It has become clear that the coronavirus pandemic is not going away any time soon, as it continues to wreak havoc across the world. Economies of all sizes around the world are feeling the wrath of the COVID-19 pandemic as central banks have taken emergency action to cut rates (some repeatedly) and increase stimulus measures. The level of borrowing is moving into unchartered territory as the fears of the economic fallout are overwhelming. The world now has almost 6 million people infected and over 350,000 deaths attributed to COVID-19. Many countries are now starting to ease restrictions and hopefully reignite some economic activity however many believe it will not be as easy as flicking a switch. As the Chairman of the U.S. Federal Reserve, Jerome Powell said, “this is a time of great suffering and difficulty and it’s come on so quickly and with such force that you really can’t put into words the pain people are feeling and the uncertainty they are realizing.”Read More
How is that for a month! As the coronavirus pandemic continues, many more hundreds of thousands of people are infected. Only a month ago we were talking in terms of hundreds of thousands of people infected with COVID-19, which has now ballooned out to over three million and more than 225,000 dead. Economies have been brought to a grinding halt as governments around the world have taken unprecedented steps to lockdown their cities etc to help prevent the spread of the coronavirus.
Financial markets have been rattled and the price of oil has plummeted as demand as all but dried up. The extreme volatility we have seen in markets has subsided a little but remains above average. Most major central banks have taken emergency action to cut rates (some repeatedly) and increase stimulus measures.Read More
What a month! Only a month ago we were talking in terms of tens of thousands of people infected with COVID-19, which has now ballooned out to several hundreds of thousands and quickly approaching one million. Financial markets are rattled and have become ludicrously volatile with wild swings being experienced on a regular basis. Most major central banks have taken emergency action to cut rates (some repeatedly) and increased stimulus measures.
In a TV interview, the OECD’s secretary general Angel Gurria has said the economic fallout from the coronavirus pandemic will be felt far beyond the immediate impact of the virus. “What you have is an economic effect now that, very clearly, is going to be prolonged beyond the period of the pandemic,” Angel Gurria said. “We’ll hopefully get rid of the pandemic in the next two or three months and then the question is how many unemployed (will there be), how many small and medium-sized enterprises will be in a very, very severe situation if not disappeared by that time,” he added. “Life, and economic activity, is not going to be normalized any time soon,” he said. “We’re going to have the impact of this crisis for a long time to come.”Read More
All financial markets have been concerned about for the last month has been the Coronavirus out of China, which has now infected tens of thousands of people around the world. As regular updates emerge about the coronavirus and how quickly it is spreading, markets and investors around the world have been gripped by fear with the rapid spread of the coronavirus. Equity markets have plummeted and generally across the board we have seen a surge in volatility. U.S. Federal Reserve (Fed) Chair Jerome Powell has previously said the rate cuts last year kept the economy on solid footing and no further decreases were needed unless the outlook darkened. Well now with the virus, "Uncertainties about the outlook remain, including those posed by the new coronavirus," Powell said at a recent media conference. "There is likely to be some disruption to activity in China and globally" from the virus. "It's too early to say what the effect will be" in the U.S. "We are monitoring it carefully.", he added.Read More
If we didn’t have enough issues rattling financial markets, along comes the Coronavirus out of China, which has now infected thousands of people around the world. As regular updates emerge about the coronavirus and how quickly it is spreading, markets and investors around the world have been gripped by fear with the rapid spread of the coronavirus. According to data from the World Health Organization (WHO) and Chinese state media, the deadly coronavirus has taken the lives of at least 170 people in China and infected thousands more globally. As widely expected, the U.S. Federal Reserve kept their benchmark rate steady. Fed Chair Jerome Powell has previously said the rate cuts last year kept the economy on solid footing and no further decreases were needed unless the outlook darkened. "Uncertainties about the outlook remain, including those posed by the new coronavirus," Powell said at the post meeting media conference. "There is likely to be some disruption to activity in China and globally" from the virus. "It's too early to say what the effect will be" in the U.S. "We are monitoring it carefully.", he added.Read More
The main issue in December was the British election and its possible impact on Brexit plans. British Prime Minister Boris Johnson returned to Downing Street with a big majority after the Conservatives easily accounted for Labour in its traditional heartlands. Mr Johnson said it would give him a mandate to "get Brexit done" and take the United Kingdom out of the European Union next month. Earlier in the month, the U.S. Federal Reserve’s (Fed) Federal Open Market Committee had its two-day policy meeting, keeping interest rates steady, as widely expected. Unlike many previous meetings, the decision to keep rates unchanged was unanimous. After three straight interest rate cuts this this year, the Fed kept the funds rate in a target range of 1.5%-1.75%. More importantly, the Fed indicated that no action is likely next year while there is persistently low inflation.Read More
The most dominant issues in November were the United States Federal Reserve (Fed) and their plan on interest rates, as well as the latest update in the Brexit and election saga. In the U.S., the spotlights are always on the Fed and at a recent conference in Washington, New York Federal Reserve President John Williams said that the Fed has interest rates at the appropriate level for the U.S. economy. "I think we have monetary policy in the right place. The economy is right where we would like it to be." Markets only see around a 25% probability of a rates move at the Fed’s next meeting on 10th – 11th December. The Brexit critics continue to roll up to have their say. Recently retired former speaker John Bercow says leaving the EU is the United Kingdom's 'biggest blunder since World War II'. At a dinner in London, Mr Bercow was quoted as saying, “I don’t think it helps the UK. Brexit is the biggest mistake of this country after the war. I respect prime minister Johnson, but Brexit doesn’t help us. It’s better to be part of the [EU] power bloc.”Read More
Global growth (or lack thereof), Brexit and trade wars were the main concerns in August, however it was the trade wars between the United States and China that resumed its spot in the limelight in the markets. According to some market strategists and US economists, the ongoing trade wars increases the chances of equities declining and more significantly, a global recession over the next 12 months. Morgan Stanley’s chief economist, Chetan Ahya has suggested that the global economy would fall into recession around six to nine months after the U.S. and China enforce their new round of tariffs. “Risks remain skewed towards further escalation at least until material market or economic weakness shows,” Ahya told clients in a note.Read More
Throughout July, the trade talks (or lack thereof) between the United States and China have taken a back seat as a leadership change in the United Kingdom along with its looming Brexit deadline have been a focus, as well as ongoing concerns about global growth and the U.S. Federal Reserve’s first rate cut since 2008. The International Monetary Fund (IMF) trimmed its forecast for global economic growth again thanks to trade wars, inflation concerns and Brexit. “Risks to the forecast are mainly to the downside,” the IMF said. “They include further trade and technology tensions that dent sentiment and slow investment; a protracted increase in risk aversion that exposes the financial vulnerabilities continuing to accumulate after years of low interest rates. Mounting disinflationary pressures that increase debt service difficulties, constrain monetary policy space to counter downturns, and make adverse shocks more persistent than normal.”Read More
Several significant issues have lingered through November including Brexit, in which the Bank of England (BOE) have recently warned the nation of some significant consequences should the exit be disorderly. Britain risks suffering an even bigger hit to its economy than during the global financial crisis 10 years ago in a worse-case scenario, according to the BOE. The U.S. Federal Reserve have also recently changed their tune as Fed Chairman Jerome Powell said he considers the central bank's benchmark interest rate to be near a neutral level, an important distinction from remarks he made less than two months ago. The markets have generally welcomed this change.Read More