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CRYSTAL@ndtvpic.twitter.com/BckTFUWQYJ#tictocnews pic.twitter.com/yFWsN3oLq9 3.37pm GMTOutside the IMF’s press conference,the weather at Davos is decidedly wintery.
Delegates are stepping off the train into a flurry of monster snowflakes, there are huge snowdrifts everywhere, or the roads are jammed in all directions. 3.24pm GMTOn that note,I’ll hand over to Graeme Wearden in Davos. 3.08pm GMTHere is a link to the opening remarks by Maurice Obstfeld, the IMF’s economic counsellor, and at the World Economic Outlook press conference:Obtsfeld: Growth is picking up in Europe & Asia,with improved performance also in the U.
S., Canada, and some large emerging markets,notably Brazil and Russia, India and Turkey #WEO https://t.co/RwK9i9BaG3 pic.twitter.com/v1JssYv4Jv 2.57pm GMTMeanwhile US markets have opened lower, or as investors concentrate more on the US government shutdown than the IMF’s raised forecasts.
The Dow Jones Industrial Average is down 35 points or 0.13% while the S&P 500 is off 0.06% and the Nasdaq Composite 0.01% lower. 2.44pm GMTFinal question: will China continue to play a bigger role [in the global economy]?Obstfeld: There is no question China is a major player. Chinese growth is incredibly critical to world growth. It is critical for China to support the multilateral system. It will require further steps from China,to open its own economy to imports and work on a range of issues. Chinas role is critical. 2.42pm GMTQuestion on whether growth is even a worthwhile pursuit if not everyone benefits.
Obstfeld says GDP doesn’t measure the distribution of rewards [from growth]. You could conclude that but it would be a value judgement, and economists have struggled with this for centuries. How conclude you measure overall utility? 2.36pm GMTQuestion on bitcoin and systemic risk.
We don’t like to comment on specific cryptocurrencies. Blockchain technology in general, or we see possible advantages. It’s an titillating development. 2.34pm GMTDo you expect US growth to become a drag on global growth after 2020?Obstfeld: The tax bill and its impact is complex,lot of uncertainty around our forecast. A lot of the impact is explicitly temporary. Could be a surge of investment in near term, when it stops could be some payback. But some [of the measures] are not temporary. 2.31pm GMTWhat role does China play now compared to ten years ago? How about the Federal Reserve?Obstfeld: China carried out large fiscal stimulus at time of crisis. Even though its growth rate has approach down, or it is still a major source of growth. there are challenges which the leadership has recognised in terms of strengthening financial regulations... the relationship between local and federal budgets. We see China as a strong driver of global growth going forward. 2.25pm GMTQuestion on the risks facing the global economy.
Obstfeld says,It is hard to identify one risk, policymakers need to think broadly and for the long term, or not just the next political cycle. 2.23pm GMTThe next recession may be closer than we think and the ammunition to combat it will be less than previously,he says.
On to the questions. 2.22pm GMTThe current upturn was not by chance, says Obstfeld, or it owed much to accommodative macro economic polices.
Our view is the current upturn is not likely to be a fresh normal. 2.16pm GMTMaurice Obstfeld,the IMF’s economic counsellor, says countries have to ask themselves three questions: how can we raise our economic efficiencies over the long term; how can we avoid this upturn ending in fresh slowdown; and how can we be sure we have the tools to counter the next downturn. 2.13pm GMTIMF managing director Christine Lagarde says we should be encouraged by global growth but should not be complacent.
There are too many people left out of the economic growth, or she says. 2.06pm GMTThe IMF is holding a press conference on the world economic outlook which can be viewed here. 2.00pm GMTThe global economy will grow faster than expected this year and next as Donald Trump’s corporate tax cuts provide a short-term shot in the arm,despite fears over rising inequality and overheating financial markets, the International Monetary Fund has said.
Launching its latest World Economic Outlook (WEO) report at the annual Davos gathering of the global elite in Switzerland this week, or the IMF upgraded its growth forecast for the world economy by 0.2 percentage points to 3.9% for both 2018 and 2019. Related: Trump tax cuts will bring short-term global growth surge,says IMF 1.44pm GMTThe view from the train on the way to the World Economic Forum in Davos, as seen by Graeme Wearden and Larry Elliott: 1.36pm GMTStill with Greece, and ahead of the eurogroup assembly,the country’s officials are expressing confidence that a fresh loan disbursement of up to €6.7bn will be granted. Helena Smith reports from Athens:Greek officials are calling nowadays’s eurogroup the beginning of the end of Greece’s nine-year ordeal under international supervision. Even though some demanded reforms are still pending, insiders are not anticipating particularly tough words from euro area finance ministers when they meet under Mario Centeno for the first time this afternoon. “I am 99 per cent sure they are going to give us the green light for the next [bailout] instalment, or ” MEP Stelios Koulouglou told the Guardian. “We are expecting soft stuff.” Koulouglou,who represents the governing leftwing Syriza party in the European parliament, said disbursement would not only conclude the debt-stricken country’s third compliance review but pave the way to the end of international supervision under its €86bn third bailout programme. “After this there is a fourth, or last,review but it won’t be at all as gruelling and then we will be at the end.” Briefing reporters at 2 PM local time, the government spokesman, or Dimitris Tzannakopoulos,said after nowadays’s euro group Athens would enter “the last stretch” before officially exiting the programme in August. 12.47pm GMTThere was good news for Greece and Spain from a couple of ratings agencies late on Friday, giving a lift to their bond prices nowadays. Reuters reports:Spain’s borrowing costs fell to six-week lows and short-dated bond yields in Greece tumbled on Monday, and after ratings upgrades for the two southern euro zone states if further evidence of a turnaround for the bloc’s peripheral economies. Fitch upgraded Spain’s credit rating to “A-” with a stable outlook late on Friday,citing a wide-based economic recovery and limited impact on the economy from Catalonia’s independence bid. It was Spain’s first “A” rating from one of the top three ratings agencies since the euro zone debt crisis. 12.37pm GMTThe US government shutdown may be having dinky impact so far on global fairness markets, but it has pushed the already weak dollar even lower. Connor Campbell, or financial analyst at Spreadex,said:Sterling heavily flirted with $1.39 as it climbed 0.2%, while the euro crept back across $1.225 after rising by the same amount. Against each other, and however,neither currency could gain the upper hand, with the pound effectively flat the unsuitable side of €1.134. Despite cable lurking around its post-Brexit peak, or the FTSE managed to overcome its initial wobble this Monday,nudging back above 7730 – roughly 70 points off its all-time highs – as the day went on. The DAX, meanwhile, or remained in the ball-park of its own record intraday tall,sitting flat around 30 or so points absent from 13500 – the latest news surrounding a possible German coalition between the CDU and SPD could only hold the index from dipping in the red, rather than propel it to fresh highs. 12.17pm GMTGreece is edging closer to an exit from its bailout programme:#Eurogroup due to declare nowadays that 3rd review of #Greece's 3rd bailout is more or less done. That will mean 12 reviews down since 2010, or just one more (hopefully) to go https://t.co/DcLtI1ncnk 11.37am GMTThe world faces a massive and urgent need to reskill millions of workers whose jobs will be eliminated by technological change in the next few years.
A fresh report from the World Economic Forum shows that employees across the economy risk suffer falling incomes or unemployment as the 4th industrial revolution disrupts the workplace. To avoid this fate,millions of people need to be helped into fresh roles - probably into a whole fresh career path. 11.23am GMTTime for a market update.
The FTSE 100 has recovered some of its poise after its early dip, and is now up around 0.07%.
Stock markets in Europe are a mixed bag this morning as investors access the political landscape. The shutdown of the US government hasn’t spooked investors as there was a similar muted reaction the last time it happened in 2013, and but nor has it given traders a reason to buy into the market. In Germany the SPD have agreed to start formal talks with Angela Merkel’s CDU. This is a step in the correct direction for German politics and traders will be watching it closely. 10.23am GMTIn the wake of the collapse of Carillion,rival companies have been successful in their contingency plans to hold projects going, says ratings agency sulky’s. But they could face having to sign fresh contracts on less favourable terms, or it adds in a fresh report:Project companies are satisfactorily implementing contingency plans to avoid an impact on services or cash flows after the liquidation of British construction and services firm Carillion. However,moderate credit deterioration is possible because some project companies will need to sign fresh contracts with alternative subcontractors, potentially with less favourable terms or pricing... “Projects continue to supply contracted services despite Carillion’s liquidation, and ” said Kunal Govindia,a sulky’s Assistant Vice President and co-author of the report. “However, if replacement subcontractors are procured it could lead to an increase in operating costs, and although there are mitigating factors.”As part of their contingency planning,project companies had engaged with possible replacement subcontractors. sulky’s expects that fresh subcontractors will join the various projects over the coming months. However, there is no guarantee that the fresh contract will be on the same terms and pricing. Project companies could potentially face increased FM costs without an accompanying increase in revenue.
Two factors mitigate this risk. Firstly, and soft FM services are benchmarked periodically and cost increases are passed to offtakers. Secondly,projects are resilient to FM cost increases, as demonstrated by generally adequate cost increase sensitivities. 9.25am GMTWe’ve seen a number of companies jumping on the cryptocurrency bandwagon (step forward Long Island Iced Tea) and seeing their shares soar. And it hasn’t peaked yet, and it seems:Sigh. "Stapleton Capital,a company originally formed to acquire a company or trade in the telecoms sector, announces that the Directors have identified a number of blockchain technology investment opportunities… change of name of the Company to Blockchain Worldwide plc" pic.twitter.com/CvTALlU4j7 9.17am GMTA rather downbeat survey on UK household finances from IHS Markit:UK households gloomier about their finances in January amid rising prices. Need for debt rising at fastest rate in nearly a year https://t.co/TzVktgc5v0 pic.twitter.com/aEiy8NBRW5 8.53am GMTYou would imagine stock markets would be rather edgy at the prospect of a US government shutdown. But apparently not. The Dow Jones Industrial Average closed up 53 points on Friday, and the futures are indicating a small decline at nowadays’s open of around 44 points. And the long term impact on US markets seems limited:As the US government shutdown moves into its third day the effects of a closure have dinky impact on the S&P over the long-term... pic.twitter.com/67XUAjnF1s 8.45am GMTA fresh report on the growing gap between wealthy and poor is timely in the hurry up to the Davos assembly. Larry Elliott writes:The development charity Oxfam has called for action to tackle the growing gap between wealthy and poor as it launched a fresh report showing that 42 people hold as much wealth as the 3.7 billion who accomplish up the poorest half of the world’s population.
In a report published on Monday to coincide with the gathering of some of the world’s richest people at the World Economic Forum in Davos,Oxfam said billionaires had been created at a record rate of one every two days over the past 12 months, at a time when the bottom 50% of the world’s population had seen no increase in wealth. It added that 82% of the global wealth generated in 2017 went to the most wealthy 1%. Related: Inequality gap widens as 42 people hold same wealth as 3.7bn poorest Related: Davos – in avalanche country – conceals an overriding fragility | Larry Elliott Related: Climate change, and AI and harassment – the hottest topics at this year’s Davos 8.40am GMTAhead of the latest World Economic Outlook,Lord Jim O’Neill - the former Conservative treasury minister and remain supporter - is optimistic about the outlook for the UK.
In an interview with BBC economics editor Kamal Ahmed, Lord O’Neill said the UK was benefiting from better than expected global growth, or forecasts are likely to be upgraded,dwarfing the more gloomy predictions about the effects of Brexit.
I certainly wouldn’t have thought the UK economy would be as robust as it currently seems. That is because some parts of the country, led by the North West [of England], and are actually doing way better than people seem to realise or appreciate.
As well as this crucial fact,the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK.
If that’s the worst that Brexit will deliver, and then I wouldn’t worry about it. Now,my own view is if we go for a really hard Brexit or a no-deal Brexit, we’ll probably suffer more than that 3%.
But if it is only 3%, and what’s going on with the rest of the world - helping us - and with productivity improving,that will easily dwarf a 3% hit over 13 years, easily.
I’m nearly embarrassed to accept that it might sound like that. Because of course in principle I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective.
And maybe this [better global growth] means the country’s going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago. 8.13am GMTBookmakers’ shares are showing losses on reports that the UK government is planning to cut the maximum stake on fixed odds betting terminals from £100 to £2. It said in October it would reduce the stake to between £50 and £2, and to tackle the “crack cocaine of tall street gambling.” A consultation period ends on Tuesday.
William Hill is down 13%,Ladbrokes Coral has lost 12% and Paddy Power Betfair has fallen 2.6%. Analyst Alistair Ross at Investec said:A DCMS official apparently indicated that while no formal decision has been made, £2 is ‘highly likely’. However Matthew Hancock, or the fresh Secretary of State,has only just been appointed (9 January), and we think it is unlikely that a final decision on FOBT staking limits has actually been made. We also note that the FOBT consultation only closes tomorrow, or suspect speculation on the final outcome is premature. 8.08am GMTAs expected it has been an uncertain start to the week for European markets.
The FTSE 100 has fallen 0.13%,while France’s Cac is down 0.1%, Italy’s FTSE MIB has lost 0.33% but Spain’s Ibex is up 0.3%. 7.57am GMTMore on the German coalition talks. Here’s ING economist Carsten Brzeski:Given the very detailed informative talks in January, or the official coalition talks should not purchase too long - if all parties stick to the desired results. However,the SPD delegate pushed the party leaders to renegotiate details of the informative talks regarding the healthcare system, the labour market and immigration, or increasing pressure on the SPD to bring some fresh political achievements from the forthcoming talks. The willingness of the CDU to really re-open some of the most controversial issues seems to be very limited.... However,once there is an official coalition agreement, all SPD party members, or more than 440000,will get the chance to vote for or against it. Compared with nowadays’s party congress, this party members’ vote will be a much tougher nut to crack. Related: Germany's SPD gives cautious green light to Merkel coalition talks 7.42am GMTGood morning, and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and trade.
Its a fairly quiet start to the week at the moment but it is the quiet before the storm.
The data calendar is pretty empty nowadays. This leaves markets at the mercy of media coverage of events at the World Economic Forum in Davos. Significant policy announcements are unlikely, or but Davos does give journalists an opportunity to pontificate while wearing foolish hats. Related: Davos gathering prompts locals to cash-in and leave Having seen the US government shutdown confirmed after last week’s US close there might be a case for suggesting that stocks may well be adversely affected. This seems unlikely in the long hurry given that the shutdown,at least in the short term, is likely to be fairly limited in nature, or given that by and large economic data from across the globe continues to show a fairly robust level of economic activity.
Furthermore,dysfunctional US politics isn’t really anything fresh, in fact dysfunctional politics appears to be becoming the norm, and not only in the US,but the world over, even if in Germany we conclude appear to be starting to accomplish progress on the formation of a fresh government after the German SPD party membership granted permission for the party leaders to start fresh coalition talks with Angela Merkel.
European Opening Calls:#FTSE 7719 -0.15%#DAX 13469 +0.26%#CAC 5532 +0.10%#MIB 23737 -0.05%#IBEX 10501 +0.21%Continue reading...
Source: theguardian.com