Kris eller uppgång för världen ?

För 10 år sedan verkade den globala ekonomin att vara på bättringsvägen.  Räntorna gick ner till 1 %, Storbritannien var i sitt 12:e år av oavbruten tillväxt, Kina var en del av WTO och alla trodde på att marknaderna själva kunde korrigera sig.

Den monetära systemkrasch som kom var oförutsedd och en total överraskning. IMF erkände att det hade gjort sig skyldiga till grupptänkande och tonade ner tecken på problem.

Ser man tillbaka och jämför, är dock 2014 inte så annorlunda jämfört med 2004. Den globala ekonomin är aktiv igen, med stor tillgång på billigt kapital.

En del optimister tror att perioden med låg inflation och fortsatt expansion har återvänt efter ett uppehåll som orsakats av kraschen. Lågkonjunkturer är sällsynta och länder återgår så småningom till en trendmässig tillväxt. Detta kan antingen vara början på en ny lång global uppgång, eller i ett annat fall en del av grupptänkande.

Kanske har IMF ännu en gång valt att ignorera de tecken som kan anas i 2014 som återigen kan leda till turbulens:

1. Den globala ekonomin är beroende av exceptionellt låga räntor. Räntorna är lägre i varje efterföljande cykel och räntorna är nu knappt över noll.

2. Obligationsmarknaden kan krascha eftersom världens centralbanker försöker återvända till en mer normal penningpolitik med en måttlig och gradvis höjning av styrräntorna.

3. Alla åberopade att skiffer olja och gas skulle bli vår nästa energikälla. Men 15 stora företag har skrivit av $35 miljarder i investeringar sedan boomen inleddes. Att få olja och gas ur marken har visat sig dyrare och mindre lönsamt än väntat.

4. Risken för resurskonflikter inom de kommande fem till tio åren, om inte det internationella samfundet blir bättre på att hantera den globala uppvärmningen . Extrema väderhändelser – från översvämningar i Storbritannien till torka i Australien – ökar.

5. Ökande ojämlikhet – en liten elit tjänar på den globala tillväxten. Längst ner, och i allt högre grad även för dem i mitten, är det en fråga om lönesänkningar, högre arbetslöshet, skuldsättning, åtstramning och fattigdom. De 85 rikaste människorna i världen äger tillsammans lika mycket som hälften av världens befolkning, men verkar omedveten om risken för omfattande social oro .

Vi får hoppas att dessa tecken inte blir mer reella och att vi ser en uppgång istället för en längre och djupare kris.

Posted on http://hedgenordic.com/

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Notes from #FOMC from 9-Apr-2014

Several Fed Officials Said Forecasts Overstated Rate Rise Meeting minutes revealed that in March, Fed Reserve policy makers discussed that a rise in their median projection for the main interest rate exaggerated the likely speed of tightening. Treasury yields rose last month after policy makers predicted that the benchmark interest rate would rise faster than previously forecast. The Fed reduced the monthly pace of bond purchases from $65 billion to $55 billion, and repeated it is likely to continue paring the program in “further measured steps”.

U.S. stocks rose, with the benchmark Standard & Poor’s 500 Index increasing 0.6 percent to 1,862.17 at 2:03 p.m. in New York. The yield on the 10-year Treasury note rose 1 basis point, or 0.01 percentage point, to 2.69 percent.

The committee last month scrapped its pledge to keep the main interest rate low at least as long as unemployment exceeds 6.5 percent

The economy and employment are showing steady gains, the economy isn’t “running flat-out, but it’s running fast enough to push down the unemployment rate and put people back to work.”Payrolls excluding government agencies rose by 192,000 workers after a 188,000 gain in February that was larger than first estimated. That brought the job count to 116.1 million, beating the January 2008 high of 116 million.

While flagging “a weak first quarter in the U.S. due to weather,” it is expected that the economy would grow at a 3 percent annual pace for “the rest of the year and into 2015.” Miami-based Lennar Corp., the biggest U.S. home builder by market value, saw customer traffic and sales volume rise through the first quarter.

Janet Yellen, 67, succeeded Ben S. Bernanke as Fed chief in February after three years as vice chair. In that role, she helped shape communication as the central bank sought to support the recovery from the longest recession since the Great Depression.

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The Daily Routines of Famous Artists and Scholars @infowetrust

Data visualization artist RJ Andrews of Info We Trust created an amazing infographic of 16 of the 161 creative masterminds featured in Currey’s book.

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World turbulences ahead ? #IMF #Forex #Economy

10 years ago, the global economy seemed to be on the mend. Interests rates down to 1%, UK was in its 12th year of uninterrupted growth, China was a part of WTO and everyone firmly believed in self correcting markets. The monetary system crash was unforeseen and a surprise. IMF confessed that it had been guilty of groupthink and played down the signs of trouble.
2014 is not that different from 2004. The global economy is mobile again, with the cheap money available.

Some optimists believe that the period of low inflation and continual expansion has returned after the hiatus caused by the crash. Recessions are rare and countries eventually revert to a trend rate of growth. This could either be the start of another long global upswing, another case of groupthink. Maybe the IMF is yet again choosing to ignore the signs in 2014 which might lead to another turbulence. 5 of such sings are

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  2. The bond market crashed as the world’s central banks cautiously try to return monetary policy to a more normal setting with a modest and gradual increase in official interest rates. 
  3. Everyone relied on Shale Oil and Gas to be our next source of energy. However 15 major companies have written off $35bn in investment since the boom began. Getting oil and gas out of the ground is proving costlier and less profitable than expected
  4. the risk of resource conflicts within the next five to 10 years unless the international community gets serious about dealing with global warming. The catalogue of extreme weather events – from floods in the UK to droughts in Australia – is growing. 
  5. Rising inequality – a tiny elite now grabbing the lion’s share of global growth. At the bottom, and increasingly for those in the middle as well, it is a case of wage squeezes, high unemployment, debt, austerity and poverty. The 85 richest people on the planet own the same wealth as half the world’s population but seem oblivious to the risk of widespread social unrest.

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How Racist is France? #France

There has been a sudden spike recently in expressions of racism in French public life—one that has provoked a national debate and may lead to legal action this week. It began in October 2013, when a candidate for the right-wing National Front likened Christiane Taubira, the Justice Minister, who is black, to a monkey, pairing her photograph with one of a chimpanzee on a Facebook page. Although the leader of the National Front, Marine Le Pen, forced the candidate to withdraw, the attacks continued. During some of the protests against France’s new gay-marriage law (which Taubira, as Justice Minister, pushed), the crowds chanted “Taubira, t’es foutue, les Français sont dans la rue.” (“Taubira, you’re fucked, the French are in the street!”) At one rally, a twelve-year-old child symbolically presented Taubira with a banana.

 

This does not appear to be an isolated case. The National Commission for the Rights of Man (C.N.C.D.H.), which has been charged by the French parliament to monitor incidents of racism in France, noted a twenty-three-per-cent increase in incidents of racism, Islamophobia, and anti-Semitism in 2012, and a five-fold increase over the past twenty years.

The Taubira affair has set off something of a national debate on the origins and responsibility for this ugly recrudescence of racism. Until fairly recently, the debate around prejudice in France has concentrated on the difficulties of integrating France’s sizeable Muslim minority, estimated at between four and six million people, or less than ten per cent of the population.

During the campaign, the center-right singled out Taubira as a reason to fear the election of the left. Taubira, who has a long and impressive political career, became one of the most visible members of Hollande’s government.

Joan Wallach Scott, an American scholar at the Institute for Advanced Studies, at Princeton, argues in her book “The Politics of the Veil” that the Republican values of egalité and laicité were historically entangled in the racist roots of French colonialism. The idea that people of all races could become French was coupled with an implicit (and often explicit) assumption that they came from inferior cultures, and needed to submit to France’s mission civilatrice to be equal. The French, in her view, need to learn to “negotiate difference.”

Egalité makes France officially color-blind: the government is not allowed to count, let alone consider, whether individuals belong to a racial, ethnic, or religious minority. And yet, the reality is that the Algerian workers who were encouraged to come to France in the nineteen-forties and fifties were placed in temporary housing on the periphery of France’s cities, and these geographically segregated banlieues are where later immigrants have continued to live.

Numerous studies show that job applicants with such addresses or with “foreign” names are much more likely to be rejected out of hand, regardless of their professional qualifications. Many in France continue to consider as immigrants people of North African or African descent whose families have lived in the country for generations, and who are French citizens. Fifty-five per cent consider Muslims to be a “group apart,” and twenty-six per cent still consider Jews to be a “group apart,” surprising given that Jewish immigration is very old and highly assimilated.

 

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Dark markets may be more harmful than high-frequency trading #HFT

Fears that high-speed traders have been rigging the U.S. stock market went mainstream last week thanks to allegations in a book by financial author Michael Lewis, but there may be a more serious threat to investors: the increasing amount of trading that happens outside of exchanges.

Some former regulators and academics say so much trading is now happening away from exchanges that publicly quoted prices for stocks on exchanges may no longer properly reflect where the market is. And this problem could cost investors far more money than any shenanigans related to high frequency trading.

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Nigeria becomes Africa’s biggest economy #Mint

One MINT country show us we need to follow them.

 

Nigeria has “rebased” its gross domestic product (GDP) data, which has pushed it above South Africa as the continent’s biggest economy.

Nigerian GDP now includes previously uncounted industries like telecoms, information technology, music, online sales, airlines, and film production.

GDP for 2013 totalled 80.3 trillion naira (£307.6bn: $509.9bn), the Nigerian statistics office said.

That compares with South Africa’s GDP of $370.3bn at the end of 2013.

‘Changes nothing’

However, some economists point out that Nigeria’s economic output is underperforming because at 170 million people, its population is three times larger than South Africa’s.

On a per-capita basis, South Africa’s GDP numbers are three times larger than Nigeria’s.

Continue reading the main story

“Start Quote

Economies are dynamic things; they grow, they shrink, they add new sectors and technologies and people’s behaviours change”

And Nigerian financial analyst Bismarck Rewane called the revisions “a vanity”.

He added: “The Nigerian population is not better off tomorrow because of that announcement. It doesn’t put more money in the bank, more food in their stomach. It changes nothing.”

Rebasing is carried out so that a nation’s GDP statistics give the most up-to-date picture of an economy as possible.

Most countries do it at least every three years or so, but Nigeria had not updated the components in its GDP base year since 1990.

Then, the country had one telecoms operator with around 300,000 phone lines. Now it has a whole mobile phone industry with tens of millions of subscribers.

Likewise, 24 years ago there was only one airline, and now there are many.

International aid donors are keen for more African countries to undertake this process regularly because it enables them to make better decisions when it comes to aid.

 

 

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No reason to again give #France more time to cut deficit – Rehn

There is no reason to further extend a European Union deadline for France to cut its budget deficit, the EU’s top economic official said on Saturday, adding policy-makers should have learnt the lessons of the debt crisis and stuck to agreed rules.

In June last year Paris got two more years, until 2015, to bring its budget shortfall below the EU ceiling of 3 percent of gross domestic product (GDP), from a 4 percent gap the European Commission expects it to have this year.

But after a government reshuffle this week, France said that while it agreed the deficit should fall, it wanted to discuss the deadline again as slower cuts would help the economy grow.

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High-frequency traders can’t front-run anyone #HFT

There’s been recent debate on High Frequency Trading (HFT) offsetting traditional SIP trading protocols. The difference is due to technology, HFTs have access to direct feeds from various exchanges, SIP takes time to aggregates various exchanges’ order books. The claim that HFTs are able to front people is faise as the order is already in the market before the HFT can see it. HFTs never know what a customer’s order is before it’s in the market. HFTs have no customers. Just because it is fast doesn’t mean HFTs are cheating. This information is public and available to anyone willing to overcome the challenges of acquiring and processing it very quickly. This is just a case of technology overcoming an existing challenge within the industry or rather seeing an opportunity which is perfectly legal, safe and taking it. Much of the confusion around HFTs derives from a complicated market structure that makes perfectly legitimate behavior seem predatory to the uninitiated.

Just like in the mid-1800s, Paul Reuter created a network of carrier pigeons to more quickly disseminate news. His biggest customers? Financial firms, who predictably abandoned pigeons with the advent of the direct telegraph. The HFT is similar.

There is room for improvement in US and global equity market. The kinds of improvements that need to be implemented are mostly incremental: making the NBBO real-time, enforcing rigorously against any unfair advantage given to any participant, getting rid of the ban on zero-spread (i.e., locked) markets. These changes will improve transparency and reduce complexity. The HFT helps us push toward positive reform.

There are legitimate and interesting concerns about conflicts of interest, free rider problems and market integrity that need addressing. But these issues have nothing to do with HFT. So, even as we strive for improvements, we should try to understand that we have never in our history have seen a more level playing field in any equity market. Especially in a time when large equity firms like Warren Buffet enjoy a myraid of advantages that we’re okay with, this is a positive development.

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Payrolls in U.S. – #NFP Rose 192,000 in March, Unemployment at 6.7%

Employers in the U.S. boosted payrolls and the unemployment rate held at 6.7 percent even as more Americans entered the labor force, showing steady progress that will prompt Federal Reserve policy makers to continue reducing stimulus while keeping interest rates low.

Payrolls rose 192,000 last month after a 197,000 gain in February that was larger than first estimated, the Labor Department reported today in Washington. The median forecast in a Bloomberg survey projected a 200,000 gain. Private employment, which excludes government jobs, surpassed the pre-recession peak for the first time.

Employment in January and February was revised higher, showing the effect on the labor market from inclement winter weather was less severe than previously thought. The gain puts payroll growth in step with the average over the past two years and shows companies are optimistic about the outlook for demand

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    Tags: month, average, jobs, rate, unemployment, forecast, department, labor, growth, usa
  • 67
      The following are the expectations for today's US December jobs reports as provided by the economists at 15 major banks. Goldman: Change in Nonfarm Payrolls (Dec): 230k Unemployment Rate (Dec): 5.7%. Deutsche: Change in Nonfarm Payrolls (Dec): 200k Unemployment Rate (Dec): 5.7%. Morgan Stanley: Change in Nonfarm Payrolls (Dec): 240k Unemployment…
    Tags: unemployment, rate, growth, payrolls, average, employment, nfp, payroll, jobs, market
  • 66
    The Federal Reserve holds its last policy meeting of the year on Tuesday and Wednesday, resulting in plenty of material to be scoured for clues about when interest rates will start inching up. The central bank’s policy committee releases its statement and new economic projections at 2 p.m. Wednesday, followed…
    Tags: policy, time, labor, market, outlook, reserve, fed, federal, interest, rates
  • 65
    The FOMC meeting is the week's highlight even though policy outcome seems a foregone conclusion. It will continue with the tapering course that Bernanke put on the Fed on before he left. However, there are more moving parts than usual, and it is worth reviewing. Essentially, there are four elements of…
    Tags: policy, will, continue, fed, usa
  • 65
    Several Fed Officials Said Forecasts Overstated Rate Rise Meeting minutes revealed that in March, Fed Reserve policy makers discussed that a rise in their median projection for the main interest rate exaggerated the likely speed of tightening. Treasury yields rose last month after policy makers predicted that the benchmark interest…
    Tags: rate, fed, rose, percent, u.s, interest, month, february, unemployment, makers