In addition to the losses from the 34 day US administrative shutdown, which were set at $11 Bn, there are other reasons to expect a less positive tone in the US than the positive current one. For the analysts at Intermoney, the only aspect able to explain this is the so called Powell put whose effect will be temporary. But where does this concept come from?
Last night the US Justice Department announced criminal charges against Chinese telecommunications company Huawei. These focus on the theft of intellectual property from the US and evading US sanctions against Iran. Also the US government has launched a ferocious campaign to persuade allies not to adopt Huawei’s 5G mobile phone technology.
Chandra Roy | The likely catalyst to trigger the widely forecast turn in global stocks is still firmly parked in the ballpark of the US economy, where current general consensus points to a downturn in GDP growth of around 2.5% this year 2019, and close to 2.0% for the next. Leverage loans are made to companies of a risky credit profile, the suitors who have traditionally focused on the issuance of high yield debt in search of funding. Clearly, one to watch out for in the current year.
Athanasius Dimadis and María Fernanda Espinosa Garcés | The United Nations is often criticized for bureaucratic inefficiency. Despite this, it still wields influence in its mission to promote international cooperation and to create and maintain international order. María Fernanda Espinosa Garcés, the president of the 73rd General Assembly of the UN, has pledged to maintain the institution’s commitment to multilateral relations while proposing crucial reforms more in tune with the “needs and quests” of an ever more connected world.
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.