The IMF forecasts a slowdown in world growth this year. GDP will barely exceed the 3% recession frontier. As usual, it has also cut its 2017 estimate, now running at 3.5%. Unless governments agree on unspecified action, this scenario points to long-term underperformance and virtual stagnation, much in line with Larry Summers’s underlying views.
Andrew Sheng via Caixin | Most studies on yuan internationalization focus on how it affects trade and investment flows and GDP growth. They typically neglect the balance sheet aspects, as well as the profits, or return on equity, issue.
A buyback is the repurchase by a company of its outstanding shares in the stock market. They can have a variety of intentions for doing that, but the most immediate impact is to keep the share price higher than it would be without this additional demand.
BoAML | According to Summers, the main source of weak US and global growth is insufficient aggregate demand. The equilibrium funds rate has dropped sharply so super aggressive monetary policy and asset bubbles are needed to create full employment and normal inflation. By contrast, we have argued that most of the stagnation is coming from the supply side of the economy.
Wang Qionghui via Caixin | China is to impose new tax rules on cross-border e-commerce that experts say will increase the cost of many items such as food, health care products and low-price cosmetics.
If the financial system works with positive interest rates, and a more or less steep yield curve, it will never work with negative short-term rates. The yield curve will never exactly reflect the postive rate curve. Why? Amongst other reasons, because the risk is never less than zero.
The Institute of International Finance (IIF) has announced that the emerging economies attracted $36.8 billion dollars of international investment in March, with $17.9 billion earmarked for stock markets and $18.9 billion for bonds.
In the select club of central bankers it’s fashionable to play around with the idea of negative interest rates. Sweden’s central bank became the standard bearer for this new trend.
UBS | Japanese policymakers have largely succeeded at generating cognitive dissonance rather than resolving the economy’s fundamental challenge. As a reminder it’s not just about achieving a 2% inflation target.
James Alexander via Historinhas | What is more important the short, medium or long term? The recent gyrations of the EUR/USD exchange rate have grabbed a lot of attention since the start of the year. In theory the strong easing bias of the ECB versus the confusing position of the Fed should mean the EUR weakens versus the USD