What’s Not Working in the World Economic Order
The reality being faced in the US and abroad is that the current world order has failed to deliver its promises.
Europe
Why are US markets at record highs while European bourses remain in the doldrums?
The main US stock indices (S&P 500 and the Nasdaq) are at record highs while the European bourses have lost over 10% in the year to date. And that’s despite the fact that they recovered almost all of their ‘Brexit’ losses in July. Such a disparate performance is not because US corporate profits have been better, as you might expect, but is due to other factors associated with more solid economic growth, a healthy jobs market and inflation-related gains.
Brexit: the market impact is lessening
The impact of Brexit on the markets has gone through different stages. There was the initial upheaval in the wake of the referendum result, which had its maximum effect on June 24 when the Ibex recorded its biggest ever fall. And now the stock market and European public debt yields have recovered to pre-Brexit levels.
Google Resists Europe’s Fiscal Pressure
What’s going on with technology giant Google, and other similar firms like Amazon or Apple, is really scandalous. The company with headquarters in Mountain Valley, and now called Alphabet, posted spectacular pretax profits of 19.651 billion dollars (26% of its income of 75 billion). But it hardly paid any tax abroad.
Spain: An Example Of Successful Keynesian Policy?
The thesis is reasonable and well-known: greater growth, lower deficit. But what happened in 2015 seems to corroborate another idea: a larger deficit (-5%) fuels the biggest growth in Europe (3.2%). So the government unilaterally raises the 2016 deficit target from 2.8% to 3.6%, while Brussels is going for 3.9%.
Vigilant Of Second Round Effects
BoAML | We have remained quite bearish on Euro area inflation for the past few years, particularly compared with ECB forecasts (but also consensus), and have highlighted the many downside risks to the inflation outlook.
If You Think It’s Bleak For Greece Now, Wait Until Tomorrow
Yiannis Mouzakis via Macropolis | | Understandably, when the International Monetary Fund published its Debt Sustainability Analysis (DSA) last week, its gloomy projections regarding the unsustainability of Greece’s debt drew all the attention. This meant that many overlooked the fact that the Fund was even gloomier about the Greek economy’s long-term growth prospects.
Dovishness Dominates ECB’ s Meeting
UBP | Unsurprisingly, the ECB kept its monetary policy unchanged. Corporate bonds buying are going to start on June 8th and the TLTRO on June 22nd.
“What Austerity Has Done Is To Highlight The Poor Management Of The Crisis”
Roberto Tamborini, author, Professor of Economy at Trento University says The Corner at this interview that “we can only start on the road towards a satisfactory recovery with fiscal and monetary coordination in the eurozone, and this fiscal stimulus can only be coordinated via Brussels. This directly calls into question the eurozone’s economic governance, one of the pillars of which is the Maastrich principle of exclusive national responsability.”
European Utilities Will Invest Nearly €85 Bn In Renewables And Networks
The main European electricity companies will invest nearly €85 billion over the next four years to speed up their strategic transformation to enable them to deal with the foreseeable drop in coal and gas prices. The companies plan to turn their strategies around, focusing more on renewable energies, networks and regulated activities.