UBS | S&P 500 consensus expectations call for -8.1% earnings growth in 1Q2016, the largest decline since the Financial Crisis. While results should beat as usual, YoY forecast declines for 7 of 10 sectors make it unlikely that positive price reactions to “better than expected” will be an upside catalyst for the broader market.
The Panama Papers may have a similar historic reach as the Pentagon Papers, marking the point of no return for reducing the list of countries which protect and promote the lack of fiscal transparency. Tax cooperation between countries with automatic exchange of information (not on request) by all the tax offices does not allow for delays.
James Alexander via Historinhas | I remain a bit disappointed that Euro Area QE and negative rates are not proving more of a hit with the markets and thus the economy. But are things really as bad as painted by our friend Lars Christensen?
The jobless rate in the Organisation for Economic Co-operation and Development (OECD) remained stable in February compared to January at 6.5% of the active population. By regions, the Eurozone had the highest unemployment rate at 10.3%.
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.