What I think I learned last week #53
I spent a couple of days in Istanbul, moderating a panel at the Tuyid (Turkish Investor Relations Society) Summit 2018 discussing MiFID II, followed by being a luncheon speaker at the CFA Society of Istanbul. It was an enlightening couple of days.
Enough about Turkey, what about France? France’s budget deficit is likely to overshoot the European Union’s limit of 3% of GDP next year and reach 3.4%. EU economic commissioner Pierre Moscovici said on Thursday an expected overshoot of the deficit ceiling by France could be tolerated if it was temporary. “Temporary” must mean something different in Europe, since France has overshot that 3.0% of GDP ceiling 19 times over the last 26 years and 9 out of the last 10 years.
I don’t understand the perpetual deficit (sorry, I meant to say “temporary” deficit) since, as I pointed out last week, France is #1 in taxes.
Has France dropped into recession? Its Purchasing Managers Index would so indicate, having fallen by almost 5 points to 49.3 in November, before the worst of the riots hit. This is the first contraction in 2½ years.
Demonstrating the strength and diversity of its economy, the European Parliament backed a trade deal with Japan that will see the European Union remove duties on Japanese cars and parts. For its part, Japan will remove tariffs on cheese.
The ECB ended its asset purchase program, while at the same time acknowledging that risks of the Eurozone economy slowing are increasing. I wholeheartedly agree with that statement.
While the public is focused on Brexit, the Wall Street Journal pointed out the real problem with the UK by asking and answering the following: What Do Some Investors Fear More Than Brexit? Jeremy Corbyn. Neil Dwane, global strategist at Allianz Global Investors, was quoted as saying “A Jeremy Corbyn government is far worse than any Brexit or no Brexit. It would be apocalyptic for the economy.” I wholeheartedly agree with that statement.
The EU is regulation-obsessed and “out of touch with reality,” said the US Ambassador to the EU, Gordon Sondland. I wholeheartedly agree with that statement.
US hiring intentions hit a 12-year high, according to the latest ManpowerGroup Employment Outlook Survey.
US industrial production rose in November, led by mining and utilities while US retail sales rose 0.2% in November. However, adjusting for falling fuel prices and other volatile items, core retail sales were up the most in a year.
US inflation cooled off in November, hitting its slowest pace in nine months.
China, upset with Canada over the Huawei CFO arrest, has organized a boycott of apparel maker Canada Goose, whose shares dropped 20%.
What is another convenient way to divert attention from a poor economy? Stop publishing numbers. It is being reported that China is suspending the release of some economic statistics. It seems that whenever a data set, whether it is birth rates, regional purchasing managers indices, car exports, or oil imports, as a few examples, becomes inconvenient for the authorities, it just disappears.
Verizon was forced to slash the value of its Oath unit by $4.6 billion. What is Oath, you ask? Oath is the unit Verizon created by combining AOL, which it bought in 2015 for $4.4 billion, with Yahoo, which it bought in 2017 for $4.5 billion. After spending $8.9 billion over the last three years, the whole division is now worth a grand total of $200 million.
And that is what I think I learned last week.
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