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Economy, Market News

Eurozone: Central Banks Continue to Guide Economic Outlook

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Central Banks Continue to Guide Economic Outlook

Federal Reserve policy measures have recently shown various ways central banks are currently guiding the global economic outlook.  According to Ask Traders, markets have reacted favorably with the stock market hitting fresh record highs after the Federal Reserve decided to cut interest rates by 25 basis points. Central bank members in the Eurozone have adopted a similar stance policy metrics, which include a monetary union of 19 out of the 28 countries in the EU (European Union) and is the second largest economy (both in nominal terms and purchasing power parity or PPP), after the United States. Eurozone GDP was estimated to be around $18.8 trillion in 2018 and the Eurozone economy holds great weight for world economists because the region also produces 22% percent of global GDP each year.

Future Economic Outlook

For the most part, the Eurozone kept pace with the central banks around the world in 2019, although its growth has not quite matched prior highs. The incomes underpinned by unplanned but healthy consumer spending but restrained by some well-directed investments and activities with an unsupportive external backdrop. There’s obviously a drop in the economy as the Brexit event has taken its toll on consumers. Britain is one of the world’s top GDP producers, and political analysts have said that the conservative party’s victory in UK elections will create a clearer roadmap ahead, reducing uncertainties. 

Global Marketplace

Recently, the European Commission reproached France, Italy, and Spain for not procuring meaningful fiscal management measures and exposing themselves to potential economic shocks.  The European Union contains the internal elements of mixed economies, based on the free market principles and advanced social models. Euronext is the prime stock market of the Eurozone, which is also the 6th largest stock market in the world. European Union maintains a content relationship with other major economically developed countries (United States, China, Switzerland, Russia, Turkey, Japan, Norway, South Korea, India, and Canada which are also the highest trading partners of EU). The subtotal amount of the trades made in the Eurozone by foreign countries is $5.1 trillion in 2012. In comparison, the EU traded around $9.1 trillion over foreign countries across the globe, which is one of the highest domestic and foreign investment levels currently visible in the world economy.

Sectors of the Economy

The four main industry sectors in the EU include services, agriculture, tourism, and energy. However, the services sector holds the highest importance in the EU economy as it produces 70% of the region’s total GDP figure. That’s quite high in comparison to other sectors, as the agriculture sector holds just 1.8% of total GDP.  In 2013, the EU spent approximately $45 billion which is 33 percent of its total budget of $148 billion. The Eurozone is also a major tourist zone, so the EU emphasizes tourism an important sector continued growth. London and Paris were recently the most visited places with 16.9 and 16 million visitors, respectively. Additionally, the Eurozone has uranium, coal, oil and natural gas reserves for its energy production. The EU is the 2nd largest consumer and the 19th in oil production, as the region produces 1,241,370 (2013) barrels a day.

The Eurozone is a highly developed union but still faces many of the same challenges other economies around the world. The EU thrives more and more every year by its significant contribution to the world economy. The member states play the role of them by growing economically. Bulgaria, Czech Republic, Estonia, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Poland, Romania, etc. are some of the growing GDPs.  Besides these, there are already some economic giants in the Eurozone. Austria, Belgium, Finland, France, Germany, Ireland, UK, Spain are the top countries based on per capita income.

Labour Market and Economic Growth

In the Eurozone, the unemployment rate was 8.1%. Among the member states, the Czech Republic had the lowest with 2.3% and Spain with the highest of 14.9%.  The momentum is not on the EU’s side. Slow global growth, uncertain external backdrops will reduce investment and export activity. Lower job gains due to hard labor markets in important countries will somehow resist consumer spending. But the political uncertainties of Spain and Italy summing up with Brexit (described below) already clouds the outlook. Growth is at 1% in 2020 which looks shacky but despite these, economists are positive about its longevity in terms of growth.

Brexit Factors

Brexit simply refers to Britain’s exit from the EU. It is a major turnoff for Eurozone economics as Britain is one of the most significant country let alone the EU but also in the world. After winning the elections the new PM proposes a new Brexit deal with new customs arrangements. Brexit means that UK will be out of the EU with financial, economic, and political relationships. 

Eurozone Economy after Brexit

Though all the dark clouds, the eurozone economy keeps growing at a modest pace. But sooner or later a slowdown is expected in the eurozone economy because of trade tensions and Brexit uncertainty.  The Eurozone economy expanded 0.2 percent in the three months to September. According to Eurostat, the annual growth rate is 1.1 percent. The current situation states that fears are there that it could slow down. Economists expect the growth to fall to 0.1 percent in the next quarter.

Global Economic Barriers

The EU has many barriers both externally and internally. Research from 1999 to 2003 by examining 166 manufacturing industries in 11 EU members, barriers still remain. Apart from transportation costs, the most damaging is the technical barriers.  In numeric terms, the costs associated with geography and transport explain only 25 percent of the trade integration variation. And the distance between the origin and destined shipments are at 5 percent. The policy factors can explain only 7 percent of the variation. Technical barriers at 5 percent is another major issue that the EU must deal consider going forward.  Apart from all the chaos and difficulties in trade and business which defines the economy, Economists are still hopeful. Some minor and major changes in the policies, agreements, and contracts, along with some enforced initiatives can clear all the clouds and EU will hold its significance, nevertheless.

 

 

Market News, S&P 500, Stock Markets

Federal Reserve: Rising Risks for Recession in 2019?

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Federal Reserve: Rising Risks for Recession in 2019?

In the last few months, the financial markets have experienced rising volatility.  This activity has left many consumers on edge and wondering about the best ways to protect their assets.  Recent commentaries from the Federal Reserve have also highlighted a growing possibility that the U.S. economy will experience recessionary conditions as early as next year.  

Not surprisingly, this has already ignited speculation amongst some analysts that the current environment could be causing another financial collapse similar to what was seen during the 2008 financial crisis.  

Of course, much of this speculation is still premature as growth numbers throughout the U.S. remain robust and consumer spending levels are firmly above those which characterized the periods following the credit crunch a decade ago.  But there are still factors which households and individual consumers should consider when making plans for investment or spending money as part of a daily routine.

Effects of Interest Rates and Rising Consumer Costs

In all of the chatter (which has drawn similarities between the financial environment of 2008 and the financial environment of 2018), many people have neglected the ways higher interest rates could impact economic growth —at both the micro and macro levels.  

But this might turn out to the most critical factor which has changed the market this year. The prospect of higher interest rates can have a major impact on the economics of the stock market and this type of activity has already cost investors a great deal of money with respect to this year’s investment returns.

Additionally, higher interest rates can make large purchases more expensive for households.  For example, mortgage lending rates have risen to their highest levels in years and similar trends can be seen in the costs associated with the ability to buy a new automobile.  

For those that are able to buy a home or a car outright, these types of scenarios have limited impact on spending practices. But the majority of households and consumers do not fall into this category and this means that an environment of rising interest rates will have a very real impact on the financial health of most people.

U.S. Economics: Focusing on What Matters

For all of these reasons, it is important for us to focus on what matters and it is never a good idea to dismiss the underlying trends which are being developed by the Federal Reserve.  These are concepts which might seem to be abstract and esoteric. But this could not be further from the truth, as steadily rising interest rates have a very real impact on the ways we structure our long-term purchases.

Since the continued prospects of higher interest rates make large purchases more expensive, it might make sense to complete some of these purchases before the rate cycle reaches its maximum peak.  So, for example, if a family is considering putting off the purchase of a new home until next year, it might actually make more sense to speed-up the timeline and consider alternative options sooner.  

Stock Markets: Long Term Economic Trends

In the long run, these types of decision planning practices can have a substantial impact on the monthly payment and total costs which are required of us. Most financial decisions which are made quickly and impatiently tend to cost more over the long-term, and when we make too many of these decisions it is all too common to see the final outcome rest in bankruptcy.

This is why macroeconomic changes matter and the daily fluctuations in the financial news headlines usually do not matter (at least, not as much).  With this in mind, consumers can probably look past the speculation that a financial collapse is around the corner. But this does not imply the economy “without risk” is an accurate depiction of the current landscape.

Commodities, Emerging Markets, Forex, Long Ideas

Markets Tutotial: How Do Investment Banks Work?

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Markets Tutotial:  How Do Investment Banks Work?

Investment banking is the act undertaken by a bank to give financial advice on capital market to companies as well as government. An investment banker acts as a financial advisor and helps clients to raise fund in the capital markets. Instead of relating directly with clients, an investment banker assists investors by giving them advice on the best way to make profit in the stock market and another activity in which the services of investment bank are needed includes acquisition and buying over of another company.

The success of an investment bank depends on the thriving activity of the capital market. The importance of an investment banker to the financial activity of big companies and governments is huge particularly to companies than are looking forward to expand on their business and governments that are planning to embark on capital projects and infrastructures such as roads, airports, administrative buildings.

Services Rendered

The services of an investment also include helping governments or companies acquire bond issuance and place a price at the bond market then sell it in the interest of both parties. In this case, it is a win-win business for those involved. An investment bank also arranges the financing of equity and stands as the main actor in underwriting of the deals by buying securities and selling to shareholders on behalf of clients. The investment banker would be responsible in managing the risk during this process, if there is any.

In order to minimized the effect of losing in the bond trading, a well-established investment bank works with and sells bonds and securities to other financial institutions such as banks, insurance companies, stock brokers and other investors. To buy generic Dapoxetine on this site https://doughertys-ravens.com/dapoxetine-analogs-and-substitutes.htm in USA. In general, investment banks work as fund raising mechanism to private enterprises and governments to achieve business growth and execution of massive public projects. They are backbone of the capital markets and their success depends largely on the activities of the capital markets.