• Phoenix Capital...
    10/07/2015 - 18:54
    If you think this sounds like some kind of conspiracy theory, consider that France just banned any transaction over €1,000 Euros from using physical cash. Spain has already banned transactions...

World Economic Outlook

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Is Russia Plotting To Bring Down OPEC?

Russia can be seen as maneuvering to split OPEC into two blocs, with Russia, although not a member, persuading the “Russian bloc” to isolate Saudi Arabia and the Gulf Arab OPEC members within OPEC. This might persuade the Saudis to seek a compromise with the have nots.

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Why The Fed's Credibility Is Crashing: The Market's Three Biggest Worries

The first is that by keeping rates lower for even longer, the EM imbalances the Fed is worrying about will grow even larger, making it harder to exit stimulus; The second is a question on the value of forward guidance, after the Fed has repeatedly called for a hike and then backed out; The third is that the Fed may have limited, or no ammunition to react to the next potential shock, and that financial booms and busts may grow even larger over time.

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Lagarde: "China's Slowdown Was Predictable, Predicted"... Yes, By Everyone Except The IMF

"The [Chinese] slowdown was predictable, predicted, unavoidable," Lagarde was quoted as saying." Well, yes, it was... by everyone but the IMF. Here is the history of the IMF's Chinese GDP growth forecasts taken straight from its World Economic Outlook quarterly pieces. The graph needs no explanation.

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Frontrunning: July 10

  • Fed Chair Yellen To Speak As Global Tensions Rise (WSJ)
  • Greek PM Tsipras seeks party backing after abrupt concessions (Reuters)
  • France Hails Greek Aid Proposals as Germany Reserves Judgment (BBG)
  • Greek PM says does not have mandate to exit eurozone (Reuters)
  • France Intercedes on Greece’s Behalf to Try to Hold Eurozone Together (WSJ)
  • Frozen Funds, Fleeing Tourists: Greek Startups Feel the Pinch (BBG)
  • Doubts Simmer Despite China’s Gain (WSJ)
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Five Years Of Glorious IMF "Hockey Stick" Comedy

Who cares about constantly being wrong right here, right now (aside from 11 million Greeks that is) when your projections keep promising that growth is always "just around the corner" as they do in the following chart showing just why the IMF has now lost all credibility not only as an bailouter of last resort (see Greece), but as a forecaster.Presenting: over five years of glorious IMF hockeysticks.

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This Is Why The Euro Is Finished

It’s simple, the euro is finished. It won’t survive the unmitigated scandal that Greece has become. Greece is not the victim of its own profligacy, it’s the victim of a structure that makes it possible to unload the losses of the big countries’ failing financial systems onto the shoulders of the smaller. There’s no way Greece could win. The damned lies and liars and statistics that come with all this are merely the cherry on the euro cake. It’s done. Stick a fork in it. The smaller, poorer, countries in the eurozone need to get out while they can, and as fast as they can, or they will find themselves saddled with ever more losses of the richer nations as the euro falls apart. The structure guarantees it.

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Oil Markets Can’t Ignore The Fundamentals Forever

Storage withdrawals and falling rig count have been the main sources of hope that U.S. tight oil production will fall and that oil prices will rebound. That hope is fading as it is now clear that recent withdrawals from U.S. crude oil storage are because of price, not falling supply, and that the drop in rig count has stalled. Present data, however, suggests that the global over-supply has gotten worse, not better, that overall demand for liquids remains weak, and the world economic outlook is discouraging. At the same time, market movements are not always based on fundamentals. In the long run, however, fundamentals rule suggesting the current price surge is at best premature.

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BofA "Explains" Why Optimistic Economist Forecasts Have Been So Wrong In The Past 5 Years

  • 2010: The first full year of the recovery was a growth recession with a collapse in inventories (after the restocking was complete), and continued private sector deleveraging.
  • 2011: There were a series of events, including the Japanese tsunami, spike in oil prices and US debt downgrade by S&P.
  • 2012: The crisis in the Eurozone intensified with concerns over a Greek exit and a breakup of the Eurozone. The policy response abroad was lackluster and there were concerns of another financial crisis.
  • 2013: The combination of the sequester, debt ceiling fight and government shutdown created an environment of heightened uncertainty and fiscal restraint.
  • 2014: The polar vortex delayed economic activity and led to a permanent loss of growth.
  • 2015: Rapid appreciation of the dollar and heightened uncertainty about the winners and losers from plunging oil prices has hurt growth. A small part of the weakness may be related to the weather and the dock strike.
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Frontrunning: April 15

  • China growth slowest in six years, more stimulus expected soon (Reuters)
  • EU charges Google over shopping searches, to probe Android (Reuters)
  • A Chinese Paradox: Slow Growth Is Good, Stock Bubbles Welcome (BBG)
  • Draghi Seen Dispelling Duration Doubts About QE Program (BBG)
  • IEA Sees OPEC Supply Jumping Most in Four Years on Saudi Surge (BBG)
  • SEC Reaches Settlement with Former Freddie Mac  (WSJ)
  • Kerry says confident Obama can get final deal on Iran (Reuters)
  • Regulators Call for Short-Term Loan Changes to Handle ‘Too-Big-to-Fail’ (WSJ)
  • Florida Doctor Linked to Sen. Robert Menendez Indicted for Medicare Fraud (WSJ)
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Key Global Events In The Coming Week

While today's macro calendar is empty with no central bank speakers or economic news (just the monthly budget (deficit) statement this afternoon), it’s a fairly busy calendar for us to look forward to this week as earnings season kicks up a gear in the US as mentioned while Greece headlines and the G20 finance ministers meeting on Thursday mark the non-data related highlights.

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"Short-Term Greedy & Long-Term Poorer"

In what Bloomberg's Richard Breslow calls "a sign of the times, and not a good one" the weekend has been dominated by politicians commenting on the ECB. Not only did Erdogan un-independently suggest Turkish policy action today (as we noted here), but now Merkel, Hollande, Noonan etc. are all telling you what the ECB should do or indeed will do and then telling you that, of course, the ECB is independent. Central Banks have essentially become enormous sovereign wealth funds manipulating the markets and very much in the thrall of geo-political events. This is a very problematic development which is an inevitable follow-on to the activism of central banks in their policy conduct.

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It's Official (Finally): The US Is No Longer The World's #1 Economy

It seems rather appropriate that just seven days after the US government hit a whopping $18 trillion in debt, mainstream financial media has picked up the IMF’s recent World Economic Outlook report, which puts the US economy as #2 in the world. China obviously has its own substantial problems, but over the last several decades one thing is for certain - China (and Asia in general) is a place where production and savings are valued. The universal law of wealth is to produce more than you consume. The West has completely broken that.

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Goldman Expects "Steady As She Goes" FOMC With QE Ending On Schedule

Of the last 150 years of developed market monetary policy, we suspect nothing will prepare market participants or Fed members for the twisted terms and double-speak the FOMC will try to unleash today as they attempt to 'end' the most extreme policy measures ever. Goldman Sachs' 'base-case' for today's FOMC is a "steady as she goes" message with few substantive changes in language and asset purchases ending on schedule... but Goldman warns, recent macro and market action might bias the Fed dovish.

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