Esty Dwek (Natixis) | Ongoing weakness across manufacturing and trade shouldn’t be a surprise, but service sectors continue to hold up, even showing a small rebound in June. Overall, we expect slower but stable growth around trend levels for the major economies.
Anthony Chan (UBP) | In the run-up with regards to the on-going Sino-US trade talks, we have seen the carrot-and-stick approach from both sides as they leverage their respective negotiating power.
Despite weak employment creation data, analysts at DWS point out that the US labour market probably remains too vigorous in general to justify the Fed cutting interest rates.
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.
John Feffer via Fair Observer | For Donald Trump, tariffs are a substitute for diplomacy, just as harassment in his personal life is a substitute for normal human interaction.
Debt/Ebitda ratios of US companies is estimated to be around 3.3X compared to 2.3X in 2008, although the coverage of interest ratio (Ebitda/interests) reaches 7.4X compared to 7.3X in 2008. Therefore, although the level of debt is indeed high, the capacity to pay is also elevated, which is what really matters.
Alicia Garcia Herrero and Jianwei Xu (Natixis) | After several peaceful months, the US-China trade has been taken back to central stage following Trump’s unexpected announcement to ramp up tariffs from 10% to 25% on Friday if no deal is reached by this Friday. Fears of resurged uncertainties spread among investors, tumbling world market over the past few days.
Shaun Riordan | The US has once before tried to use trade restrictions to force an Asian power to abandon its strategy. It did not end well.
Alicia García-Herrero (Natixis) | Out of the key reasons for the cyclical slowdown in 2018, namely the worsening sentiment due to the US-China trade war and the rapid shadow banking crackdown, the former can be considered as an external shock but the latter is self-inflicted.
John Feffer via Fair Observer | Several countries have already withdrawn recognition of the Trump government and recognized Nancy Pelosi instead as the legitimate leader of the country. The deputy assistant undersecretary general of the United Nations has given the United States a one-year warning. If the country doesn’t clean up its act and become a responsible world citizen, Ithell Colhoquon announced yesterday, the international community will impose sanctions on…