Global Economic Data & News 02 (Nov 15 - Apr 22)

Global Economic Data & News 02 (Nov 15 - Apr 22)

Postby behappyalways » Sat Nov 14, 2015 10:05 am

The world economy: The never-ending story

First America, then Europe. Now the debt crisis has reached emerging markets

IT IS close to ten years since America’s housing bubble burst. It is six since Greece’s insolvency sparked the euro crisis. Linking these episodes was a rapid build-up of debt, followed by a bust.

A third instalment in the chronicles of debt is now unfolding. This time the setting is emerging markets. Investors have already dumped assets in the developing world, but the full agony of the slowdown still lies ahead.

Debt crises in poorer countries are nothing new. In some ways this one will be less dramatic than the defaults and broken currency pegs that marked crashes in the 1980s and 1990s. Today’s emerging markets, by and large, have more flexible exchange rates, bigger reserves and a smaller share of their debts in foreign currency. Nonetheless, the bust will hit growth harder than people now expect, weakening the world economy even as the Federal Reserve begins to raise interest rates.

In all three volumes of this debt trilogy, the cycle began with capital flooding across borders, driving down interest rates and spurring credit growth. In America a glut of global savings, much of it from Asia, washed into subprime housing, with disastrous results. In the euro area, thrifty Germans helped to fund booms in Irish housing and Greek public spending.

As these rich-world bubbles turned to bust, sending interest rates to historic lows, the flow of capital changed direction. Money flowed from rich countries to poorer ones. That was at least the right way around. But this was yet another binge: too much borrowed too fast, and lots of the debt taken on by firms to finance imprudent projects or purchase overpriced assets.

Overall, debt in emerging markets has risen from 150% of GDP in 2009 to 195%. Corporate debt has surged from less than 50% of GDP in 2008 to almost 75%. China’s debt-to-GDP ratio has risen by nearly 50 percentage points in the past four years.

Now this boom, too, is coming to an end. Slower Chinese growth and weak commodity prices have darkened prospects even as a stronger dollar and the approach of higher American interest rates dam the flood of cheap capital. Next comes the reckoning. Some debt cycles end in crisis and recession—witness both the subprime debacle and the euro zone’s agonies.

Others result merely in slower growth, as borrowers stop spending and lenders scuttle for cover. The scale of the emerging-market credit boom ensures that its aftermath will hurt. In countries where private-sector indebtedness has risen by more than 20% of GDP, the pace of GDP growth slows by an average of almost three percentage points in the three years after the peak of borrowing (see article).

But just how much pain lies ahead will also depend on local factors, from the scale of the exchange-rate adjustment that has already taken place to the size of countries’ reserves. Crudely, most emerging economies can be put into one of three groups.

The first group includes those for which the credit boom will be followed by a prolonged hangover, not a heart attack. The likes of South Korea and Singapore belong in this category; so, crucially for the world economy, does China. It still has formidable defences to protect it against an exodus of capital. It has an enormous current-account surplus. Its foreign-exchange reserves stood at $3.5 trillion in October, roughly three times as much as its external debt.

Policymakers have the ability to bail out borrowers, and show little sign of being willing to tolerate defaults. Shovelling problems under the carpet does not get rid of them. Firms that ought to go bust stagger on; dud loans pile up on banks’ balance-sheets; excess capacity in sectors like steel leads to dumping elsewhere. All this saps growth, but it also puts off the threat of a severe crisis.

For that risk, look instead to countries in the second category—those that lack the same means to bail out imprudent borrowers or to protect themselves from capital flight. Of the larger economies in this category, three stand out. Brazil’s corporate-bond market has grown 12-fold since 2007. Its current-account deficit means that it relies on foreign capital; its political paralysis and fiscal inflexibility offer nothing to reassure investors.

Malaysia’s banks have lots of foreign liabilities, and its households have the highest debt-to-income ratio of any big emerging market; its cushion of foreign-exchange reserves looks thin and its current-account surplus is forecast to shrink. Turkey combines a current-account deficit, high inflation and foreign-currency-denominated debts that have become more onerous as the lira has fallen.

The third group of countries consists of those emerging markets that will either escape serious trouble or have already gone through the worst. Of the big ones, India is in healthier shape than any other big emerging economy and Russia might just surpass expectations. The rouble has already gone through a bigger adjustment than any other major currency, and the economy shows tentative signs of responding. Argentina, a perennial flop but one with little private debt, could also shine if a reformist wins the presidency this month.

Such brighter spots aside, everything else points to another pallid year for the world economy. The IMF has forecast higher growth in emerging markets next year; the lesson of past debt cycles suggests another year of slowdown is more likely. And weakness in the developing world, which accounts for over half of the global economy (in purchasing-power-parity terms), matters far more than it once did.

Lower growth in emerging markets hits the profits of multinationals and the cash flows of exporters. Low commodity prices help oil importers but ratchet up the pressure on indebted miners, drillers and traders, which between them owe around $3 trillion.

Volume four?

Europe’s open economy is most exposed to a cooling in emerging-market demand, which is why more monetary easing there looks likely. But America’s policy dilemma is more acute. The divergence in monetary policy between it and the rest of the world will put upward pressure on the dollar, hurting exports and earnings. And waves of capital may again seek out the American consumer as the borrower of choice. If so, the world’s debt crisis may end up right back where it started.


Source: The Economist
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Re: Global Economic Data & News

Postby winston » Sat Nov 14, 2015 5:27 pm

What to Watch for at the G-20 Summit

Obama and Putin to meet after Russia started bombing Syria
Tackling economic slowdown eclipsed by civil war, refugees

The Turkish coastal resort of Antalya plays host to the Group of 20 summit from Sunday, and puts world leaders next door to one of the biggest crises on their plate.

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... risis-zone
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Re: Global Economic Data & News

Postby winston » Tue Nov 17, 2015 8:21 am

5 Charts That Detail the State Of The Market Today

Here is where we stand in a week that starts with global concerns

By David Fabian

Source: FMD Capital Management

http://investorplace.com/2015/11/the-st ... kpxoHYrKM8
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Singapore - Market Direction 11 (Nov 14 - Dec 15)

Postby behappyalways » Wed Nov 18, 2015 9:25 am

Global rally stalls. Now what?

16th November: The global trend is now ambiguous. US indexes tested and turned on expected resistances. Now it's anyone's guess what will happen: a range? A breakout upside? Or a return to the bearish trend, as suggested by the top in the NYA chart.

Oil and the Australian dollar are on good long term supports, lending hope to the scenario that commodities are bottoming.

Hong Kong is still cheap.

Thailand is still expensive.


Charts current to 13th November.

http://asiachart.com/
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Re: Global Economic Data & News

Postby winston » Thu Nov 19, 2015 8:41 pm

We Need to Talk About the Global Economy by Jeffrey_Black



Source: Bloomberg Markets Magazine

http://www.bloomberg.com/news/articles/ ... al-economy
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Re: Global Economic Data & News

Postby winston » Fri Nov 20, 2015 2:01 pm

<Research Report>G Sachs Lists Top 10 Market Themes for 2016; Expects Limited Upside in U.S. Equities

Goldman Sachs, in its Global Markets Analyst, listed top ten market themes, including
1. Global growth: More stable than it looks;
2. US inflation: Less downside risk than is priced;
3. Divergence of monetary policy in developed countries;
4. Oil prices: Near-term downside risk, year-end upside;
5. Relative value in commodities;
6. Global saving glut: In reverse;
7. Limited US equity upside;
8. Emerging market risk;
9. Market liquidity;
10. Corporate earnings.

The broker expected global GDP to rise to 3.6% in 2016 while the growth in the United Stated will slow down a little (from 2.4% to 2.2%).

For China, the growth will also ease to 6.4% from 7%.

The forecasts on USD/CNY in end-2016 and end-2017 are 6.6 and 6.8 respectively.

Meanwhile, the broker expected limited upside for the United States' equities in 2016. It has a 2016 price target of 2,100 for the S&P 500, suggesting a return of around 5%.

Source: AAStocks Financial News
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Re: Global Economic Data & News

Postby winston » Tue Nov 24, 2015 9:06 pm

HSBC Expects Global Trade Volumes in 2025 Rise to US$27.8T

HSBC published Trade Winds Report today, expecting Asia to be the main engine for global trade growth in next ten years.

According to the report, the current global trade volumes amounted to US$17.9 trillion. It estimated it would shoot up to US$27.8 trillion in 2025 and even US$68.5 trillion in 2050, during which China would contribute most of the global trade volumes and Asia Pacific region would contribute 46% of the global trade volumes.

The report said China had become a major global exporter since 2007. Besides, China’s "Belt and Road" Initiative and its Asia Infrastructure Investment Bond plan supported China's infrastructure development and boosted its trade to grow continuously.

Source: AAStocks Financial News
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Singapore - Market Direction 11 (Nov 14 - Dec 15)

Postby behappyalways » Tue Dec 15, 2015 5:41 pm

Short term bearish - long term ambiguous
- except for Japan

The US markets are bearish in the short term but ambiguous in the long term:

- NYA is the most bearish short term chart with a clear top, pullback and turn. But the long term chart shows good support. A turn at 9,700 might save the day.

On the other hand, market breadth, as shown by the new high and low histogram, suggests that that bear market of the last two years is unsustainable.

- S&P 500 is ambiguous: bearish in the short term, the index is likely to test support at 1,930. On the other hand, the index is hovering around the 26-year mean. Resistance would be at around 2,800.

- the Nasdaq is trapped by strong double resistance at around 5,200. A breakout upside would be the first sign of a continuation of the bull trend.

In summary, the short term is clearly bearish. But the long term outlook is ambiguous. We'll have to wait for a clearer picture.

Japan: still unambiguously bullish. But it could take a while to reach target.

Europe: also ambiguous. Eurostoxx is potentially bullish. But EFA is decidedly bearish in the short term.

Hong Kong: looking for support at 21,000. The market is still cheap.

Thailand: Dangerous long term top for the SET and high valuation make this market very dangerous. The communications sector appears to be a leading indicator.

Australian dollar: looks well supported.

Euro: could be bottoming, but there is also a target at 0.90.

Oil: support at 34, then 25.

Charts current to 11th December

Source: http://asiachart.com/
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Re: Global Economic Data & News

Postby winston » Thu Dec 31, 2015 9:04 pm

How Much Does China Really Contribute to Global Growth?

By Valentin Schmid

Looking at the world economy as a market where different sovereign nations compete, rather than the world economy as one whole entity, it is difficult to see how China is contributing to rest of the world growth, when it is actually taking away from the growth of most of its trading partners.


Source: Epoch Times

http://www.theepochtimes.com/n3/1930055 ... campaign=7
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Re: Global Economic Data & News

Postby winston » Fri Jan 08, 2016 6:53 am

World Bank sees slower 2016 growth

The global economy will sputter along this year as China's slowdown prolongs a commodity slump and contractions endure in Brazil and Russia, the World Bank said.

The Washington-based development bank lowered its forecast for 2016 growth to 2.9 percent, from a 3.3 percent estimate in June, according to its bi- annual Global Economic Prospects report released on Wednesday.

The world's economy grew 2.4 percent last year, less than a forecast of 2.8 percent in June and slower than the 2.6 percent expansion in 2014, it said.

The World Bank cut its outlook for China's growth in 2016 to 6.7 percent from 7 percent in June, and it forecast a 6.5 percent expansion for next year.

It expects Brazil's economy to shrink by 2.5 percent this year and Russia's to contract by 0.7 percent.

"The global economy will need to adapt to a new period of more modest growth in large emerging markets," World Bank chief economist Kaushik Basu said in the report.

Under a base case, global growth will see a "modest upturn" as China opts for a consumption and services-led economic model, and US rates are raised without "undue turbulence," Basu said.

Source: REUTERS
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