June 11, 2017 at 06:35PM
from James Rothwell
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Showing posts with label 2017 at 06:39PM. Show all posts
Showing posts with label 2017 at 06:39PM. Show all posts
Sunday, June 11, 2017
Volkswagen looks at rehiring Opel CEO – source
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FRANKFURT (Reuters) – Carmaker Volkswagen is looking at rehiring the chief executive of General Motors’ Opel, possibly to lead its Audi brand, a source familiar with the matter told Reuters on Sunday, following a media report the executive will quit Opel.
June 11, 2017 at 06:33PM
from
Trump is starting to draw battle lines with Congress on an issue with huge implications for the global economy
By sometime later this summer, Congress will have to raise the nation’s debt ceiling.
- Both Congress and the Trump administration are starting to firm up their positions.
- Failing to raise the ceiling could lead to catastrophic effects on the economy.
The deadline that led to the night President Barack Obama once called the “scariest moment” of his presidency is once again on the horizon in Washington.
Raising the debt ceiling: At its core, a seemingly simple function of Congress. But the battle over raising the cap on how much debt the federal government can incur emphasizes divides not only in Congress but also within President Donald Trump’s administration.
Failing to reach a deal to raise the nation’s borrowing limit, however, could be disastrous for the global economy and possibly undermine large swaths of the international financial system.
“I want to emphasize that the sooner they do it, the less uncertainty there is in the market,” Treasury Secretary Steven Mnuchin said of Congress on Friday.
Sooner than expected
The timeframe for dealing with the debt ceiling has crept up amid recent developments.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” Mnuchin wrote in a public letter to House Speaker Paul Ryan when a temporary suspension of the limit expired in March.
Since then, the Treasury has used “extraordinary measures” to extend the timeframe on the debt ceiling by suspending some investments in federal retirement funds and slowing the pace of debt issuance. Originally, the Treasury and Office of Management and Budget indicated the ceiling would be hit sometime in the fall, though the exact timing is only a best estimate.
Mnuchin said recently, however, that the pace of tax receipts the department generated was slower than expected over the past few months.
“I think it’s absolutely important that this is passed before the August recess, and the sooner the better,” Mnuchin told the House Ways and Mean Committee in a hearing on May 24.
On Friday, however, Mnuchin did seem a bit less alarmed, saying the Treasury has “backup plans” if the limit is not raised by August. He did not specify those plans.
“We will be fine if they don’t do it beforehand, but I want to emphasize that the sooner they do it, the less uncertainty there is in the market,” Mnuchin told reporters at a meeting with Canadian Finance Minister Bill Morneau.
Mick Mulvaney, the director of the Office of Management and Budget, also said in a congressional hearing that the slower pace of tax collections would mean the debt ceiling could be breached sooner than previous projections.
Based on Mnuchin’s testimony and reports from Treasury officials, the deadline could come within the next couple of months.
Lower-than-expected tax receipts seem to be in part a problem of Trump’s own making. Trump’s promise to cut taxes and recent rollout of a one-page tax outline seems to be causing Americans to delay some of their tax bill in anticipation of the lower rates.
A report from the Congressional Budget Office on May 5 said tax receipts between October and April were 3% below the office’s projections from January. The CBO said that could be in part due to Trump’s tax promise.
“The reason that payments for 2016 activity were smaller than anticipated may be that income growth was weaker than expected in calendar year 2016, or that taxpayers shifted more income than projected from 2016 to later years, expecting legislation to reduce tax rates to be enacted this year,” the CBO report said.
Bloomberg has also reported that wealthier Americans have been deferring tax payments on non-wage income in order to take advantage of the lower rates that Trump says are on the way.
A necessary step
According to a report from Andrew Austin, an analyst at the Congressional Research Service, the idea of an official debt limit stretches back to The Second Liberty Bond Act of 1917. There has been an aggregate limit on the level of federal debt since the 1939.
Prior to this Congress, had to approve debt offerings by the Treasury on an individual basis. The debt ceiling, on the other hand, allowed Congress to exert some influence over spending and debt issuance while making it easier for the Treasury to effectively finance operations. That was especially important for bond issuances to finance American involvement in World War I.
Since the debt ceiling’s inception, it was repeatedly raised with little fuss — until the 21st century.
Debt-ceiling fights, especially amid massive deficit increases following the 2008 financial crisis, have become more difficult and politically contentious.
Perhaps the most famous came in 2011, when it appeared that Republican leadership in the House did not have enough votes from its conference to pass the debt ceiling bill just hours before it was set to be breached. Obama, in an interview in January, called the moment the most nerve-wracking of his presidency and said he had prepared a speech in case the US went into partial default on its debt.
Obama’s fear was warranted, given the massive impact failing to raise the debt ceiling would have on not only the finances of the federal government, but also the global economy.
In the most basic sense, if the debt limit is not raised the government loses the ability to pay its bills, and many elements of the federal government would shut down as obligated payments cease.
During previous debt ceiling fights, the major credit-rating agencies all said a default would lead to a serious downgrade of the US’s credit rating. In 2011, the simple fact that the US got so close a breach led Standard & Poor’s to downgrade the country’s then-AAA rating — the first credit downgrade in the history of the nation.
Further lowering the credit rating would increase borrowing costs for the government, make issuing new debt more costly, and cause serious disruptions in global credit markets.
Outside of the effect on the US government’s financial situation, the loss of faith that the America would always pay its bills would ripple out into the global economy.
For instance, even the prospect of a default in 2011 caused a steep decline in US stock markets. A report on the macroeconomic effect of the 2011 ceiling fight from the Treasury Department said that the “S&P 500 index of equity prices fell about 17% in the period surrounding the 2011 debt limit debate.”
Amadou Sy, a senior fellow at the Brookings Institution, pointed out just how important the US maintaining good standing is for global investors in a post before the 2013 debt ceiling increase.
“Global investors need a ‘risk-free’ benchmark to value securities and US Treasurys typically play this role (given that the U.S. still holds a solid credit rating and the fact that it has never defaulted),” wrote Sy. “Emerging and developing countries that issue dollar-denominated bonds could pay a higher price should the U.S. default. Furthermore, the U.S. Treasury market is perhaps the deepest and most liquid market in the world, allowing investors to exchange U.S. Treasuries for cash very rapidly even in in times of market stress. “
Since the US dollar is the considered the world’s reserve currency and US government bonds are key assets in much of the world’s investment portfolios, undermining the world’s trust in these financial products could be devastating.
The Treasury report on the economic impact of such a default concluded that the failure to raise the debt ceiling would be catastrophic.
From the report:
“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth—with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression.”
Battle lines
Given the necessity of raising the ceiling, the argument over the limit often becomes a battleground for various ideological arguments and politically motivated riders. This time, it has split not only Congress, but the Trump administration as well.
Mnuchin, for one, has said he favors a “clean” raise — legislation solely to raise the ceiling.
On the other hand, Mulvaney has advocated for legislation that includes some spending cuts designed to rein in some of the debt increases in the future. Such a move would likely be a poison pill for Democratic support and make it difficult to pass, given the thin Republican majority in the Senate.
Trump, for his part, has appeared to take Mnuchin’s side, telling congressional Republican leaders that Mnuchin is “that guy” for the debt ceiling.
Mulvaney’s position, however, is supported by his former colleagues in the hardline conservative House Freedom Caucus — and by some in the House GOP leadership.
The Freedom Caucus, which continually pushes for debt reduction and curtailed spending, even went as far as taking an official position in May that it would not support any debt ceiling bill without concessions on spending cuts.
House Speaker Paul Ryan has also said the party should target spending reductions to go along with a limit raise, but did not guarantee they would have the votes to do so.
“Yes, that can be achieved,” Ryan told reporters at a press conference Thursday. “The question is can we assemble the vote coalition to do that. So, we’re not taking any options off the table, we’re talking with our members about what is the best way to proceed, and how can we meet these fiscal deadlines we have.”
Hardline deficit hawks in the Senate, like Sen. Rand Paul, also have said they will push for spending cuts as a part of debt ceiling legislation.
Democrats have long pushed for a clean raise, and so far that is their official position.
“The Republican Majority should pass a clean debt limit increase and not risk the full faith and credit of the United States,” House Minority Leader Nancy Pelosi said in a statement.
But given the consequences of failing to raise the ceiling and the fact that the Republican majority could feel the pressure to save face on increasing the deficit, Democrats could push for more.
The other X-factor in the debt ceiling fight this time is Trump himself.
Chris Krueger, an analyst at the Cowen Washington Research Group, said Trump’s unpredictable approach to policy may bring more extreme solutions — like minting a platinum coin worth $1 trillion to pay down a chunk of the debt — to the table.
“With President Trump, debt ceiling options like the Platinum Coin and the 14th Amendment — while unlikely — are now at least a possibility,” Krueger wrote in a note to clients. “You also have Twitter risk, Trump’s personal/business history with debt, and his comments during the election about restructuring the nation’s debt (hair-cutting Treasuries?) that combine to make this a volatile DC-created tail risk.”
Issac Boltansky, an analyst at the political research firm Compass Point, said there is a strong likelihood that legislators avoid a default. But given the web of conflicting policy goals, he predicted some collateral damage along the way.
“Odds favor lawmakers addressing the debt ceiling in advance of the deadline, but we caution that there are numerous political and practical hurdles ahead,” Boltansky said in a note to clients. “Furthermore, our sense is that the accelerated debt limit timeline will further hamper the GOP’s legislative agenda, increase the odds of a government shutdown in October, and potentially shift the Federal Reserve’s policy normalization trajectory.”
Asked Friday what exactly the Treasury’s back-up plan was if the debt ceiling was not increased in time, Mnuchin offered only a vague assurance.
Said Mnuchin: “Treasury Secretary super powers.”
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NOW WATCH: ‘Our democracy is at risk’: Watch Rep. Al Green call for Trump’s impeachment
June 11, 2017 at 06:33PM
from Bob Bryan
Monday, June 5, 2017
A secret weapon is propping up global markets
Markets worldwide are being propped up by a secret weapon of sorts: robust cash holdings that are the highest in almost three decades.
While stocks globally have benefited from rebounding earnings growth, bonds have also rallied amid declining inflation expectations and uncertainty around the pace of Federal Reserve rate hikes.
Underpinning gains in both asset classes is $5 trillion of capital that’s sitting on the sidelines and serving as a reservoir for buying on weakness.
“This excess cash acts as a backstop for financial assets, both bonds and equities, because any correction is quickly reversed by investors deploying their excess cash to buy the dip,” Nikolaos Panigirtzoglou, managing director of global market strategy at JPMorgan, wrote in a client note.
While the $5 trillion is roughly half of what it was before the US presidential election — a period that’s seen the S&P 500 surge 14% — the outstanding cash is still close to a record and well above the average level seen since 1990, JPMorgan data show.
The safety net provided by these cash holdings has eased investor worry, as seen by subdued global volatility across all asset classes. Both realized and implied price swings sit at historical lows only previously seen in mid-2014, according to the firm, which also attributes the low volatility to a dearth of macroeconomic surprises.
“Effectively downside risk and volatility are suppressed,” said Panigirtzoglou. “Low levels of vol are typically seen in the mid phase of an economic or market cycle.”
The resilience of the stock market specifically has been on broad display over the last 24 months of the eight-year bull market. Just a couple weeks ago, the S&P 500 dropped the most in eight months, only to recover most of the loss in just two days.
Following the UK’s vote last June to leave the European Union, the S&P 500 fell by 5.3% over two trading sessions, only to make up those losses in about a week. The same dynamic was in play when China unexpectedly devalued its currency in August 2015. After the S&P 500 underwent an 11% correction, traders bought the dip and restored the benchmark to its pre-sell-off levels within about two months.
JPMorgan sees this trend continuing if the US government is able to provide policy clarity, which would then in turn further reduce uncertainty in the market.
“In such a scenario, the gap between money supply and demand would rise again back to previous pre-US election highs, inducing a reinvigoration of the asset reflation trade and supporting both equities and bonds,” said Panigirtzoglou.
SEE ALSO: Trump could get ‘beamed into space’ and stocks would be just fine
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NOW WATCH: 9 phrases on your résumé that make hiring managers cringe
June 05, 2017 at 06:36PM
from Joe Ciolli
DALIO: Donald Trump is putting a small part of America ahead of the entire world
The founder of the world’s largest hedge fund says Donald Trump is showcasing a tendency to choose the part over the whole.
In a note posted on his LinkedIn page Monday, Bridgewater Associates’ Ray Dalio said he was “especially concerned about the consequences of his pursuing so much conflict.”
“When faced with the choices between what’s good for the whole and what’s good for the part, and between harmony and conflict, he has a strong tendency to choose the part and conflict,” Dalio wrote on his LinkedIn page.
He added:
“By ‘the whole,’ I mean the whole ecosystem, the whole world community, and whole of the US, and by “the part,” I mean the part of the US that he is presumably trying to help.”
Dalio cited Trump’s decision last week to pull the US out of the Paris climate accord agreed to by 195 countries, calling it “consistent with [Trump’s] increasingly clear patterns of behavior.”
Trump’s actions are leaving people scrambling to figure out which Americans Trump is trying to help, such as American manufacturing workers, and at the expense of whom, Dalio wrote.
People are left questioning, for instance, whether they should support the “part he is trying to protect (e.g., American manufacturing workers)” or whether they are “more aligned with those who will lose out (e.g., immigrants, those who will lose benefits from his budget changes).”
In the end, Trump’s strategy might backfire on him, Dalio added:
“Sometimes conflict produces better results and sometimes it produces worse results for the people who are pursuing it to get what they want. For example, if Donald Trump were optimizing for his own well-being through conflict, it’s entirely possible that he would undermine his own well-being because the retaliation could be more damaging to him than the cooperation.”
Dalio and his $150 billion investment firm have speculated on Trump, and his implications for markets, for months, though those predictions haven’t always played out.
Last year, Bridgewater told clients on the day of the election that markets would slump if Trump were elected. (They have since rallied.) More recently, Bridgewater said that stocks would drop if Trump were impeached, according to a client note reviewed by Business Insider.
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NOW WATCH: Trump is reportedly selling his Caribbean estate for $28 million — take a look inside
June 05, 2017 at 06:36PM
from Rachael Levy
Sunday, June 4, 2017
Colorado economy: Low unemployment, high pot sales
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Colorado has the highest average elevation of any state, but it also has the lowest unemployment rate.
June 04, 2017 at 06:13PM
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Trump criticizes London’s mayor for his response to Saturday’s deadly terror attack
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Trump tweeted, “At least 7 dead and 48 wounded in terror attack and Mayor of London says there is “‘no reason to be alarmed!'”
June 04, 2017 at 06:13PM
from
Wednesday, May 24, 2017
$ICNB can someone provide analysis of the company
I’m a real novice at stocks, i have index funds and take some risks on penny stocks to me this one seems like a great long term investment. There Q1 financials were released with good progress to me… I dunno just looking for someone to give it a fresh look
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May 24, 2017 at 06:12PM
from /u/besafebuddy
Chile Inflation Seen at 0.0 Pct in may – Cenbank Poll
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CHILE INFLATION SEEN AT 0.0 PCT IN MAY – CENBANK POLL
The material has been provided by InstaForex Company – www.instaforex.com
May 24, 2017 at 06:19PM
from
Tuesday, May 23, 2017
Fxwirepro: Gbp/jpy Trade Idea
- GBP/JPY continuing its losing streak for the second consecutive week after making a top around 148.11. It is currently trading around 144.18.
- The pair formed a bottom around 143.34 on May 18th 2017 and is acting short term trend reversal level. GBP trading lower against all major pairs overnight on reports of the Manchester terror attacks. Investor awaits UK inflation report for further direction.
- The near term resistance stands around 145.40 high made on May 19th 2017 and any break above targets 146.26 (61.8% retracement of 148.11 and 143.34)/147.10.Bullish continuation can be seen only above 148.11.
- On the lower side, near term major support is around 143.34 and any break below will drag the pair down till 140.36 (61.8% retracement of 135.59 and 148.11).
It is good to sell on rallies around 144.25-144.30 with SL around 145.40 for the TP of 143.35/140.40.
Resistance
R1-145.40
R2 -146.25
R3- 147.10
Support
S1-143.35
S2-140.35
S3-138
The material has been provided by InstaForex Company – www.instaforex.com
May 23, 2017 at 06:37PM
from
IFGS: Lawrence Wintermeyer, Innovate Finance
Lawrence Wintermeyer from Innovate Finance speaks to us at IFGS.
May 23, 2017 at 06:04PM
from Dylan Jones
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