J. P. Marín-Arrese | US Federal Reserve Chairman Jerome Powell faces the dilemma of choosing the right path, confronted with conflicting data and forecasts. While the US economy grew at a booming 4% rate in the first quarter, inflation trails far behind the Fed’s objective and salaries fail to pick up despite historically low levels of unemployment. Moreover, the trade tug-of-war with China is denting confidence in consumers and investors alike. Should the conflict turn worse, the economy might suffer a harsh blow.
DWS | How should a hedge fund have positioned itself if it had known the U.S. Federal Reserve’s (Fed’s) decisions and press release a day ahead of the market? Until lunchtime on Wednesday noon its staff might have reasonably concluded that the material contained preciously little actionable information. On paper, it would have all looked exactly as expected, leaving limited scope for any meaningful market reaction. This is not, of course, how things actually turned out.
Justin Irving | The word “boom” evokes some temporary period of above-average economic growth. The Roaring 20s, the plentiful 50s and 60s and the Dot Com era. Because booms are characterized by unexpected levels of economic growth, asset prices, which had not priced in the growth, rise sharply. Is this what is going on US economy today? Not quite.
The interest on the US 10-year bond has reached 3%, its highest level in 10 years (blue line). There is nothing exceptional about this given that, as we can see in the graphic, expected inflation has also taken off.
While the EU statistics office Eurostat said on Tuesday GDP in the eurozone rose 0.6% quarter-on-quarter in the three months to September and 2.5% year-on-year, the EC revised yesterday its growth forecast for the region to 2.2%, markedly higher for this and next year. Therefore, this Commission’s expectation in 2017 is well justified, based on published data from Eurostat.
Ever since December last year, when it reached its low point, almost at parity with the dollar, the euro has not stopped rising. And the European economy is doing much better than that of the US.
Larry Beck via Fair Observer | The Democratic Party must seize the moment now and deliver a message of change, but change driven by a renewed collective conscience with social justice at its core.
The communication released after the Fed’s June meeting, along with the publication of the system it will use to potentially reduce its balance sheet, shows there is strong support for continuing with the normalisation of US monetary policy.
As far as the global economy is concerned, 2017 will be the year when new US President Donald Trump will make his mark. That said, how far his influence will reach is still uncertain as it is still too soon to know how many of his policies will be implemented.
There is a statistic link between profits and investment, in the US, so a drop in the former determines a recession in the following quarter. But the Trump effect is likely to mean another imminent recession will have to wait.