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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (109494)	1/4/2015 11:59:45 PM
From: elmatador	Read Replies (1) \| Respond to of 219974

US should enjoy afternoon sunshine while it lasts Elmat: Seven year of low interest rates forced jobless rates down created huge amount fo jobs but bot the well paid type. But it is better than Europe wand Japan where there is not jobs at all. As I keep telling don't wait Germany to get Europe of the doldrums. Don't wait for the US to lift the world economy. Rest of the world have to wake up. They have to get thongs going on their own or they will revert back to the bush they came from. US should enjoy afternoon sunshine while it lasts Edward Luce In 2015 Europe will still be waiting for Godot while America copes with return to normality Three decades ago, Ronald Reagan declared “ Morning in America” after years of economic turmoil. His timing was perfect. Several years of boom ensued. No one today would dare muse about the US being a “shining city on the hill”. There have been too many false dawns since 2008 for that. Yet a corner has been turned. The recovery under Barack Obama has been painfully slow by postwar standards, but it is fast compared to most of the rest of the world. There is also more to come in 2015. The US should enjoy the afternoon sunshine while it lasts. Most of America’s good news is relative. The US is estimated to have grown last year by 2.6 per cent — roughly half a percentage point higher than the previous five years of recovery. This was weak compared to all previous US recoveries barring the first business cycle of the 21st century. But it looks stellar compared to the eurozone, which barely cleared 1 per cent. This coming year is likely to be very similar. The US will grow by around 3 per cent while the Europeans and Japan would be lucky to exceed 1 per cent Moreover, US unemployment is falling more rapidly than it has in years. With almost 3m jobs created, 2014 was the best year for the US labour market since 1999 — the height of Bill Clinton’s boom. At 5.8 per cent, the US jobless rate is almost half the rate of the eurozone. Most of America’s new jobs may be casualised and poorly paid. But they are jobs nonetheless. By contrast, countries such as Italy, France and Spain are unable to generate jobs of any description. A whole generation of Europeans is withering on the vine. The next few months will crystallise the growing US-Europe divergence. At some point — probably in June — Janet Yellen’s Federal Reserve will begin the long-awaited turn in the US interest rate cycle. Should the US continue to create more than 250,000 jobs a month, that point could come sooner. The era of exceptionally easy money is at an end in the US. With luck, the European Central Bank will head in the opposite direction. Alas, the ECB is still debating how and on what scale to deploy the same kind of tools that have helped dig the US out of the post-2008 slump. In 2015 Europe will still be waiting for Godot while the US will be coping with a return to normality. That is America’s good news. But it is of the type that used to qualify as bad. Nor will it persist for very long. The US recovery is already mature — there is no Clinton-style middle class boom around the corner. In spite of seven years of zero interest rates, the US has yet to clear the 3 per cent growth milestone. Free money does not go far nowadays. Long run trend growth has fallen from above 3 per cent to about 2 per cent. The US middle class has yet to regain its pre-2008 median income levels. It would take several years of 3 per cent growth for that to occur. The chances are this business cycle will come to an end in 2016 or 2017 without that having happened. The contrast with the Reagan years is telling. In those days the US was the twin-engined motor of the global economy. Today the US is not strong enough to lift the rest of the world out of a downturn. But it is robust enough to continue to motor ahead even if Europe and Japan stall. The most important ingredient in the recent US growth spurt is the near-halving in the global oil price in the past six months. That has put hundreds of extra dollars in the pockets of Americans each month, boosting consumer spending. If the price of oil stays below $60 a barrel in 2015, the windfall will add about half a percentage point to US headline growth — enough to make up for the absence of real wage growth. The more persistent lift has come from rising US asset prices. The stock market boom has helped revive the housing market and pension valuations. Some of the gains are vulnerable to a tightening of US interest rates. Some may also be jeopardised by the type of crisis that so often follows a turn in the US monetary cycle. Risk forecasters spend half their time nowadays searching for unexploded bombs on emerging market balance sheets. Yet by historic standards, the US equity markets are not yet in bubble territory. US corporate balance sheets are also strong. Barring a global meltdown, the surge in American asset prices ought to survive gradual monetary tightening. Why, then, are so few people popping the champagne? The answer is simple. Most Americans are worse off than they were at the beginning of the 21st century, while the top sliver are dramatically richer. There is no reason to believe the US has found the answer to that. Relative to most of Europe, America’s middle class have better prospects, particularly in the short term. But in the long run, we are all subject to the same grand squeeze. The US system still has the wherewithal to generate growth — albeit with gains captured almost wholly by the top echelons. But it is neither your parents’ recovery, nor your grandparents’. This coming year will be America’s best in a decade. It will nevertheless elude most Americans. edward.luce@ft.com

To: THE ANT who wrote (109494)	1/5/2015 12:11:36 AM
From: elmatador	Respond to of 219974

QE will fail to revive the eurozone economy, according to economists polled in a Financial Times survey. QE is not a panacea for the euro-area,” said Carsten Brzeski of ING DiBa, a bank. He suggested that the biggest impact from any QE would come “if governments were at the same time allowed to start a deficit-financed investment programme. The FT survey of 32 eurozone economists, mainly working in the financial sector, conducted in mid-December, found most expected the ECB to launch QE in 2015 — catching up with the world’s other main central banks that have all bought large quantities of sovereign debt since the last financial crisis. Twenty-six economists forecast the central bank would start purchasing government bonds this year, while five thought it would not. One did not respond to the question. A stuttering recovery and a worrying drop in inflation have raised fears of another financial crisis in the currency bloc and put pressure on policy makers to cast aside powerful opposition from Germany and begin purchasing sovereign debt. ECB president Mario Draghi last week gave his strongest signal yet that the central bank would extend its asset purchases to include sovereign debt in the next few months. A decision could come as early as the next governing council meeting on January 22. But most of the FT poll’s respondents expected growth and inflation to remain weak even with quantitative easing. “[QE] will help lift inflation expectations and reduce the euro, but [it’s] not a total game changer,” said Dario Perkins, economist at Lombard Street Research. Jörg Krämer of Commerzbank said QE would lower the yield on government bonds and “help the finance ministries of highly indebted countries such as Italy, and its banks”. But he added that QE would not change low growth and inflation levels and would “only fuel asset prices”. While several respondents said government bond-buying was likely to help fight the threat of deflation and lower yields on debt issued by weaker sovereigns, most economists agreed that growth would remain lacklustre unless governments backed the ECB’s efforts. “QE is not a panacea for the euro-area,” said Carsten Brzeski of ING DiBa, a bank. He suggested that the biggest impact from any QE would come “if governments were at the same time allowed to start a deficit-financed investment programme. [It’s] doubtful [that] will ever happen in the euro area.” Some said a larger package stood more chance of success. “If it is big enough, it will have some effect on the economy, if only to bring the euro down,” said Jonathan Loynes of research group Capital Economics. “It’s worth a try.” Of the economists who put a number on the size of the purchases, the most popular guess was €500bn, although some put the figure as high as €1tn and others as low as €250bn. Some also expected the ECB to start buying corporate debt alongside sovereign bonds. Eurozone inflation dropped to 0.3 per cent in November, less than a fifth of the ECB’s target of just below 2 per cent. Inflation is likely to have fallen again in December on the back of the sharp drop in oil prices. Mr Draghi and most of the governing council backed a new development in ECB policy in December, saying the expansion of the central bank’s balance sheet from €2tn towards the €3tn mark was now expected. However, six policy makers objected to the December decision, underlining the extent of divisions over quantitative easing. Jens Weidmann, the Bundesbank’s president, was among the dissenters, and while Berlin is not expected publicly to oppose the policy, resistance within Germany remains fierce. Many economists think it is impossible for the ECB to hit the €3tn level by confining its purchases to the assets it buys at the moment: covered bonds and asset-backed securities. “The ECB will purchase sovereign debt in 2015, mostly for want of anything else to buy,” said Lorcan Roche Kelly of Agenda Research. Twenty-six respondents to the FT’s poll thought the size of the ECB’s balance sheet would lie somewhere between €2tn and €3tn by the end of 2015. Two thought the ECB would be able to hit €3tn over the next 12 months, while four thought the balance sheet would fall below €2tn. Some respondents thought resistance within the council could affect the programme, with others suggesting the ECB would ensure national central banks bore the risk from buying their governments’ bonds. “The ECB will most probably have to limit sovereign purchases to investment grade sovereigns,” said Hetal Mehta of Legal & General Investment Management, an insurer. “The purchases will consist of nationally-weighted sovereign [debt purchases]. I think that [credit] risk will probably [be] decentralised at the national level via some mechanism,” said Lucrezia Reichlin, a professor at London Business School and co-founder of data firm NowCasting. Richard Barwell of Royal Bank of Scotland said: “There may be compromises in the design to get as many people on board as possible, but I expect a sufficiently strong signal that the ECB is determined to do what it takes to preserve price stability and that’s what counts in the end.” Kit Juckes of Société Générale said buying European Investment Bank bonds to spur investment spending was a “more appealing” way for the ECB to spend its cash. Harald Benink, a professor at Tilburg University, agreed. “Our proposal of buying bonds?.?.?.?issued by the EIB is likely to be more acceptable to the Bundesbank since it is violating to a lesser extent monetary financing rules as contained in the [EU] Treaty”, he said. .?.?. Read the responses to the FT’s poll of eurozone economists Question 1: What is your growth forecast for the region’s economy over the next 12 months? Question 2: How low will inflation go in 2015? Question 3: What do you think eurozone policy makers need to do next to boost the region’s recovery? Question 4: Is the fiscal compact fit for purpose? Question 5: Will the European Central Bank embark on full-scale quantitative easing? If so, what will the package look like? Question 6: Would government bond-buying by the European Central Bank work? Question 7: What size will the ECB’s balance sheet be by the end of 2015? Question 8: Will we see a sizeable fiscal stimulus from Germany? Question 9: Will the euro reach parity with the dollar in 2015? Related Topics European Central Bank, Europe Quantitative Easing