Daily Economy Thread

[Woolfsmck 2,763]

http://finance.yahoo.com/news/breaking-news--fed-announcement-on-interest-rates-154848233.html

 

Fed holds rates unchanged

 

I'm not sure this is a good thing ... personally I would have preferred a rate hike, but I am not a big borrower ... so....

[Economy 52,844]

http://finance.yahoo.com/news/breaking-news--fed-announcement-on-interest-rates-154848233.html

 

Fed holds rates unchanged

 

I'm not sure this is a good thing ... personally I would have preferred a rate hike, but I am not a big borrower ... so....

i saw that

 

they are probably afraid of triggering a global meltdown... emerging markets are really unstable... and the US financial system is so large that rate hikes there cause rates to go up everywhere else

 

Its estimated for every 1% bond yields rise in the US, in emerging markets they will rise at least 0.43% along with it (so almost half as much)

 

and the central bank rising rates influences bonds to rise

[Luc 4,776]

i saw that

 

they are probably afraid of triggering a global meltdown... emerging markets are really unstable... and the US financial system is so large that rate hikes there cause rates to go up everywhere else

 

Its estimated for every 1% bond yields rise in the US, in emerging markets they will rise at least 0.43% along with it (so almost half as much)

 

and the central bank rising rates influences bonds to rise

I guess now is the time for trade deals with developing countries and rate hikes...

[Woolfsmck 2,763]

I guess now is the time for trade deals with developing countries and rate hikes...

emerging markets (aka small developing economies) are a big risk for default right now ...many investors are looking for stability and security not necessarily hi risk

[Economy 52,844]

emerging markets (aka small developing economies) are a big risk for default right now ...many investors are looking for stability and security not necessarily hi risk

hence why bond yields are falling again in developed nations that are stable. Its not normal for example for the US to have bonds at 2.1% even as the federal reserve is pondering raising rates.

 

im surprised gold hasnt been rising. it too is a safe-heaven

[Woolfsmck 2,763]

hence why bond yields are falling again in developed nations that are stable. Its not normal for example for the US to have bonds at 2.1% even as the federal reserve is pondering raising rates.

 

im surprised gold hasnt been rising. it too is a safe-heaven

Gold generally is a hedge against inflation or devaluation of currency.  It doesn't generally offer much in return unless you can invest a very large amount ...

[Economy 52,844]

Gold generally is a hedge against inflation or devaluation of currency.  It doesn't generally offer much in return unless you can invest a very large amount ...

True inflation heavily affects gold. But so does uncertainty

 

but i guess since inflation is low, bonds are a hetter safe heaven

 

US 10 year bonds are at 2.1%

Canada 1.5%

Germany like 1%

Japan like 0.7% but thats another issue

 

Even high risk Nations are like 5% lol 

[Woolfsmck 2,763]

http://news.yahoo.com/shift-fossil-fuels-risks-popping-carbon-bubble-world-203433539.html

Shift from fossil fuels risks popping 'carbon bubble': World Bank

What I been sayn'

A gradual economic transition would make the most sense.  Simply cutting off fossil based energy won't impact global weather as much as it would crash the economy.

[Economy 52,844]

http://news.yahoo.com/shift-fossil-fuels-risks-popping-carbon-bubble-world-203433539.html

Shift from fossil fuels risks popping 'carbon bubble': World Bank

What I been sayn'

A gradual economic transition would make the most sense.  Simply cutting off fossil based energy won't impact global weather as much as it would crash the economy.

not to mention its crazy expnsive to try to chsnge everything at once

 

Here in Ontario the liberals green innitiative already tripple hydro rates to 15c per killowatt and is expected to rise another 40% within 5 years

 

they are destroying the manufacturing sector with this  

[Woolfsmck 2,763]

Fed officials seem ready to deploy negative rates in next crisis

 

http://www.marketwatch.com/story/fed-officials-seem-ready-to-deploy-negative-rates-in-next-crisis-2015-10-10?siteid=yhoof2

Hmm... Denmark has been doing it...this amounts to devaluing the currency tho. 

[Economy 52,844]

Fed officials seem ready to deploy negative rates in next crisis

 

http://www.marketwatch.com/story/fed-officials-seem-ready-to-deploy-negative-rates-in-next-crisis-2015-10-10?siteid=yhoof2

Hmm... Denmark has been doing it...this amounts to devaluing the currency tho. 

Switzerland is doing it as well.

 

As far as currency goes, everyone seems to want a weak currency anyways. Instead of building competitiveness to export, they try to take the lazy way out by simply devaluing the currency which is the worst way to try and build export competitiveness cause you loose purchasing power and imports cost more putting some negative pressure back into the economy neutralizing some of the benefits of more exports

 

Also QE did the same thing as far as devaluation... QE is also going beyond 0% interest which Japan has been doing for over 10 years, the US did it and the EU is currently doing it

 

Im glad my Country never did that non-sense shenanagins. QE has some major downsides to it... Its like a medicine with lots of side-effects

[Luc 4,776]

http://news.yahoo.com/shift-fossil-fuels-risks-popping-carbon-bubble-world-203433539.html

Shift from fossil fuels risks popping 'carbon bubble': World Bank

What I been sayn'

A gradual economic transition would make the most sense.  Simply cutting off fossil based energy won't impact global weather as much as it would crash the economy.

Is the current rate gradual enough? Because I think the current rate is too slow... 

[Woolfsmck 2,763]

 

if you believe all the climate change hype circulating right now.

how much is human activity impacting the global weather ?

climate change has and will occur regardless of anything humans are capable of doing. 

[Economy 52,844]

if you believe all the climate change hype circulating right now.

how much is human activity impacting the global weather ?

climate change has and will occur regardless of anything humans are capable of doing. 

i agree totally but the pace in which it happens must be considered

 

if human activity truly accelerates climatic change, plants and animals are given less time to adapt and some ultimately fail and end up going extinct

 

I do think scientists that study this get emotional. They care about the cause because its their lifes work and its easy to exxagerate the issue. I do think some things are blown out of proportion

 

However i dont doubt it for a second that theres issues environmentally caused by us that must be solved because they are our fault

[politicqxs 358]

economics should be a required course for high schoolers. 

 

Official data say China’s economy is barely slowing. Are they believable?

http://www.economist.com/blogs/freeexchange/2015/10/chinas-data-doubts

 

FOR most countries, delivering resilient growth when investors had expected an abrupt slowdown would be impressive. China is different. The announcement that its economy grew 6.9% in the third quarter, just below the second quarter’s 7% pace, is more grist for the already-brimming mill of scepticism about its data. Such are the doubts about Chinese figures that it is difficult to write a straightforward a--lysis of them without riddling it with caveats about what is and is not credible. So it is sensible to look at the latest numbers in two parts: what the government reported and what ought to be believed.

The official data are indeed impressive, not least because they cover a quarter during which concerns about China's economy were so widespread. July began with the stockmarket in turmoil, falling some 40% from peak to trough. Flailing attempts by the government to prop up share prices tarnished its reputation for technocratic competence. A mini-devaluation of the yuan in August added to the feeling that China’s economy was in trouble. And a series of surveys pointed to contraction in the manufacturing sector.

Against that bleak backdrop, growth of 6.9% is a remarkably good performance. It might be China’s slowest quarter since early 2009, the nadir after the global financial crisis, but the economy is twice as big now as it was then. A gradual, steady rebalancing of the growth model helps explain the solid figures. As commodity exporters can readily attest, China’s factories are struggling. The industrial sector expanded 5.8% year on year in the third quarter, just about the weakest in more than two decades. But China is changing. The services sector expanded 8.6% year on year in the third quarter, matching its strongest growth since 2011. That is important because, as of a few years ago, services account for a bigger share of the economy than industry does.

The transition can also be seen in the seemingly relentless slowdown of investment versus much more robust consumption. Overall investment rose 10.3% year on year in the first nine months of 2015, the lowest in 15 years. But retail sales nudged up to 10.8% growth year on year in real terms in September, a seven-month high. A healthy labour market has supported this rebalancing. Income growth actually improved a touch in the third quarter, accelerating to a 7.7% year-on-year increase in real terms.

Just how believable are these numbers? Analysts who question the data can generally be sorted into two camps: those who think that China’s numbers are out-and-out fabrications, concealing the economy’s true, grim state; and those who think that China’s numbers are embellishments, inflating growth but not altogether misrepresenting it. The weight of evidence is on the side of the latter.

The most extreme scepticism about Chinese data focuses on a range of indicators that have served in the past as decent barometers for the broader economy. Power output, for example, has risen just 0.1% so far this year, which would normally imply that real growth is far slower than the government's figure. Imports have also been very weak, falling nearly 18% year on year in September. But these indicators are windows onto the industrial sector, the very part of the economy that is suffering the steepest deceleration. Trying to get a full read on growth from import data is even more problematic: plunging commodity prices have depressed the value of Chinese imports. What is more, the shift towards more services-led growth shows up in current-account statistics, not monthly merchandise trade figures.

There are stronger grounds for the milder form of scepticism: China does appear to be doctoring its growth data a little. The controversy centres on the way that the statistics bureau adjusts nominal growth figures to account for inflation. In the third quarter, nominal growth was 6.2% but the government calculated that overall prices fell by about 0.7%, allowing real growth to hit 6.9%. That is odd, since consumer price inflation picked up a little in the third quarter, rising to 1.4%. Moreover, much of the apparent deflation stems from falling producer prices, but those, to a large extent, reflect falls in imported commodity prices, not domestic deflation. It is fiendishly difficult to calculate alternative deflators, since they rely on heroic assumptions about sectoral weights and price levels. But a--lysts who have developed rough substitutes for the economy as a whole put growth closer to 5-6%.

One partial solution is to look at the government’s nominal data alone, ignoring its deflator. Here, the picture that emerges is more closely aligned with the impression of a sustained slowdown in China. Nominal growth fell to 6.2% year on year in the third quarter, markedly lower than the second quarter 7.1% pace. It was the slowest since 1999 and less than a third of the jaw-dropping 20% nominal rate chalked up in 2011. What’s more, the collapse in commodity prices has flattered China’s growth rate. The resulting fall in imports has translated directly into a big rise in the trade surplus, boosting overall growth. Stripping out net exports, China’s nominal domestic-demand growth is probably closer to 5%, according to a--lysts with China International Capital Corp, a local investment bank. That is a sharper slowdown than the one portrayed by the government. But it is still a good deal better than the hard landing feared for China just a few months ago.