “zero covid.” With a population of 21 million, Chengdu is the largest Chinese city to shut down since Shanghai imposed a strict two-month lockdown in April—which left thousands of residents scrambling for food and spurred a mental health crisis. Authorities said residents in 16 of Chengdu’s 23 jurisdictions will undergo daily testing for the virus, the Guardian reported. The remaining jurisdictions have been released from strict lockdown, but residents will not be allowed to travel out of Chengdu, let alone their home districts, unless absolutely necessary. Chengdu, home to a major factory producing Apple products such as MacBooks and iPads, was most recently plagued by an intense heat wave, a severe drought and power cuts. An earthquake this week left at least 65 people dead there.

Property woes for Chinese banks (Financial Times) The big four banks in China—Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China—reported having ¥136.6 billion ($20 billion) in overdue property loans on their books at the end of June, up from ¥90 billion overdue last year. The four banks have 36 percent of the country’s deposits, and bad loans are beginning to pile up. The Agricultural Bank of China saw bad loans in the real estate sector up 152 percent compared to a year ago, and the China Construction Bank saw bad loans up 97 percent year over year.

With Government Paralyzed and Militias Fighting, Iraq’s Instability Deepens (NYT) Politicians have failed to form a new government nearly a year after the last elections. Baghdad just saw its worst militia clashes in years. And despite vast oil wealth, the state can’t provide basic services. “Internally, externally, at the political level and at the security level, Iraq is now a failed state,” said Saad Eskander, an Iraqi historian. “The Iraqi state cannot project its authority over its territory or its people.” That Iraq has not collapsed is thanks largely to the country’s immense oil wealth. But most citizens never see the benefit of that wealth, suffering through daily electricity cuts, decrepit schools and a lack of health care or even clean water. Last month, the country’s respected finance minister, Ali Allawi, resigned with a stark warning that staggering levels of corruption were draining Iraqi resources and posed an existential threat.

Big hail (NYT) In August, a couple of days before his 68th birthday, Leslie Scott, a cattle rancher in Vivian, S.D., went to the post office, where he received some bad news. His world record had been broken, the clerk told him. That is, the hailstone Mr. Scott collected in 2010, which measured eight inches across and weighed nearly two pounds, was no longer the largest ever recorded. Some people in Canada had found a bigger one. The Canadian hailstone added to the list of regional records set in the past couple of years, including Alabama’s in 2018 (5.38 inches long, 0.612 pounds), Colorado’s in 2019 (4.83 inches, 0.53 pounds) and Africa’s in 2020 (around seven inches long, weight unknown). Australia set a national record in 2020, then set it again in 2021. In 2018, a storm in Argentina produced stones so big that a new class of hail was introduced: gargantuan. Larger than a honeydew melon. But the record-setting has come with increased hail damage. Insurance claims on cars, houses and crops damaged by hail reached $16.5 billion in 2021—the highest ever. Hail can strip plants to the stem and effectively total small cars. On Wednesday, a hailstorm killed a toddler in the Catalonia region of Spain. “It’s one of the few weather hazards that we don’t necessarily build for,” said Ian Giammanco, a meteorologist at the Insurance Institute for Business & Home Safety. “And it’s getting bigger and worse.”

#headlines #news

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classyfoxdestiny · 3 years ago

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Europe recovers from double-dip recession but lags the United States.

Workers at a Volkswagen assembly line in Zwickau, Germany, last month.Credit…Matthias Rietschel/Reuters

Europe’s economy exited a painful double-dip recession in the second quarter, rebounding faster than expected from the ravages of the pandemic as consumers spent pent-up savings and restaurants, factories and other businesses sprang to life after pandemic control restrictions eased.

Gross domestic product, the broadest measure of economic output, grew 2 percent in the second quarter of the year in the eurozone, up nearly 14 percent from a year ago and reversing a 0.3 percent contraction in the first three months of the year, Eurostat, Europe’s statistics agency, reported on Friday.

But the eurozone’s recovery, while striking for its speed, is far from complete: It continues to lag the United States, which reported data Thursday showing it had returned to its prepandemic level of output in the second quarter. Europe is not expected to hit that marker before the end of the year.

The European Union recently increased its forecast for growth this year to 4.8 percent, but the United States economy is expected to grow by 6.9 percent in 2021, according to the Organization for Economic Cooperation and Development.

Nonetheless, Europe’s recovery has gained speed as service and manufacturing sentiment and activity jumped among the 19 nations that share the euro currency, after governments worked to prevent new lockdowns in spring. Authorities also applied pressure on citizens to ramp up vaccinations that are seen as the key to sustaining a recovery — and winding down billions in pandemic support for workers and businesses.

The vaccination push has reaped benefits: This week the European Union pulled ahead of the United States in total vaccinations, adjusted for population, a turnaround from the spring.

Europe’s four biggest economies recorded expansions over the April-to-June quarter, with the most robust growth in southern Europe, in countries that suffered the brunt of Covid deaths last year.

Italy grew 2.7 percent and Spain grew 2.8 percent from the first quarter, while Portugal and Austria’s economies surged more than 4 percent, thanks to a rebound in tourism. But growth was weaker than expected in Germany, Europe’s largest economy, which grew 1.5 percent from the first quarter, perhaps reflecting supply chain problems as a shortage of electronic chips has slowed manufacturing in its massive auto industry.

The French economy, however, struggled to climb out of a recession, growing 0.9 percent from April to June following zero growth in the first three months. President Emmanuel Macron has been trying to coerce the French into getting vaccinated in a bid to cement a recovery.

Counting the 27 European Union countries, Eurostat said economic output rose 1.9 percent last quarter.

Europe’s revival has helped stoke a mild return of inflation, which rose to 2.2 percent in July following a 1.9 percent rate the previous month. The European Central Bank, which until recently sought to keep inflation below or close to 2 percent, has a new strategy that will tolerate inflation above its target if the price increases are considered transitory.

Keeping economies open is seen as crucial to sustaining Europe’s rebound. Since countries ended lockdowns earlier this year, order books for industrial goods have filled rapidly — so much that some European manufacturers have begun to express worry about keeping up with demand. And unemployment continued to fall, declining to 7.7 percent in euro area in July from 8 percent in June, Eurostat reported.

“Never before has sentiment been so positive among eurozone businesses and consumers,” Bert Colijn, senior eurozone economist at ING Bank, said in a note to clients. “This indicates that the economic rebound is in full swing.”

Since the pandemic arrived in early 2020, Europe’s economy has been rocked by two recessions — a double-dip recession. In the second quarter of 2020 alone, eurozone economic output shrank 12.1 percent.

But in a reflection of the return of economic fervor, many of Europe’s biggest companies reported bumper earnings this week, from a surge in aircraft delivery at Airbus, the world’s largest plane maker, to a consumer splurge in the purchases of expensive scarves and handbags at the luxury retailer Hermes. But the Delta variant, which has caused a jump in coronavirus infections across Europe, has recently caused consumer confidence to tick back down, increasing uncertainty among service sector businesses.

Vaccinations, though, are weakening the link between cases and hospitalizations, meaning the economic consequences of a new wave of coronavirus cases will be far milder than those of previous waves, Rory Fennessy, an economist at Oxford Economics, said in a note.

Nonetheless, depending on how the pandemic evolves, “the potential ramifications of the Delta variant are the main downside risk to the outlook,” he said.

Credit…Andrew Kelly/Reuters

In late 2018, Chelsey Glasson, a researcher at Google who had worked there for four years, moved to a new team. She was pregnant at the time and said she immediately felt she was being discriminated against. Her new boss suggested that her forthcoming maternity leave might “rock the boat,” and she was effectively stripped of her management responsibilities.

When she filed a complaint with human resources, she was offered 10 free sessions with a mental health counselor who was contracted by Google and available on campus.

At the time, she thought, “What a great resource, of course I’m going to take advantage of this.”

More than a year later, when Ms. Glasson filed a pregnancy discrimination lawsuit against Google, her counselor told Ms. Glasson that she was “really nervous and uncomfortable” seeing her after Google had asked for access to records of their sessions, Alisha Haridasani Gupta and Ruchika Tulshyan report for The New York Times. “She was concerned that affiliating with me would compromise her contract with Google,” Ms. Glasson said.

“That was an incredibly low, deflating moment in my experience,” she said. She added that Google had already been using those subpoenaed records to suggest that she was distressed for personal reasons, not because of a potentially toxic work environment or discrimination.

In interviews with The Times, six former and current Google employees recalled that when they spoke up against workplace misconduct, they, too, were offered free short-term counseling — called the Employee Assistance Program (E.A.P.) — or medical leave.

A Google executive, who asked not to be identified because he is not permitted to speak to reporters, said that when employees report difficulties at work with a colleague, Google’s human resources officers are instructed to remind those employees that the company offers up to 20 therapy sessions a year. (Google recently expanded the benefit to 25 sessions.)

Of course, offering counseling isn’t necessarily a bad thing. Nor is this kind of counseling unique to Google.

But counseling can become problematic when it’s used as a stopgap or a quick fix to resolve tense workplace situations that might not legally be considered harassment or bullying but that are nonetheless unacceptable, said Erica Scott, a human resources expert.

Tolerating bad managers while directing employees to a counseling program is a “shocking” way to “shield the employer from accountability,” she said. “These are employee matters that are the employer’s obligation to deal with, not a third party.”

A woman interviewing for a position at a job fair in St. Louis last month.Credit…Whitney Curtis for The New York Times

Economists at the University of California, Berkeley, and the University of Chicago this week unveiled a vast discrimination audit of some of the largest U.S. companies. Starting in late 2019, they sent 83,000 fake job applications for entry-level positions at 108 companies — most of them in the top 100 of the Fortune 500 list, and some of their subsidiaries.

Their insights can provide valuable evidence about violations of Black workers’ civil rights, Eduardo Porter reports for The New York Times.

The researchers — Patrick Kline and Christopher Walters of Berkeley and Evan K. Rose of Chicago — are not ready to reveal the names of companies on their list. But they plan to, once they expose the data to more statistical tests.

In the study, applicants’ characteristics — like age, sexual orientation, or work and school experience — varied at random. Names, however, were chosen purposefully to ensure applications came in pairs: one with a more distinctive white name — Jake or Molly, say — and the other with a similar background but a more distinctive Black name, like DeShawn or Imani.

On average, applications from candidates with a “Black name” get fewer callbacks than similar applications bearing a “white name.”

This aligns with a paper published by two economists from the University of Chicago: Respondents to help-wanted ads in Boston and Chicago had much better luck if their name was Emily or Greg than if it was Lakisha or Jamal.

This experimental approach with paired applications, some economists argue, offers a closer representation of racial discrimination in the work force than studies that seek to relate employment and wage gaps to other characteristics — such as educational attainment and skill — and treat discrimination as a residual, or what’s left after other differences are accounted for.

The Berkeley and Chicago researchers found that discrimination isn’t uniform across the corporate landscape. Some companies discriminate little, responding similarly to applications by Molly and Latifa. Others show a measurable bias.

All told, for every 1,000 applications received, the researchers found, white candidates got about 250 responses, compared with about 230 for Black candidates. But among one-fifth of companies, the average gap grew to 50 callbacks. Even allowing that some patterns of discrimination could be random, rather than the result of racism, they concluded that 23 companies from their selection were “very likely to be engaged in systemic discrimination against Black applicants.”

Uber will only allow employees to come into its offices if they are vaccinated and wear masks, a spokesman said.Credit…John Muggenborg for The New York Times

Uber told employees on Thursday that it would require them to be vaccinated, and it postponed a mandate to return to the office, joining a group of tech companies that have delayed reopening and stepped up vaccine requirements in response to the spread of the highly contagious Delta variant of the coronavirus.

On Wednesday, Google postponed its return-to-office plans until October and said employees in its U.S. offices would be required to be vaccinated. Lyft, Uber’s largest U.S. competitor, said it would not require employees to return to the office until February. Twitter shut down its San Francisco and New York offices, and put an indefinite halt to its reopening plans. Last week, Apple postponed its reopening until October.

The changes come as coronavirus cases have surged in the United States. Cases in the country increased 146 percent in the past two weeks, according to a New York Times tally.

Uber will also require employees to be vaccinated in order to work from the office. The mandate will begin with employees in the United States, and the company will assess its requirements for employees in other countries based on vaccine availability, Uber’s chief executive, Dara Khosrowshahi, wrote Thursday in an email to staff seen by The New York Times. Unvaccinated employees will be required to work from home.

Uber had already opened some offices for employees who wanted to return voluntarily, and a spokesman said that employees could continue to come into Uber’s offices if they are vaccinated and wear masks. But the company said it would not require employees to return until Oct. 25, a delay from its initial September return date.

“It’s important to say that this date is a global target, and local circumstances will continue to dictate when it makes sense to bring employees back in a given city,” Mr. Khosrowshahi said. “Rising Covid cases in our communities are a real reminder that we still need to be cautious, look at the data, and listen to experts as we return to offices. Every day, teams across the company are closely monitoring the rapidly changing global situation.”

Uber’s return date could be pushed back further if cases continue to surge, Mr. Khosrowshahi wrote.

Uber has not said whether it will require its drivers or riders to be vaccinated. It does require them to wear masks.

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orbemnews · 4 years ago

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Verizon Nears Deal to Sell Yahoo and AOL: Live Updates Here’s what you need to know: Credit…Richard Drew/Associated Press Verizon Communications, signaling that it has given up on its media business, is near a deal to sell Yahoo and AOL to the private equity firm Apollo Global Management, two people with knowledge of the matter said on Sunday. The transaction would be the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that most people used to get online. But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch. The deal, which could be announced in the coming days, would value the brands at $4 billion to $5 billion — about half of what Verizon originally paid for the two — and include Verizon’s advertising technology business as well, Edmund Lee and Lauren Hirsch reported in The New York Times. The people, who requested anonymity because the talks are confidential, cautioned that the talks could still fall apart. It is unclear what Apollo plans to do with the business, but it still generates plenty of revenue. The media division recorded $1.9 billion in sales in the first quarter, a 10 percent gain over last year. A worker at MTA, a maker of electronic components, in Codogno, Italy. Eurozone manufacturers have been reporting new orders.Credit…Flavio Lo Scalzo/Reuters The S&P 500 is poised for an upbeat opening when trading starts on Monday, and European indexes are higher, amid positive economic news in Europe and continuing inflation worries. The Stoxx Europe 600 index was 0.2 percent higher, and the Dax in Germany gained 0.3 percent. In Asia, indexes ended the day lower. In the United States, the S&P 500 futures were 0.3 percent higher to start the new month. The benchmark index closed out April with a 5.2 percent gain, the largest monthly gain since November. Oil prices slipped lower, as did yields for Treasury 10-year notes. Markets were closed in London for a bank holiday, and trading overall was subdued as some countries marked the May Day holiday. Inflation pressures Investors may have inflation on their minds after the investor Warren E. Buffett spoke about the “red hot” economy on Saturday at the annual shareholders meeting of the company he runs, Berkshire Hathaway. Mr. Buffett said the company had seen the cost of construction materials rising. “We’re seeing substantial inflation,” Mr. Buffet said. Indeed, commodity shortages in several industries, including construction, are causing price increases, Alan Rappeport and Thomas Kaplan report in The New York Times. The stresses are the result of rising demand running up against supply chain disruptions and Trump-era tariffs. Although the Federal Reserve has described the price increases as temporary and unlikely to spiral out of control, pressure on the Biden administration to intervene could grow as it seeks a $2 trillion infrastructure investment package, a price tag that could rise as the cost of building roads, bridges and electric vehicle charging stations increase. European manufacturers get healthier European manufacturing companies are signaling “considerable increases in output and new orders,” according to the IHS Markit purchasing manager’s index report for April. The seasonally adjusted index hit 62.9 points, the highest ever since the survey data become available in 1997, IHS Markit said Monday. The news came after data on Friday that showed the eurozone economy fell into a recession in the first three months of the year. But economists, pointing to rising vaccination rates and loosening government restrictions, believe the rest of the year should show robust growth. Coming up Verizon is said to be nearing a deal to sell Yahoo and AOL to the private equity firm Apollo Global Management, marking an end of the phone giant’s entry into the media world. A trial will begin Monday in federal court in California pitting Epic Games, the company behind the popular Fortnite game, and Apple. Epic has sued Apple, saying it holds far too much control over developers through its App Store. On Friday, jobs data for the month of April will be released by the Labor Department. A strong jump in hiring is expected as the United States economy continues to revive after the yearlong pandemic. Apple and Epic Games, maker of the wildly popular game Fortnite, are set to square off on Monday in a trial that could decide how much control Apple can exert over the app economy. The trial is scheduled to open with testimony from Tim Sweeney, the chief of Epic, on why he believes Apple is a monopoly abusing its power. The trial, which is expected to last about three weeks, carries major implications, Jack Nicas and Erin Griffith report in The New York Times. If Epic wins, it will upend the economics of the $100 billion app market and create a path for millions of companies and developers to avoid sending up to 30 percent of their app sales to Apple. An Epic victory would also invigorate the antitrust fight against Apple. Federal and state regulators are scrutinizing Apple’s control over the App Store, and on Friday, the European Union charged Apple with violating antitrust laws over its app rules and fees. Apple faces two other federal lawsuits about its App Store fees — one from developers and one from iPhone owners — that are seeking class-action status. Beating Apple would also bode well for Epic’s coming trial against Google over the same issues on the app store for Android devices. That case is expected to go to trial this year and would be decided by the same federal judge, Yvonne Gonzalez Rogers of the Northern District of California. If Apple wins, however, it will strengthen its grip over mobile apps and stifle its growing chorus of critics, further empowering a company that is already the world’s most valuable and topped $200 billion in sales over just the past six months. As the post-pandemic economic recovery ramps up, prices are going up on goods as varied as toilet paper, diapers and wood flooring — and the increases may soon be felt in consumers’ wallets. Procter & Gamble is raising prices on items like Pampers and Tampax in September. Kimberly-Clark said in March that it would raise prices on Scott toilet paper, Huggies and Pull-Ups in June, a move that is “necessary to help offset significant commodity cost inflation.” And General Mills, which makes cereal brands including Cheerios, is facing increased supply-chain and freight costs “in this higher-demand environment,” the company’s chief financial officer, Kofi Bruce, said recently. These price increases reflect what some economists are calling a major shift in the way companies have responded to demand during the pandemic, Gillian Friedman reports in The New York Times. Before the virus hit, retailers often absorbed the cost when suppliers raised prices on goods, because stiff competition forced retailers to keep prices stable. The pandemic changed that. The people who profit off corporate America’s use of offices are trying to coax corporate America back to the office. They have refined their sales pitches to play up air filtration systems, flexible lease terms and swing space and brokers are back in their own workplaces in force. They are acknowledging that some things have changed while also seeking to prove to their clients, and themselves, that the office will soon return to something close to what it was, Rebecca R. Ruiz reports in The New York Times. With New York City set to reopen fully in July, and many companies expecting to summon workers back this summer and fall, those in commercial real estate are hoping that the rebirth they’ve tried to hasten may finally happen. “We opened our offices as soon as we were allowed across the country,” said David Lipson, a vice chairman for Savills, a global brokerage firm. “If you’re in the office real-estate business, should you be comfortable getting too comfortable working from home?” The industry, coming off a boom of continuous growth, has seen commissions fall off as vacancy rates have climbed to their highest levels in decades. Real estate executives, characteristically bullish on their prospects, are facing existential questions. With 1.3 billion square feet of office space available across America’s top markets — and more now on the market in Manhattan than exists in all of Nashville, Orlando or San Antonio, according to the research firm CoStar — strains in rosy projections are showing. Source link Orbem News #AOL #deal #Live #nears #sell #Updates #verizon #Yahoo

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sknews7 · 4 years ago

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Economics class: teaching ideas | Financial Times

Beneficial FT articles and duties picked by our panel of trainer advisers to assist enhance examination and interview success, with solutions on questions for sophistication actions and dialogue.

Learn a number of FT articles, pattern examination questions and wider instructing supplies produced along side Core (free registration required). Learn FT articles mapped to the curriculum beneath:

Mixture demand: What the latest data on activity are signalling

Change charges: Sterling’s faded illusion of sovereignty

Improvement: Pandemic brings Italy’s black market out of the shadows

Financial improvement: Latin America’s taxing problem

Competitors/market constructions: Pain in Spain for telecoms groups as competition heats up

Financial Improvement: Zambia feels the way for distressed nations in seeking debt talks

Distribution of Earnings and Wealth: Spain to push through minimum income guarantee to fight poverty

Buying and selling blocs: The chain of events that led to Germany’s change over Europe’s recovery fund

Public items: Any Covid-19 vaccine must be treated as a global public good

Inflation: A return to 1970s stagflation is only a broken supply chain away

Principle of the agency: Ryanair to axe up to 3,000 jobs as it warns over slow recovery

Competitors & regulation: Britain’s private schools warned against fee collusion

Value mechanism: Oil-producing nations grapple with latest price fall

Cash: Rishi Sunak prepares to offer 100% guarantees on small business loans

Market failure: Boris Johnson can now redeem his debt to the NHS

Round Movement of Earnings: India’s exporters face crunch as coronavirus pummels economy

Market constructions: British Airways to suspend more than 30,000 staff amid coronavirus crisis

Unemployment: US jobless claims surge to record 3.3m as America locks down

Change charges: Why the Fed is trying to tame the dollar

Oligopoly: Eight days that shook the oil market — and the world

Employment: Germany’s minimum wage boosted productivity but hit small companies

Labour markets, authorities intervention: Income inequality increases in UK

Mixture demand: Italy unveils €3.6bn stimulus to tackle coronavirus

Elasticities, Market Constructions: Can £5bn revitalise England’s bus services?

Financial progress and improvement: Restructuring Argentina’s debt will require IMF support

Market constructions: Climate change and the prisoner’s dilemma

Labour markets: The unions taking on the gig economy and outsourcing

Demand & Provide, Change Charges, Elasticity: Commodities may not stay cheap

Financial coverage: US debt investors seek protection against inflation

Market/authorities failure: Air quality remains dangerously low

Provide aspect coverage, capital flows: Tide turns for Polish émigrés

Distribution of revenue and wealth: Before we soak the rich

Provide & demand: Fortnum & Mason boosted by demand for loose leaf tea

Macroeconomic targets: Iran’s economy strangled under US sanctions

Monetary markets, alternate charges: Dollar shortage shakes confidence in Lebanon’s banks

Competitors and market constructions: Sony pulls plug on PlayStation Vue

Creating economies: Ethiopia’s path to prosperity is opening up

Financial Progress, macroeconomic targets: UK economy to avert recession

Demand & provide, taxation: UK’s slowing housing market hits stamp duty

Market failure: French tobacconists fear business will go up in smoke

Goals of companies: The limits of the pursuit of profits

Labour markets: How does British Airways pilot pay compare?

Introductory economics: China acts on pork prices

Fiscal coverage: Javid shift in strategy after decade of austerity

Financial cycles: A long economic recovery is not necessarily a better one

Demand and Provide, Market Constructions: Iran warns Opec ‘might die’

Commerce insurance policies and negotiations: Mexico ratifies Nafta’s replacement

Financial improvement: CDC to invest $300m in Africa’s power networks

Allocation of sources: Old economists can teach us new tricks

Monetary markets: China dumps US Treasuries

Allocation of sources: EBRD mulls sub-Saharan Africa loans

Demand and provide: Iran’s economy slumps on US sanctions

Round circulate of revenue: Fear over UK’s low national savings rate

Monetary markets: US mortgage reform

Macroeconomic coverage: UK inflation rises 1.9%

Cash: The continued appeal of cash

Financial coverage: Monetary policy has run its course

Inflation: UK basket gains popcorn

Stability of funds: US trade deficit

Monetary markets: Zimbabwe’s currency reforms criticised

Externalities and visitors congestion: Luxembourg tackles congestion

Economic growth and development: IMF funds Ecuador

Demand and supply, externalities: university applications rise

Trade: China’s economy slows

Market structures, nationalisation: rail privatisation

Trade, balance of payments: service exports

Exchange rates and Brexit

The price of fish farms

Demand & Supply: stock markets tumble

Development, exchange rates: African loans

Productivity: zero workforce growth

Government intervention: tech regulation

Demand & Supply, commodities: oil price fall

Market failure: wind and solar costs

Supply and demand: oil volatility

Supply and demand: chip prices

Exchange rates/balance of payments: depreciation dangers

Price determination: vanilla

Subsidies: UK farmers prepare for Brexit

Technological innovation: escooter rentals

Public finances: UK near bottom of IMF league

Markets, supply/demand: cocoa prices

Labour markets: Amazon pay rise

Fed interest rate impact

The impact of migration

Low wage growth

Brexit uncertainty

Coca Cola, Costa and economies of scale

The end of QE

Oligopolies and price discrimination

UK productivity

Coffee shops and market entry

Argentina hikes interest rates

Reversing QE

Privatisation and nationalisation

Audit monopolies

Child mortality and development

China’s household debt

Trade policies and anti-dumping

IMF, Kenya and economic policy

German trade

Sterling weakness

British manufacturing recovery

France’s declining fertility

Venezuela’s imploding economy

Measuring GDP

Inflation climbs to 3.1%

Venezuela debt: US, Russia and China play for high stakes

Productivity, smartphones and the crisis of attention

Diesel taxes

Agriculture and trade after Brexit

Monetary policy uncertainty

Natural monopolies and regulation

Richard Thaler and behavioural economics

EU fines Scania for price-fixing cartel

Monarch airline’s failure

Bank of England and Brexit

Brexit-free trade illusions

Supply and demand for coal

Bank of England interest rates debate

Amazon and food retail competition

Brexit and the generational divide: a price worth paying?

EU-Japan trade: the shift in commerce

Retail sales: how external factors influence demand

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furryalligator · 4 years ago

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https://www.questia.com/magazine/1P4-2316731607/from-crash-to-scrip

It was a Tuesday, exactly 90 years ago on October 29. Wall Street was thronged with pulsing crowds, giving off an ominous roar. The air was electric with panic. The market opened in free fall. Unprocessed sell orders overflowed the wastebaskets. Ashtrays were filled with halfsmoked cigarettes. A record 16½ million shares were traded-almost four million more than the previous record, set the prior Thursday, a one-day loss of value, in today's dollars, of nearly $208 billion. But as bad as the day was, the Crash was a process, a succession of wild swings that turned sharply negative on Thursday, October 24, 1929, when panicked sellers sold off nearly 13 million shares, sending the Dow (expanded the year before to an index of 30 leading stocks, from 12) diving 11%. Stocks bounced back, but the following Monday they plunged again, and the next day, Black Tuesday, the bottom fell out. The four days of trading had cost investors $30 billion-in today's money nearly half a trillion dollars, and almost 10 times more than the entire 1929 federal budget. By November, the equivalent of $1.5 trillion had disappeared from the economy. The Dow had hit its record high of 381 in September 1929, up six-fold since 1921. By the summer of 1932, it was down to almost 41, having lost nearly 90% of its value. By 1933 nearly 13 million Americans, almost a quarter of the labor force, were jobless. Wall Street had seen trouble before. Notably the Panic of 1907 and the 1920 bombing outside JP Morgan & Co. that killed 38 people and injured more than 300. But those disasters came and went. The Crash of '29 was different. It seemed prolonged and endless and all but took the country down with it. In reality, there were many market downs and ups before and after the Crash. Even after the shock of Black Tuesday, the plunge of prices halted by spring 1930, and in April the Dow was 50% above its November low. In June 1930, President Herbert Hoover told a delegation of worried clergy, "You have come 60 days too late. The depression is over." But of course it was only beginning. The roots of the 1929 disaster were deep. There had been a recession after World War I. Inventories built up during the war failed to find a market overseas, leading to a drop in exports. Farm prices were particularly hard hit. In ravaged Europe, conditions were worse. Defeated Germany suffered a catastrophic inflation that paved the way for Hitler. But in the United States, the long-term problems were hard to see behind what became known, after the death of Warren Harding in 1923, as "the Coolidge boom." It was fueled by several things. The Federal Reserve System, created in 1913, began reducing its discount rate, from 7% in 1921 to 3% by 1924, making for easier credit. The automobile industry was surging. Between 1921 and 1923, factory sales of passenger cars more than doubled, to 3.6 million. The popular new mass entertainments of radio and movies-talkies!- were intoxicating. A sexual revolution was underway. And, speaking of intoxicating, notwithstanding Prohibition, liquid happiness flowed from every flapper's flask and speakeasy. But problems lurked beneath the surface. From 1920 to 1921, farm prices dropped by half. Through the 1920s, a third of wage earners earned less than $2,000 a year-or $27,000 in today's money. That would qualify today for a family of three as poverty level. Today the national poverty rate is about 12%. So in the 1920s almost three times more Americans than today lived at or below the poverty line. Even before the crash, two banks a day were failing. And, of course, there was as yet almost no safety net, no federal deposit insurance, Social Security, unemployment insurance, food stamps or Medicare. But it was increasingly easy to invest. Brokers opened margin accounts with as little as 10% cash down-which was great as long as stocks kept rising. The Fed was no help; it actually made the borrowing easier. …

#Fake Money #Scrip #great depression #Stock Market #1929 #ralph Blumenthal #numismatics

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ukimmigrationmatters · 3 years ago

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Stock Market Correction Warning By The Bank Of England

Financial markets and stocks and hares could see a “sharp downturn” if investors start to reconsider the prospects of economic recovery from the lockdown amid supply problems, rising prices and a spending squeeze, the Bank of England predicts.

The UK’s central bank's financial policy committee (FPC) warned of a “correction”, defined as a drop of at least 10% in the price of a share from its most recent peak. The bank has seen signs of increased risk-taking at investment banks – the people who get paid huge sums to play with other people’s money at the stock market casino!

Stock indexes around the world have hit record levels this year, from a crash in 2020, as investors bet on a strong economic bounce back from the pandemic.

However, worrying levels of inflation have returned to the UK, US and Germany sparking fears that growth could be stunted in the face of supply chain bottlenecks, soaring wholesale natural gas prices and skills shortages.

In the UK, millions of households and businesses are facing a long winter of discontent from a cut in benefits and state support combined with a surge in energy prices not seen since the 1970’s Arab oil crisis which sent economies across the globe into recession.

The Bank is also concerned that higher borrowing during the public health emergency has likely put more businesses at risk.

It said: "The increase in debt - though moderate in aggregate - has likely led to increases in the number and scale of more vulnerable businesses.

"As the economy recovers and government support, including restrictions on winding up orders, falls away, business insolvencies are expected to increase from historically low levels."

Around 1.7 million companies borrowed money under emergency loan schemes, like the bounce back loans, that were launched last year.

Many of them were very small companies without high debt, but desperately needed of cash to avoid immediate collapse. Source Sky News.

China’s debt and real estate bubble has not gone away, with Evergrande and Fantasia expected to default on more upcoming debt repayments.

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billehrman · 5 years ago

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The Sky is Falling...Not!

The death of the U.S. economy and stock market have been greatly exaggerated.

Our biggest concern remains business and consumer confidence. They both could be hurt by the dire predictions made by pundits/media bombarding us with negative sound bites 24/7 despite the majority of data pointing to the contrary! Yes, the U.S economy has slowed, but don’t forget our economy is being hit by a GM strike, Boeing’s Max disruption, trade conflicts and politics.

Don’t listen to Chicken Little. The sky is not falling. Focus instead on the preponderance of data points that support continued, albeit slower growth, for the quarters ahead. We recognize how difficult it is to invest successfully in a VUCA (volatile, uncertain, complex, and ambiguous) global environment but focus instead on long term investing in great companies with superior leadership selling below long-term intrinsic value. Stop trading on every sound bite as that is the recipe for failure.

It was amazing how quickly the pundits began predicting a recession in the U.S next year after the September Manufacturing Report came out October 1. Is anyone really surprised that our manufacturing sector has continued to weaken? Don’t fret as the manufacturing sector is only 10% of U.S GNP while the consumer/government comprise nearly 90%. We have been hearing for months how the slowdown in manufacturing and trade will hurt hiring. Yes, it has, but to a small degree as we added over 136,000 new jobs in September; average hourly earnings are still increasing near 3% with inflation running beneath 2%; the unemployment rate continues to drop especially amongst minorities; the average workweek and overtime have not changed; and there remains over 7 million, yes 7 million, job opening in the U.S. Does that sound like a bad backdrop for continued growth in consumer spending in the months ahead? And add the fact that governments will increase spending over the next two years by several hundred billion dollars and we have a very accommodative Fed. Does that sound like a formula for a recession?

We have seen no reason to change our thesis that the U.S economy will slow over the next year but still grow around 2% in real terms. That is not a recession!

On the other hand, we are maintaining a pessimistic view towards growth outside the U.S, including a sharp slowdown in China, unless there are major changes in fiscal, trade and regulatory policies. The WTO lowered its forecast for global trade again last week to only 1.2% in 2019, down from its forecast of 2.6% in April. We believe that their prediction of a pick-up in growth in 2020 to 2.7% is way too high without any trade deals, fiscal stimuluses and regulatory reforms. We continue to avoid investing in countries where exports/manufacturing are the keys to growth. However, we will look at the consumer, healthcare and services sectors, on the other hand, in these countries where there is earnings growth and substantial dividends. Remember that there are negative interest rates in many of these regions/countries like the Eurozone and Japan.

The bottom line is that we still find the U.S market undervalued today. We used the market weakness last week to upgrade the quality of our holdings, as all stocks got hit indiscriminately, without changing our net exposure.

Let’s look at the key data points reported last week that support/detract from our view that the U.S economy is in fine shape while weakness continues abroad:

The United States

Clearly the key set of numbers that we looked at last week revolved around the consumer which is the key factor supporting our view that the U.S economy will sustain growth near 2%. We already mentioned the employment report which clearly paint a goldilocks picture as the numbers were not great, but just about right to support continued easing by the Fed over the foreseeable future. Lower interest rates will help the interest sectors of our economy namely autos and housing which continue to do better than expected. In fact, the auto industry is still running at a 17 million annualized rate while housing has picked up and could do even better if there was more supply. Nothing wrong with being supply constrained.

Investors focused last week on the weakness in the September Manufacturing ISM report and slowdown in the services gauge. Specifically, the Manufacturers PMI fell to 47.8, down 1.3 points from August; new orders index rose slightly to 47.3; the production index declined to 47.3; the employment index fell to 46.3; the inventories index declined to 46.9; and the exports index fell slightly while the import index rose. Clearly demand contracted, consumption fell and inputs were weak. Global trade was mentioned as the single key factor hurting manufacturing, A strong dollar is NOT helping.

While the more important services index did fall to a 3-year low in September, it still stood at 52.6, which means positive growth. The HIS Markit services index also remained above 50 in September. Chain store retail sales have accelerated to a near 6% gain in September.

While we do not expect the impeachment proceeding against Trump to go anywhere, clearly it has stopped the government from moving forward on any legislation which unfortunately could include the trade deal with Canada and Mexico. Throw all the bums out unless they put the people of this country ahead of themselves. Bernie Sanders heart issues clearly help Elizabeth Warren, which in turn, may help Trump’s reelection chances. Don’t forget that Trump needs a strong economy and stock market to get re-elected. Stay tuned to this key event which will impact investing next year.

China

President Xi’s speech last Tuesday commemorating the 70th anniversary of the Chinese Communist Party’s rule was no surprise as he mentioned many times that no force could sway China’s future development, peacefully. Clearly, he considers Hong Kong and Macao part of China forever.

We remain hopeful that China and the U.S can reach a trade truce next week postponing any additional tariffs. If so, an initial deal will include major purchases by China of our agricultural products along with a schedule for additional meetings to resolve issue by issue. Don’t forget the more time it takes to reach a trade deal; the more time companies have to shift their supply lines outside of China damaging the potential of China 2025.

The Eurozone

Europe’s manufacturing sector continues to spiral downward as the September PMI fell to 45.7 indicating the steepest downturn in manufacturing in over seven years. The region’s downturn was led by deteriorating conditions in Germany where the PMI hit a 10-year low. Clearly concerns over Brexit, the effects on trade by the U.S- China trade war and the inability to reach a trade deal with the U.S all weigh against business/consumer confidence in the region. Eurozone CPI slowed to less than 1% in September raising fears of deflation.

It’s hard to fathom why Germany has not loosened its own purse strings yet while also not permitting other countries in the Eurozone to do the same. The WTO ruling against Airbus does not help the situation. Hopefully there will be progress on a trade deal with the U.S when both sides meet next month. Stay tuned!

Japan

Can you believe that Japan went forward raising the retail sales tax to 10% from 8% on October 1s? It’s hard to fathom even though the government tried to partially offset the added tax by increasing domestic stimulus by $18.55 billion. The Japanese Manufacturing PMI contracted to 48.9 in September, a new low for the year. The slowdown on global trade has hit Japan hard and future prospects remain bleak.

India

India’s Reserve Bank is forecasting that India will grow around 6% in 2019, a multi-year low. We believe that this forecast is overly optimistic as it means that growth will accelerate to around 7% in the second half of the year which is unlikely as overall demand only rose marginally in September hurt by almost no growth in exports and employment. The government has added fiscal stimulus by cutting taxes and boosting spending while repo rates have been cut too. Hopefully these moves will stimulate growth later in the year into 2020.

Investment Conclusions

We are maintaining our view that there is no place like home. The U.S advantage over the rest of the world is that our economy is dominated by consumer and government spending, not manufacturing and trade. The dollar has remained strong as the interest rate differential has only widened over the last few weeks such the inbound capital flows remain huge. Our Fed has more arrows left in its quiver to lower rates and begin enlarging its balance sheet unlike the ECB and BOJ which are virtually frozen to do more at this time. While Japan has little leeway to increase fiscal stimulus due to its huge debt to GNP ratio, Germany and the rest of the Eurozone can loosen its purse strings to stimulate growth. How much worse can their economic outlook get before they act? We expect some movement in the Eurozone on fiscal stimulus, trade and regulatory reform before year end as the consequences of not moving are too dire for them. China still has room to move but no trade deal will be a bigger and bigger drag on growth the longer the conflict goes on.

Clearly the sky is not falling in the United States as the experts/pundits/Democrats may want you to think. Our market continues to fight against a wall of worry creating tremendous investment opportunities for the patient investor. Don’t forget that well over 65% of the S & P companies are yielding above the 10-year treasury with the prospects of additional dividend hikes ahead as corporations are generating record free cash flow. By the way, corporate and individual refinancing now exceed $1 billion over the last 3 weeks and is growing rapidly putting more cash into the consumers’ pockets and reducing interest costs/boosting profits and cash flow for corporations. Not bad!

Our portfolios are concentrated in technology, consumer nondurables, cable with content, utilities, financials, global industrials/capital goods, airlines, retail with a focus on housing and many special situations. We own no bonds and are flat the dollar.

As always, the weekly Investment Committee webinar will be held on Monday morning, October 7, at 8:30 am EST. You can join the webinar by typing https://zoom.us/j/9179217852 into your browser or dialing +1 408 638 0968 or +1 646 558 8656

Remember to review all the facts; pause, reflect and consider mindset shifts; analyze your asset mix with risk controls; do independent research including listening to company earnings calls and …

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

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theweeklyprofit · 6 years ago

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The 3 Best ETFs to Profit from the Global Slowdown

“We haven’t seen our sales drop this quickly since 2008.”

That’s a quote from a top sales and marketing executive at one of the largest companies in the world. I met her a couple of months ago in Argentina.

I can’t share the company name, but every one of you has bought one of their products.

Their outlook for sales is rough. In fact, she told me that they are seeing a major slowdown globally. And the economy is slowing rapidly.

This company is a perfect barometer for economic health. But you don’t have to have my contact’s word for it.

Warning signs are flashing red around the world.

Germany’s Woes

Germany is the industrial center of Europe. As Europe’s largest economy, it accounts for nearly one-third of eurozone GDP.

And it’s slowing fast.

Germany recorded lackluster growth in 2018. Its GDP grew 1.5%, down from 2.2% in 2017. That’s the country’s slowest growth rate in five years.

The end of the year was especially painful.

In Q3, Germany’s GDP shrank by 0.2%, the worst quarter in five years! In the last quarter, Germany posted zero growth, narrowly avoiding recession.

There are a few reasons for the slowdown.

First, the eurozone is slowing as a whole. But the key problem is the trade spat between the US and China.

Germany is China’s fourth-largest trading partner. No question, Germany is very dependent on trade with China.

Jorg Kramer, Chief Economist at Commerzbank, went as far as saying, “The German economy rises and falls with China.”

And the Chinese economy has certainly been falling.

China on the Brink

The past 12 months have been tough for China.

The trade war with the US has taken a toll on the Chinese economy. The Shanghai Composite Index lost 25% of its value last year. That placed it among the world’s worst performers.

The trade dispute and tariffs have also started to show up in Chinese economic numbers. In December, the country’s exports fell 4.4%. That’s the largest drop in three years.

And the slowdown shows no sign of stopping. Last month, China’s exports fell by 22%!

Meanwhile, China’s GDP growth has fallen to 6.4%, the lowest level in over a decade.

The falling Chinese economy is a symptom of a global economic slowdown. And the US isn’t immune from it.

Uncle Sam Is in the Crossfire

Compared to its peers, the US is in a pretty good position. Economic growth is decent while unemployment and inflation are low.

However, recession fears are growing.

A Bloomberg survey pegged the likelihood of a recession in the next 12 months at 25%. That’s the highest reading in six years.

Others are seeing warning signs, too.

Take a look at this recession probability chart from the Fed:

Source: Federal Reserve

It’s alarming for a couple of reasons:

•The odds of a recession have doubled in the last year.

•The recession reading has not been this high since 2008.

•The world’s three biggest economies are struggling with a set of economic issues.

As risks grow, it’s time to move into the safest market in the world: US Treasury bonds.

Booking a Flight to Safety

Even if the US, Germany, and China fall into recession, US government bonds will perform well.

See, when investors need a place to hide, they flock into government bonds. That pushes their price higher.

That’s why these bonds are known as “risk-free” investments.

The timing now is also good. We seem to be at the top of the Fed’s hiking cycle, so the yields are very appealing.

This is especially true for short-term government bonds.

These Bond ETFs Are the Best Fit for Today’s Investing Climate

The gap between long-term and short-term bond yields has been shrinking for a while now. This is known as a flattening yield curve.

That happens when investors grow pessimistic about the future.

So while long-term bonds yield a bit more, the difference is not worth the extra interest rate risk.

For this reason, I choose to buy shorter-duration bonds.

One of my favorite bond funds is iShares 1-3 Year Treasury Bond ETF (SHY). This bond fund has a yield of 2.3% and a low expense ratio of 0.15%.

(The expense ratio is the annual fee the fund charges its shareholders.)

Next on my list is the SPDR Barclays Intermediate Term Treasury ETF (ITE). This bond has a higher yield of 2.4% and a lower expense ratio of 0.10%.

It yields more because the maturity on the bonds ranges between 1 to 10 years as opposed to 1 to 3 years for SHY. This means you assume a little higher interest-rate risk.

Lastly, I’m a fan of the iShares 0-5 Year TIPS Bond ETF (STIP). This fund offers a 2.4% yield on a very low 0.06% expense ratio.

STIP is different from the other two because it holds Treasury inflation-protected securities, also known as “TIPS.” These bonds pay a fixed interest rate that is adjusted with the inflation rate.

All these bond funds will insulate your portfolio from a global slowdown while earning you a steady and safe income. I highly recommend adding them to your portfolio before the next recession hits.

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phgq · 5 years ago

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EU enters its deepest recession over virus: exec

#PHnews: EU enters its deepest recession over virus: exec

BRUSSELS – The European Union, over the pandemic, has entered the deepest economic recession in its history, the bloc's commissioner for economy said on Wednesday.

"The coronavirus caused an unprecedented economic crisis," Paolo Gentiloni said.

Gentiloni presented the EU’s 2020 spring economic forecast, and according to the report, its gross domestic product (GDP) is expected to contract 7.4 percent in 2020.

“Both recession and recovery will be uneven,” he said.

Inflation will be significantly weaker due to the fall of consumer prices, while unemployment is set to rise despite government measures, he added.

Among EU countries, Greece, Italy, Spain, and Croatia are expected to record the biggest economic fallout in 2020 with more than 9 percent loss of their GDPs (minus 9.7, minus 9.5, minus 9.4, and minus 9.1 percent, respectively).

France’s economy will shrink 8.2 percent, while Germany can prepare for a 6.5-percent fallout.

However, the European Commission estimates an economic relaunch for the bloc in 2021 with an average 6.1 percent of GDP growth.

Unemployment rate may rise to 9 percent in average this year, but the number features great national differences.

Nearly one in five workers might lose their jobs in Greece and Spain with an expected 19.9 percent and 18.9 percent unemployment rate, respectively.

The ratio will only be 4 percent in Germany.

The report foresees a very mild improvement for 2021 with 7.9 percent EU-wide unemployment rate, maintaining nearly 17 percent ratio in Greece and Spain.

Consumer prices are expected to grow 0.6 percent this year, and 1.3 percent in the next one.

Turkey’s economic loss will be lower than the EU average, according to the spring forecast.

The GDP is supposed to shrink 5.4 percent in 2020 and grow 4.4 percent the year after.

After originating in China last December, the coronavirus disease 2019 (Covid-19) has spread to at least 187 countries and regions.

Europe and the US are currently the worst-hit regions.

The pandemic has killed more than 257,800 worldwide, with total infections reaching more than 3.68 million, while recoveries exceeded 1.2 million patients, according to figures compiled by the US-based Johns Hopkins University. (Anadolu)

***

References:

* Philippine News Agency. "EU enters its deepest recession over virus: exec." Philippine News Agency. https://www.pna.gov.ph/articles/1102110 (accessed May 07, 2020 at 04:29AM UTC+14).

* Philippine News Agency. "EU enters its deepest recession over virus: exec." Archive Today. https://archive.ph/?run=1&url=https://www.pna.gov.ph/articles/1102110 (archived).

#Philippines #News #Filipino #Pinoy #Tourism #Politics #Culture #Editorial #Environment #Society #History

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