Donald Trump has waffled about whether he will renew the term of the current US Federal Reserve chair, Janet Yellen, when her term expires in February next year. Now, the president won’t need to wait that long to shake up the top one of the world’s most influential economic institutions: vice chairman Stanley Fischer just handed in his resignation.
Less than two months ago, the Bank of Canada raised interest rates for the first time in seven years. Traders priced in a 40% chance of the central bank raising interest rates again today, with higher odds for a move in October or December.
Donald Trump seems to take delight in toying with Mexico and Canada over the fate of the North American Free Trade Agreement (Nafta).
Over the weekend, North Korea conducted its sixth and largest nuclear test to date. South Korea responded with live-fire exercises and, in the process, determined that the North is preparing more missile launches. Although US markets are closed today for the Labor Day holiday, there are plenty other signs that investors are nervous about where this will lead.
The bad news just keeps piling on for the dollar.
In the aftermath of violence in Charlottesville, Virginia and Donald Trump’s reluctance to fully condemn the neo-Nazis, Klansmen and white supremacists in attendance, businesspeople of all stripes have been distancing themselves from the US president. Notably, two people are sticking by his side: Gary Cohn, head of the National Economic Council, and Steven Mnuchin, US Treasury Secretary. Between them they hold the most sway over US economic policy but many question how they can continue to serve in Trump’s administration.
In 2017, more countries are recording GDP growth than in any year since 2007. According to forecasts of the 190-odd countries tracked by the IMF, 94% of the world’s economies will register positive annual growth this year, a shade under the 96% achieved in 2007.1
Norway’s sovereign wealth fund is now worth just over $1 trillion. It is the world’s largest fund of its kind, and is clearly determined to keep it that way. In the first half of 2017, the fund made a cool 499 billion kroner ($63 billion), the best half-year return in its history, the fund said today.
For a while, it seemed like Canada had solved one of the thorniest problems that plague many big cities, from London to San Francisco, Sydney, and beyond: how to get an overheating property market under a control.
On Aug. 9, 2007, BNP Paribas froze three of its investment funds—barring investors from withdrawing billions of euros—because of a lack of liquidity in the US markets. At that time, the French bank was the third-largest in the world by assets. For a bank that size to admit that it simply had no idea what some of its US property assets were worth rattled the markets.
If we knew then what we know now…
Investors faith in Europe’s economic recovery has made stocks in Italy the best performers in the G7 so far this year. Forgotten, it seems, are worries that Italy’s fragile banking system could blow up the euro zone. Set aside are concerns of how disgruntled Italians are with the euro, in general.
Companies are selling less abroad than they used to. On average, in 2016 corporate revenues generated overseas fell to 44% globally, the lowest level in five years, according to HSBC.
Nothing unites the world’s city dwellers quite like complaining about property prices.
Germany is Europe’s economic powerhouse, with a reputation for efficiency, order, and low unemployment. But since the end of 2015, the job market in the neighboring Czech Republic has been even stronger.
In the US, the gender pay gap is narrowing. But progress on equal pay is not itself equal. To earn the same amount as white men in 2016, black women will have had to keep working until around today, July 31, according to the Economic Policy Institute (EPI).
In Venezuela, runaway inflation, a collapsing currency, and chronic shortages have battered the South American nation’s economy for years. Over the past five years, Venezuela’s economy has shrank by a quarter, according to the IMF.
Amazon’s paltry second-quarter earnings made one thing clear: profits don’t matter.
Exactly five years ago, European Central Bank president Mario Draghi demonstrated the power of words. The euro zone was in the throes of crisis, with bailouts of debt-laden members pushing the currency union to the verge of collapse. But with a simple, seemingly off-the-cuff phrase, Draghi fundamentally changed the course of events: “whatever it takes.”
A few months ago, Donald Trump said the best thing about a strong dollar is that it “sounds good.” The US president also fretted that the dollar may be too strong, in fact, “and partially that’s my fault because people have confidence in me.”
For many investors, the phrase “Greek bonds” makes them break out in a cold sweat. Greece’s spectacular economic collapse was at the center of the euro zone’s sovereign debt crisis and just a few years ago private bondholders were hit with huge losses on Greek debt, which was forcibly restructured as part of the country’s multibillion-euro bailout. Bad times.
The US used to be the engine of international economic growth—where the US went, the world economy followed. Now, the tables are turning. The International Monetary Fund has cut its projections for US economic growth but not for the rest of the world. Instead the global economy is being propelled forward by the euro zone, China, Japan, and Canada.
It’s a number that gives big bank execs nightmares. In the nine years since the global financial crisis, US and European investment banks have set aside $273 billion in provisions to pay for fines and other litigation related to bad behavior, according to Moody’s. Almost half the fines they paid were for dealing in dodgy US mortgages.
As goes the Donald Trump administration, so goes the US dollar.
