UBS | Global trade in goods and services has risen to a record share of the world economy in real terms. In nominal terms it has stagnated – which basically tells us that the price of traded goods and services is falling relative to the price of non-traded goods and services. Hardly surprising given where oil is.
C.Peel, T.Docal and C.Sweeting via Caixin | Collapsing oil prices have clearly caused financial disruptions. There will likely be bankruptcies and credit-crisis events among over-leveraged and high-cost producers.
Nick Ottens via Atlantic Sentinel | Italy’s prime minister, Matteo Renzi, has lately taken a hard line against the rest of the European Union, warning that German-inspired austerity is fanning the flames of populism.
Francisco López |The OECD has once again downgraded its outlook for global growth, especially for the Eurozone. It will only grow 1.4% this year, almost half a percentage point less than the previous forecast in November. But is the downwards revision the result of the sharp drop in share prices, or is it the stock market which is in fact anticipating that growth will slow in the coming months?
The banks are in crisis yet again, despite the aid they have received and the fact that regulation has been strengthened. Nobody trusts the banks, and even less the suggested formats to bail them out in case of a crisis.
There are apparently two imminent threats to the world economy which is the reason why the markets have tumbled: the damage low crude prices could cause for investments in the oil sector and the global financial system, and the fact the fall in oil prices may reflect the sharp slowdown in China. But both of these issues seem cloudy.
UBS | The distaste for value is back to the ‘growth love – in’ high of 2000. The valuation stretch between winners & losers (within a sector) has only been this high 4 times since 2000: 1) end of Tech bubble; 2) Mar 03 recession; 3) Mar 09 Financial crisis; and 4) Jul 12 ‘euro panic’.
India has snatched away from Spain the fourth place in the global ranking of countries with the greatest installed wind energy capacity, after adding 2,623 MW over the year to reach 22,088 MW. With this figure, the Asian country’s capacity exceeds Spain’s 22,988 MW, becoming fourth in the world for wind energy installations after China, the US and Germany.
UBS | With central bank balance sheets at their largest on record, yet risk assets struggling, investors are increasingly questioning the efficacy of Quantitative Easing (QE). We take a detailed look at the impact of QE on asset prices through its portfolio effects, as well as throught he dovish policy signal it sends.
James Alexander via Historinhas | Scott Sumner made a somewhat light-hearted comment in a recent post that “no-one can predict recessions”. It made me stop and wonder what was the point of Market Monetarism in that case. The essence of MM is that market forecasts of NGDP Growth should guide monetary policy, should be monetary policy.