Displaying items by tag: europe

(Frankfurt)

In another sign of the deteriorating global economy, bond yields in Europe are once again moving negative. German Bund yields fell in trading recently and are now below zero. The move reflects the recently weak data coming out of Europe as fears grow about a recession there. Europe had seen negative bond yields for a long period until the brief bout of economic strength over the last couple of years.

FINSUM: Can the US be the odd man out in deflecting the global downturn? We have done it before, but this time feels different.

(London)

The journey of Brexit has been long, winding, and utterly confusing at times. However, it is all headed for a dramatic conclusion. PM May has called for a Parliamentary vote on her plan on March 12, just a couple of weeks before the UK is supposed to formally depart the EU. However, the pushback on the left has been so strong that opposition leader Jeremy Corbyn now looks poised to call for a second referendum on EU membership. He announced the position yesterday, marking a major change in position.

FINSUM: We absolutely dismiss the view that holding a second referendum is “undemocratic”. The vote was almost three years ago now and no one could have foreseen the deal Britain might get, so it only makes sense to have another vote.

(New York)

Is the US headed for a major slowdown? That is the big question, especially as the economic clouds darken around the globe. The rest of the world, from Europe to China, is slowing, but the US continues to hum along nicely. So are we the last ship that is going to sink, or will the US manage to defy the tides and keep growing strongly? Looking to markets, yields around the world have fallen (including a dramatic increase in negative yielding European bonds), showing that investors are growing more bearish about the economic outlook.

FINSUM: With the Fed paused, we do not see an imminent recession by any means. We do, however, feel the US economy and markets lack a strong narrative at the moment, which makes us slightly nervous.

(London)

Pretty much since the day it happened, the prospect of a second Brexit referendum has loomed large. Now, almost 2.5 years since the initial vote, it is becoming closer to reality. PM May’s universally panned Brexit deal with the EU is adding weight to efforts to hold another vote. A conservative MP (same party as Theresa May) has proposed a new vote in May, saying it would only take 22 weeks to prepare. The vote would have three options—stay in the EU, accept the May plan, or leave without a deal.

FINSUM: Critics of a second referendum argue that it is undemocratic to not abide the first vote. However, the action of leaving the EU is unprecedented, and the deal that Britain could get from the EU was completely unknown, so in our view, holding second referendum to decide on the actual terms is actually the most democratic option.

(New York)

Bloomberg is arguing that the world may be on the verge of a big synchronized recession. In the words of the publication, there is “risk of synchronized slowdown in global growth as Europe wobbles, China sputters and stock markets around the world keep crumbling”. China is finally feeling real heat from the tariffs of the trade war and European growth is slumping. That begs the question of how long the US can remain the fast-growing outlier.

FINSUM: Growth is still good in the US but it does seem to be past peak. Just not as far past peak as in the rest of the world.