UBS | As attention turns towards fiscal stimulus as a means to drive global growth, infrastructure investment is considered a politically feasible way to justify government spending. Despite increased focus, however, deploying additional meaningful funds for infrastructure spending is never easy. The US infrastructure, for instance, has received intermittent attention over the last several years.
The Fed has increased its daily interest rate to 0.75%, saying it predicts three further hikes in 2017. This is called active and persuasive monetary policy. But the central banks are no longer the masters of the economy, whipping it into a place they want.
UBS | After Outlook conferences in 8 countries, we highlight that 2017 is expected be the first time in 7 years that global nominal GDP growth accelerates.
China is already the top lender in Latin America, while Spain is the second biggest investor in the region after the US. But joint projects there are scarce.
BoAML | One of the most popular ideas in emerging markets economics is grouping Brazil, Russia, India and China together. Here we argue that grouping these very different economies together for economic forecasting was never very useful in the first place. The only thing they have in common is size. The recent divergence in the group makes it even less useful.
Trump and the republicans are already considering a fiscal amnesty which would repatriate – with a tax rate of 10% – the 2.5 billion dollars US companies have outside the country.
Of all the arguments I have heard against monetary normalisation, I would definitely highlight the potential destablising effect which it could have on some financial markets. And I am not emphasising this in a positive way: I sincerely believe that delaying a decision which can help reduce uncertainty in the medium and long-term to avoid a negative impact (which I think will be limited) in the short-term is, without any doubt, questionable.
The markets are still discounting the inflationary impact of Trump’s measures. Furthermore, they are anticipating the positive effects of his fiscal policy, the best short-term guarantee of which is in economic agents’ shift in expectations. Our criticism of excessive complacency on these issues is well-known, although it’s true that the market doesn’t see it that way.
Janet Yellen intends to hold firm against market pressure as her press conference showed yesterday. The 0.25% rise in federal funds was downgraded to a modest move, wholly anticipated by investors, while hinting at a moderate path in rate hikes over the next couple of years.
Natixis AM | The Fed decided On Wednesday to increase its main rate by 25 bp. The US central bank had mentioned so many times this hike that it has to do it. But what will happen now?