USA

The US Capital Account Disaster

The spotlight is on the Federal Reserve Bank, this cannot be avoided by traditional fundamental data let alone the special topics such as the capital account. Nonetheless, we should pay particular attention to the latest portfolio flow data from the US, which reflect the unfavourable development of the last few months. The massive liquidation of international Treasury holdings stands out most. While the first signs that demand was easing became apparent already at the end of 2014, the trend was not reinforced before mid-2015. Foreign investors have sold USD 420m in US Treasuries since then. Net purchases were last seen in February and March of this year. Since then sales have been on the agenda – and this trend is rising. These sales are dominated by foreign central banks, which have been net sellers of US Treasuries since as early as the end of 2014 and have sold an almost…

German business climate index is unimpressed by US election and still at a high level

After rising significantly during the past few months the ifo Institute’s business climate index has stagnated in November at a comparatively high level. The business climate is thus back at 110.4 points again, higher than it has been since April 2014. So Donald Trump’s election as the next president of the United States has not had any major repercussions on sentiment at German companies. While the firms still view their current business situation in a positive light, their business expectations for the next six months deteriorated slightly. In manufacturing industry the assessment of the business situation became slightly dimmer. Compared to the good result in October, the expectations for the next six months even deteriorated somewhat more significantly. But despite the recent decline, the level of the business climate index remains relatively high. Apart from the previous month’s result (16.4 points), at 14.7 points the current response balance is the…

DZ BANK Research Outlook for 2017

Fiscal policy will stimulate the global economy, but growth will remain fragile / central banks not more expansionary / stock markets with moderate upside potential The global economy will only slowly pick up pace in 2017. It will be bolstered by increasing fiscal-policy stimuli. Inflation will edge up above all owing to the energy-price-related baseline effect. Thus, there will be no talk of an even more expansionary monetary policy. Interest rates will remain very low, especially in the Eurozone. The existing lack of appealing investment opportunities in combination with the global economy’s slightly brisker growth will also boost the stock markets. The DAX should close 2017 at around 12,000 points. The global economy is estimated to grow by 3.0 percent in the coming year, whilst 2.8 percent is expected in the current year. Growth worldwide continues to not be very dynamic. Some countries will try and use fiscal programmes to…

Do we have to worry about Trump

Contrary to all expectations Donald Trump won the election. In January he will become the 45th US President. It’s obvious: Trump is different from his predecessor and he will certainly also govern differently But there is mounting concern that Trump will plunge not only the USA but also the western world into major problems. But do we really need to be worried? Donald Trump did not get the most votes. But this is not necessary in the USA. Because of the electoral system the candidate that gets the most electoral votes is the winner. And here Trump has a huge lead. If the Michigan result, which is still not yet final, is confirmed, then Trump won the votes of 306 of the electoral-college members, while Hillary Clinton won only 232. A victory that not all Americans are enthusiastic about: since the election there have been demonstrations against the future president…

Japanese growth surprisingly positive in the third quarter – thanks to exports

The Japanese economy was surprisingly positive in the third quarter: gross domestic product increased by 0.5 percent (quarter-on-quarter) after 0.2 percent in the second quarter. This means the economy was more robust than expected and equated to an annualised expansion rate of +2.2 percent (Q2: +0.7% Q/Q, annualised). Since the middle of the year, the economy has been driven mainly by exports, which rose by 2 percent (quarter-on-quarter), with exports of components for smartphones and other electrical articles having a particularly positive impact. Private consumption on the other hand just about managed a slight increase with growth of only +0.1 percent. Corporate investment did little more than stagnate, increasing by +0.1 percent over the second quarter. All in all, Japan’s economy was therefore very susceptible recently to the eventful external factors. While the demand for exports in the third quarter alone contributed 0.5 percentage points to economic growth, thanks to…

The new US President-elect – Trump, his plans and what’s likely to become of them

In the US election, Donald Trump has won 290 of the electoral votes, with „only“ 270 actually required for a victory. This will make him the 45th President of the United States and he will move into the White House on 20th January. The result of what was an altogether very exciting and often highly-personal election campaign confirms the rule that the end of a president’s eight-year period of office is usually followed by political change. And this time too, the party that lost the election was the former President’s party. The majority of voters therefore preferred to place their trust in the Republican candidate and his assurance to achieve stronger economic growth as well as higher wage growth. It therefore comes as no surprise to learn that the Republican Party continues to have the majority of mandates in the two chambers of the Congress. Backed by the full majority…

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