China’s Economy in Q3: Not All Bad News China announced last week that annual real GDP growth slowed to +7.4% in Q3 from +7.6% in Q2. The Chinese government has targeted real GDP growth of +7.5% for the full calendar year of 2012. This official growth target was revised down from +8.0% earlier this year. […]
Massive Liquidity Preference Test the Potency of US Monetary Policy
Global Economic Slowdown: Blame Fiscal Consolidation, Not Monetary Policy In the wake of the most serious global economic slowdown since the end of the Great Recession, central banks in advanced economies have seemingly run out of ammunition in terms of being able to use interest rates to fine tune aggregate demand. The fact that short-term […]
Placing the US Fiscal Cliff into Context
Economic Implications of the Fiscal Cliff Now that the Fed has invoked a third tranche of quantitative easing, financial markets have refocused their attention on the possible economic and financial implications of an unfolding US fiscal cliff scenario. Under current legislation, US fiscal policy will be tightened by 3% of GDP in 2013. Such a […]
Making Sense Of Expectations For US Corporate Profits
Testing Times for Corporate Profits We are about to enter the Q3 reporting season for US corporate profits against a backdrop of faster-than-expected deceleration in global economic growth. The International Monetary Fund (IMF) is almost certain to revise down its economic growth forecasts for both 2012 and 2013 when it shortly releases its World Economic […]
Watching the Fed: Structuring Quantitative Easing
Once Again…All Eyes on the Fed The Federal Open Market Committee (FOMC) begins another two day meeting today, with the economy still seemingly stuck in second gear. At the recent Jackson Hole gathering of central bankers, Fed Chairman Bernanke outlined the case for yet another tranche of quantitative easing, expressing “grave concern” about the state […]
Return to the Gold Standard? History Suggests Not To!
The Gold Standard: About to Return? The financial crisis of 2008-9 has laid the foundation for intense debate about the future of the global financial system. In the US, depending on the outcome of the Presidential election, the Republicans have declared an intention to explore the viability of returning the dollar to some form of […]
US Fiscal Policy: Not Credible Under the Ryan Plan
The Fiscal Choice Facing America The rapidly approaching US Presidential election seemingly presents America with a stark choice about the conduct of fiscal policy. In the short-term, however, the Obama Administration and Congress need to reach a compromise about how best to avoid the “fiscal cliff” scenario, where fiscal policy could be tightened by as […]
Top-line Weakness Evident In Q2 Profit Reports
Early Q2 US Corporate Profit Results We have just had the first busy week of Q2 profit reports from S&P500 companies. So far, 119 constituent companies have reported Q2 EPS. The following profile has emerged: 67% of reporting companies have beaten expected EPS, but only 38% have beaten revenue estimates. Over the past 4 years, […]
Not All Bad News For US Labour Market
US Job Openings: Rising Once Again While the overwhelming bulk of global economic news has been negative over the past few months, it is easy to overlook positive economic signals, however scant. For example, the Fed will no doubt have been disappointed by the rise in the civilian unemployment rate to 8.3% in July, despite […]
All Eyes On The Fed
All Eyes on the Fed The Fed has both enemies and supporters in Congress. The behaviour of the US central bank will be under extra scrutiny by Congress during a Presidential election year. The ideal backdrop for the Fed would be to sit on the fence. The Fed does not, however, have that luxury: the […]
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