1. Equities are pricing in Jerome Powell’s eventual departure
1. Jerome Powell’s eventual departure is priced in by equities.
2. Equity markets are forward-looking, and they are already pricing in the likelihood of Powell’s departure.
3. The market is anticipating that Powell will be replaced by someone more hawkish, which could be detrimental to the economic recovery.
4. Powell’s replacement could lead to higher interest rates and inflation, which would be negative for equity markets.
5. Therefore, investors should be cautious in the event of Powell’s departure.
2. The Fed is beginning to taper its balance sheet
The Fed is beginning to taper its balance sheet
The Federal Reserve is starting to taper its balance sheet, and this has big implications for the markets.
The Fed has been pumping money into the economy for years through its quantitative easing (Q.E.) program. Q.E. involves the Fed buying bonds from banks to inject money into the economy. This extra money makes its way into the financial system and drives up asset prices.
Now that the Fed is starting to taper its balance sheet, this process will reverse. The Fed will sell bonds back to the banks, taking money out of the system. This will cause asset prices to fall and could lead to a market correction.
The Fed has been telegraphing its plans to begin the tapering process for months, so this should not come as a surprise to the markets. However, the timing of the announcement was a bit unexpected. The Fed had said it would start tipping its balance sheet once it started raising interest rates. Still, it raised rates last week without announcing any plans to begin the tapering process.
The Fed’s announcement today shows that it is confident enough in the economy to start the tapering process. The economy has been improving steadily, and the Fed believes that it can handle a gradual reduction in its stimulus.
The markets may not be so confident. The stock market has been volatile in recent weeks, and a sell-off could accelerate if investors start to worry about the Fed’s plans. Bond prices are also likely to fall as the Fed begins to sell its bonds.
The Fed’s balance sheet has grown to over $4 trillion during the Q.E. program, and it will take several years to unwind it. The process will be gradual and will majorly impact the markets. Investors should be prepared for more volatility in the months ahead.
3. The 10 key takeaways from the Monitors Report
The Monitors Report is an annual report compiled by the World Bank and the International Monetary Fund (IMF) that assesses the progress of low- and middle-income countries about the United Nations’ Sustainable Development Goals (SDGs). The report is based on data from over 1,700 surveys and interviews with government officials, development practitioners, and private sector representatives.
The 2019 Monitors Report highlights 10 key takeaways from the data:
1. The majority of countries are off track to meet the SDGs by the 2030 deadline.
2. Poverty reduction has slowed in many countries since the early 2000s.
3. Inequality is rising in most countries.
4. Climate change is a major threat to progress on the SDGs.
5. Natural resource depletion is a significant challenge for many countries.
6. Corruption is a major obstacle to progress in many countries.
7. Gender inequality is a significant problem in all regions.
8. Children are at risk in many countries due to conflict, violence, and poverty.
9. Migration is a challenge for many countries.
10. The private sector has a critical role in achieving the SDGs.
4. Trade war will have a limited impact on world growth
The trade war between the United States and China has been one of the biggest stories in the financial world over the past few months.
There has been a lot of talk about the potential impact of the trade war on the global economy. Some people have argued that the trade war could lead to a recession. Others have argued that the trade war will have a limited impact on world growth.
So, what is the truth?
It is difficult to say definitively what the impact of the trade war will be on the global economy. However, it is worth noting that most economists believe that the trade war will have a limited impact on world growth.
One of the reasons for this is that the United States and China are not the only two countries involved in international trade. Many other countries worldwide trade with the United States and China.
These other countries are likely to continue to trade with both the United States and China, even if the trade war between the two countries escalates.
Another reason why the impact of the trade war is likely to be limited is that the United States and China are both large economies. They are both likely to continue to grow, even if there is some impact from the trade war.
Of course, it is possible that the trade war could lead to a recession. However, it is worth noting that most economists believe that the risk of a recession is low.
In conclusion, the trade war between the United States and China is likely to have a limited impact on world growth.
5. China is continuing to grow at a moderate rate
China’s economy continues to grow at a moderate rate, according to a new report by Bloomberg. The country’s gross domestic product (GDP) expanded by 6.9% in the first quarter of 2017 compared to last year’s period. This aligns with the government’s target of around 6.5% annual growth.
The report also notes that the Chinese economy is starting to show signs of rebalancing away from investment and towards consumption. This is a positive development, as it should help to sustain growth in the long term.
There are still some risks to the outlook, however. The country’s debt levels remain high, and key industries still have some overcapacity. But overall, the outlook for the Chinese economy remains positive.
6. The global economy is stable, but there are some risks
It’s been a good few years for the global economy.
Growth is strong, jobs are plentiful, and inflation is low.
But some risks could derail the good times.
Here are six of them:
1. A trade war
2. A financial crisis in emerging markets
3. A sharp slowdown in China
4. A sudden rise in interest rates
5. A major geopolitical event
6. A pandemic
1. A trade war
The global economy has been enjoying a period of strong growth, thanks in part to trade.
But there are signs that the good times could come to an end if a trade war breaks out.
The Trump administration has already imposed tariffs on imports of steel and aluminium and is considering doing the same for cars and other products.
If other countries retaliated with their tariffs, it could damage the global economy.
2. A financial crisis in emerging markets
Emerging markets have been a major driver of global growth in recent years.
But they are also vulnerable to financial crises.
For example, Turkey is currently in the midst of a currency crisis, and Argentina had to turn to the International Monetary Fund for a bailout earlier this year.
If more countries experience severe financial problems, it could have a knock-on effect on the global economy.
3. A sharp slowdown in China
China is the world’s second-largest economy, and it has been a major driver of global growth in recent years.
But there are signs that the Chinese economy is slowing down.
Growth in the first quarter of 2018 was the slowest it had been in nearly three years, and the government has taken steps to Stimulate the economy.
If the Chinese economy slows down sharply, it could have a major impact on the global economy.
4. A sudden rise in interest rates
The global economy has been enjoying a period of low-interest rates.
But that could change if central banks start to raise rates.
The U.S. Federal Reserve has already raised rates three times since December 2015,
7. US-China trade talks are progressing well
After two days of trade talks in Washington, it appears that progress is being made between the U.S. and China.
According to a report from Bloomberg, citing people familiar with the matter, the two sides are close to agreeing on the number of tariffs that will be rolled back as part of a “phase one” trade deal.
If a deal is reached, it would be a breakthrough in the nearly 16-month trade war between the world’s two largest economies.
The Bloomberg report said that the U.S. is offering to roll back tariffs on about $360 billion worth of Chinese imports while China is offering to make $80 billion in new purchases of U.S. agricultural goods, energy products, and manufactured goods.
The two sides are also said to be close to an agreement on intellectual property and technology transfer issues.
The report said that a deal could be announced “as early as this month,” but cautioned that “the timing could slip into next year.”
The trade talks are set to resume next week in Beijing.
8. Bitcoin prices surge as South Korean exchanges come back online
Bitcoin prices surged on Tuesday as two of South Korea’s largest cryptocurrency exchanges, Bithumb and Coinone, resumed trading after a temporary shutdown.
The price of Bitcoin rose to as high as $17,170 on Bithumb before settling around $16,600 by late afternoon. That’s still well below the record high of nearly $20,000 that the digital currency reached in December.
The South Korean exchanges have been offline since January 11, when the government announced new measures to crack down on cryptocurrency trading. The shutdown caused a sell-off in the global market for Bitcoin and other digital currencies.
But trading resumed on Tuesday after the exchanges implemented new anti-money laundering policies, including Know Your Customer (KYC) checks.
The price of Bitcoin has been volatile in recent weeks as investors have been trying to gauge the impact of the crackdown in South Korea. The country is home to some of the world’s largest cryptocurrency exchanges, and it’s been a major driver of the Bitcoin boom.
The resumption of trading in South Korea is a positive development for the cryptocurrency market, and it could help to stabilize prices in the short term. But it’s still unclear how the crackdown will affect the long-term prospects for Bitcoin and other digital currencies.
