Blog With Tag china
Who would have predicted that Leicester City bottom of the Premier League at Christmas 2014 with only 10 points from 17 matches would not only escape relegation but would top the Premier League at Christmas 2015? There were not that many either that forecast a Conservative majority Government as a possible outcome in the “closest UK general election for a generation” or that it would take the US Federal Reserve the whole of 2015 before it raised interest rates for the 1st time in 10 years!
PegasusCapital - Mon 4th Jan
With the 3rd largest sporting event in the world kicking off this month it’s not been so much about the curved ball as it has been about the slow ball! The referees (World Bank/IMF) have been calling for a delay in US interest rate rises to try and avoid a big hit on emerging markets and raising the possibility of a new credit crunch! Analysts have warned us that China is leading the world into a global recession despite growth across the G20 economies remaining static at 0.7% in Q2. However, Chinese industrial production has slowed to 6.1% (6.4%) and the manufacturing index has fallen to a 6 year low which amongst other things, prompted the OECD to cut its Chinese growth forecast to 6.7% this year and 6.5% for 2016. Meanwhile, despite the devaluation last month the Chinese central bank has used a record $94,000,000,000 of foreign exchange reserves protecting the Renminbi.
PegasusCapital - Thu 1st Oct
Just when the markets thought it was a slam dunk for a US rates rise this month, the fallout from the events in China over the last month have resulted in a time out until the consequences are absorbed. The path to normalisation as it is known in financial circles (interest rates at historically normal levels) has been re-routed as all eyes focus on what is happening to the Chinese economy. The cut in Chinese interest rates by 0.5%, the devaluation of the currency and the falling stock market are symptomatic of a slowdown and the need to stimulate demand however, it is the underlying deflation that is likely to be exported to the rest of the world.
PegasusCapital - Tue 1st Sep
Tough love is sometimes needed and at times it can work; just witness Spain and Ireland where after some rough times both economies are growing at more than 3%, the fastest rate since the crises began. However throwing money or should we say creating more debt will not necessarily provide a long term solution. Eurozone debt has now reached a record high at 92.9% of GDP with Greece, Italy, Belgium, Cyprus, Portugal and Ireland all exceeding 100% and France nearly there at 98%. In a low rate environment the political agenda can supercede fiscal reality but the IMF gave us a timely reminder that reality has to kick in eventually when it announced that it could not participate in the Greek bailout because the sums just don't add up.
PegasusCapital - Mon 3rd Aug
In the month when it has been reported that after a century of domination the American economy is about to be overtaken by China, it is still the US that calls the shots in the financial markets.
PegasusCapital - Thu 1st May