World economy talk

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re collapse of Japan GDP

when the consumption tax hike was announced Japanese consumers went shopping like crazy before the tax hike went into effect

sales that were supposed to happen in Q2 was pulled forward to Q1

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re oil prices

despite geopolitical concerns oil prices are falling

it's either the market is very well supplied or demand is weak

or both

if demand is weak it's a bad sign for the global economy

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re King

they are losing market share to cheaper games

like that Kim Kardashian game

[Lady Bathory]

EURUSD has fluctuated within a narrow range since the beginning of the month. The bottom of the range has been tested 4 times and each time the 1.3333 low held. If Thursday’s Eurozone Q2 GDP report shows that the region contracted that support level could finally be broken.

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10Y Bund yield falls to new record low -- below 1.01%

[tidus1203]

USDPHP sold heavily today. Mukang nag intervene na si BSP and they are very serious about their inflation fighting stance...

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10Y Bund yield falls below 1%

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USDPHP sold heavily today. Mukang nag intervene na si BSP and they are very serious about their inflation fighting stance...

and also dollar weakness coz of US retail sales data last night

U.S. retail sales pause, seen rebounding in months ahead | Reuters

it gives the Fed more justification to hold rates at zero for a longer period which is dollar negative

[uls]

EURUSD has fluctuated within a narrow range since the beginning of the month. The bottom of the range has been tested 4 times and each time the 1.3333 low held. If Thursday’s Eurozone Q2 GDP report shows that the region contracted that support level could finally be broken.

eurozone GDP didnt contract. but it didnt grow. it's dead flat

BBC News - Eurozone growth flatlines in second quarter

Growth in the eurozone as a whole flatlined in the second quarter, according to official estimates released on Thursday.

The eurozone saw 0.0% growth compared with the first quarter, according to Eurostat figures.

EURUSD short covering rally

[Monseratto]

With globalization, Russia is now able to purchase from countries that didn't impose economic sanctions against it's actions in Ukraine. Food imports have increased from Brazil, Paraguay and Argentina...And some of those that did impose sanctions now see their growth sputter.

UPDATE 1-Germany's DIHK cuts 2014 export growth forecast, citing Ukraine
Thu Aug 14, 2014 8:26am EDT


Aug 14 (Reuters) - Germany's Chambers of Commerce cut its 2014 estimate for exports from Europe's biggest economy on Thursday due to the Ukraine crisis, but said even its lower forecast would not be achievable if the standoff between Russia and the West worsened.

The DIHK said German shipments abroad would increase by a maximum of 3.5 percent this year. In May it had forecast growth of 4.0 percent but on Thursday it said tensions in Ukraine and weaker growth in emerging markets like Turkey, South Africa, India, Brazil and Indonesia meant this was not possible.

"We're on a dangerous path," said DIHK foreign trade head Volker Treier.

The European Union has imposed sanctions on the Russian finance, energy and defence sectors in response to Russia's annexation of Crimea and its failure to rein in pro-Russian separatists in Ukraine. Moscow denies arming the rebels and has hit back by banning imports of Western foods.

"The sanctions and Russia's countermeasures are continuing to affect German exports. Alongside the direct negative impact, there will be an economic slowdown in other European countries which will then buy fewer German products," Treier said.

He said exporters would make around 11 billion euros less in revenues than previously forecast, putting some 100,000 jobs in Germany at risk. The DIHK said exports, which traditionally propel the German economy, would therefore fail to make a contribution to growth this year.

Data published on Thursday showed weak foreign trade, combined with lower construction investment, drove a 0.2 percent decline in German gross domestic product (GDP) between April and June. Given tit-for-tat sanctions between Europe and Russia, the third-quarter outlook is not rosy either.

Shipments to Russia, which fell 15 percent in the first five months of the year, make up only 3.3 percent of total German exports. But the standoff has increased uncertainty among German exporters, of which about 10 percent send goods to Russia.

The DIHK said exports could, however, grow by around 5 percent next year as long as the crisis with Russia over Ukraine eases.

But even that growth would be well below the average of around 6 percent since Germany reunified in 1990. The economy in France, Germany's biggest export market, remains weak, while Italy has slipped back into recession.

The DIHK also cut its forecast for economic growth in 2014 to 1.5 percent from its previous estimate of 2.0 percent in February. (Reporting by Markus Wacket; Writing by Michelle Martin; Editing by Madeline Chambers and Mark Trevelyan)

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US 10Y yield

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the BSP can control money supply to fight inflation

meaning the BSP can reduce money in circulation to drive down demand

but what if inflation is coming from the supply side?

BSP seeks help, says it can?t temper inflation on its own | Inquirer Business

The government must sort out the issues that have led to a tightening in the country’s supply of goods, if it hopes to keep inflation from climbing further in the coming months, the Bangko Sentral ng Pilipinas (BSP) said.

While controlling inflation has always been the main task of monetary authorities, interest rate hikes and the like cannot and must not be the state’s only line of defense against rising prices.

“We will continue to coordinate with other agencies of government to address pressures from the supply side,” BSP Governor Amando M. Tetangco Jr. said last week.

Speaking at a forum organized by Bloomberg for foreign exchange traders, Tetangco said the central bank could not fight inflation on its own.

The BSP’s main responsibility is to protect the public’s purchasing power by keeping prices stable. It does so by controlling the amount of cash circulating in the economy which, in turn, influences consumer demand. The central bank measures, considered to be forms of “demand management,” merely counteract instead of address inflationary pressures that spring from the supply side.

In keeping inflation in check, the BSP said administration officials should ensure the timely importation of certain food products and tighten price monitoring activities to prevent speculative trading.

Lowering logistics and shipping costs, and pushing projects that improve the agriculture sector’s productivity, should also ease the tightness in the country’s food supply.

Last July, inflation rose to its highest level for the year at 4.9 percent, faster than June’s 4.4 percent. It was brought on by the rise in prices of rice and other food products, which weighed heavily on the official consumer price basket used to compute inflation.

[Lady Bathory]

US 10Y yield

Last Friday, geopolitical problems sent the U.S. 10-year yield falling to 2.30%. One thing i learned in the past several weeks is not to bet against the rally in U.S. Treasuries. The rally goes against expectations of yields rising as the U.S. economy improves. Record low European bond yields are also driving down U.S. Treasury yields. The wide spread between the German 10-year and the U.S. 10-year makes it an attractive carry trade for European investors (sell Bunds and buy Treasuries).

[Monseratto]

Welfare State...

[tidus1203]

PH unemployment rate rose to 25.9 pct in Q2 | ABS-CBN News

25.9% unemployment rate... Jobless growth...

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Welfare State...

^^

that's a social security funding problem

countries with aging population and low birth rate

as more people retire social security funds have to write more checks

but not enough young people are replacing those retiring -- so there are fewer contributors to social security funds

there used to be more working age people than pensioners

now it's reversing

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[Lady Bathory]

EURUSD is making a new low for the year. Next support is the Nov. 2013 low at 1.3295/1.3300.

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[Lady Bathory]

Consumer prices in the U.S. is up only 0.1% in July, the smallest increase in 5 months. Downward pressure came from energy prices which fell 0.3% reflecting the 5% decline in oil prices in the past month despite geopolitical problems. With CPI running at 2% YoY, inflation is not strong enough to make the Federal Reserve change monetary policy soon. The market is expecting hawkish language from the FOMC minutes tonight and Janet Yellen's speech on Friday. Investors bought U.S. dollars aggressively which sent EURUSD and GBPUSD crashing through key levels.