José Ramón Díez Guijarro (Bankia Estudios) | Economic cycles are inexorable, reflecting the dynamics of economic markets, summed up by Schumpeter as the process of “creative destruction”. After the initial recovery of the expansionary phase comes the tipping point, with growth superior to potential, to later enter in the slowdown phase, in which there is a gradual convergence with trend rhythms of growth and the negative output gap closes.
via The Conversation | New Year’s Day 1999 saw the largest monetary changeover in history. On that date, just 20 years ago, 12 members of the European Union formally adopted a brand-spanking-new currency, the euro. Today seven additional EU member states use it, along with Montenegro, Kosovo, Andorra, Monaco, San Marino and Vatican City. If survival is the ultimate gauge of success, then this grand monetary experiment can be said to have succeeded.
Pablo Pardo | With his trade war, Trump has accelerated the slowdown in China, and now the world´s second economy is buying fewer goods and services from the US. And from the rest of the world in general. Not only Apple has declared that its profits are going to be reduced by China´s slowdown. Also, for example, its main rival outside China, Samsung.
The re-opening of the primary debt market for companies on both sides of the Atlantic, from which companies in the high yield segment also benefit, is good news given that it shows the reduction of investors’s fears and, more important, means a respite for the companies able to access again market financing. The primary high yield market in the US accumulate 41 days without operations, the longest drought in the registers of Dealogic, which began in 1995.
China’s Belt and Road Initiative (BRI) marked its fifth birthday in September 2018, though there was probably less to celebrate than the Chinese authorities might have wished. Five years after President Xi presented the initiative to the world in a speech in Kazakhstan, the BRI is facing pressures on three fronts.
| When the dot-com bubble burst in 2000 it sent significant numbers of businesses to the wall. Investment banks had been encouraging enormous investment in dot-com ventures by launching Initial Public Offers (IPOs) allowing investors and entrepreneurs to cash in on vast fortunes by selling off shares in their companies.
A combination of proper pension reforms, better allocation of state and private-sector assets, and greater utilization of new technologies can help China to defuse the demographic bomb and mitigate the ageing shock for its economy and society. Analysts at AXA IM briefly summarises the pillars of China’s pension system.
via The Conversation | Parts of the federal government have been closed since midnight on Dec. 22, making it the second-longest shutdown on record. It’s also the third since President Donald Trump took office. The immediate and most visible impact of a shutdown is in the government’s day-to-day operations.
Sheng Songcheng and Shen Xinfeng via Caixin | Speculation has flared up that the People’s Bank of China (PBOC) is considering buying stocks. But there are no valid reasons for the central bank to buy shares directly or through exchange-traded funds (ETFs) that track indexes or baskets of stocks.