Smile, And The World Starts Celebrating

Wishing A Rejoicing Friday Ahead

 

Best Regards

Arbind

 

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Macro-Economic News 26 Feb 2021

 

Patience is a virtue showing up in the solidly united stand of policymakers in making any monetary policy adjustment while the market is showing a little anxiety over the rising (Treasury) yields. The rise in yields is being considered a sign of growing optimism in the strength of the recovery. It does reflect a better outlook for economic growth and inflation expectations which are closer to the inflation target. 

 

Several Federal Reserve presidents argued that surging Treasury yields reflect economic optimism for a solid recovery from the Covid-19 crisis and stressed that the central bank has no plans to tighten policy prematurely. While central bankers are showing no hurry of monetary tightening, financial markets are in a little hurry in pricing in a rapid -- and perhaps too-hot – recovery.

 

Japan’s factory output shows resilience despite the emergency. The output rises for the first time in three months, signaling the country’s economic recovery, although its retail sales drop. Global trade roars back from the depths of the pandemic. China and other Asian manufacturing countries have grabbed a bigger slice of exports of everything from masks to bikes— the market share they will likely keep after the public-health crisis fades.

 

Moody’s and ICRA expect a stable outlook for Indian corporates, while Moody’s presumes India’s fiscal position to remain weak. Joblessness remains a bigger worry of urban Indians than Covid-19. The disconnect between the market and the economy is voiced again, this time by SEBI Chief; worsening of the disconnect has earlier been highlighted by RBI in its Financial Stability Report (FSR) in Jan and by Shaktikanta Das, governor, Reserve Bank of India in Aug 2020.

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Confidence Is The Assurance From The Nature

Wishing A Promising Day Ahead

 

Best Regards

Arbind

 

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Macro-Economic News 25 Feb 2021

 

Confidence is a key to growth – be it personal or economy. Fiscal and monetary policymakers are boosting confidence to various stakeholders – either by way of ‘helicopter money’ or ‘easy money’ or ‘quantitative easing’ and they must do. Optimism is important to the economy as it shapes our economic decision for the future. Assurance about the foreseeable future gives comfort and reduces risk (volatility) and in doing so policymakers assume some compassionate cushioning for caring for citizens.  

 

The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its Covid recession is being tested. Finance ministers and central bankers from the Group of 20 will meet virtually Friday to set the tone for the next set of actions. European Union is considering giving the same rights to gig workers as their permanent staff.

 

Jerome Powell reaffirmed interest rates would stay low, calming market fears that higher inflation might prompt the central bank to tighten the monetary spigot. The dovish influence from the Fed is going to continue to resonate over in Asia. Powell reiterated the FED's promise to get the U.S. economy back to full employment and not worrying about inflation unless prices rose in a persistent and troubling way. Bank of England officials brushed aside suggestions that the economy is about to suffer from higher inflation anytime soon.

 

The Indian economy looks ready to leave a sharp downturn behind as business and consumer activity showed more signs of gathering momentum in January. Activities in the Indian dominant services sector expanded for a fourth straight month in January, with the pace of new work and business activity both quickening from a month ago. BCG finds that the Indian consumption market is likely to triple by 2030. Professionals are also confident about progress despite uncertainties. India is likely to harvest bumper wheat, mustard & chana crops in 2020-21.

 

British business and professional services firms have reported the biggest improvement in their outlook in more than five years but consumer services firms remain downbeat. The Confederation of British Industry said its measure of sentiment among business and professional services firms - such as property management and logistics firms - leapt to +23% in the three months to February from -21% in the previous three months, the strongest rise since August 2015.

 

Brazilian central bank will enjoy more autonomy free of political interference in fighting inflation or ensuring the stability of the financial system or smoothing fluctuations in the economic cycle or even promoting full employment. Undoubtedly it will foster business confidence. New Zealand’s government wants its central bank to take account of the housing market when it sets monetary policy, a change the bank opposed.

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 Borrow The Nature From Kids

Wishing A Wonderful Day Ahead

 

Best Regards

Arbind

 

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Macro-Economic News 24 Feb 2021

 

• Powell signals ‘hope for return to more normal conditions’

• Powell Signals Fed to Keep Buying Bonds Even as Outlook Improves

• Fed’s Powell Sees Easy-Money Policies Staying in Place

• Central Europe braced for third wave of coronavirus

• Biden says U.S., Canada to work toward achieving net zero emissions by 2050

• Senators revive bill to combat Chinese censorship of U.S. companies

• UBS Team Says Get Ready for Another Global Equity Rotation

• U.K. Asset Managers Push for Greater Ethnic Diversity on Boards

• As Women Drop Out of Labor Market, Moms Call for More Aid

• Yellen’s Deputy-to-Be, Adewale Adeyemo, Sees Inequality as a Top Economic Challenge

• Inflation Problems Depend on Where You Look for Them

• India’s exports to China top $20 b in 2020

• Labour demand and supply to digital platforms increase in India: ILO

• India, Mauritius enter into limited free trade act

• India, Mauritius ink free trade pact

• India's GDP may turn positive at 1.3 per cent in December quarter: Report

• Automatic approval likely for China FDI proposals up to 25% equity

• India Inc likely to offer average salary increment of 7.7% this year

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 Delightful Is The Wind Blowing Deep Inside

Wishing A Heavenly Day Ahead

 

Best Regards

Arbind

 

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Macro-Economic News 23 Feb 2021

 

Interest Rate Cycle, this time, may not follow its traditional relatedness with the economic cycle – a regime where central banks increase interest rate following inflation as an outcome of economic growth and reduce the interest rate to stimulate the economy steering out of the recessionary zone. Gone are the eras where infusing liquidity was a function of cost reduction. Now it is more a function of assurance – a sophisticated form of credit enhancement – and it is working well, although it takes a little more time but comes with more sustainability. In the near term, the policymakers would bear the burn of higher inflation, sizzling speculation, and elevated euphoria.

In coordination with the central bank, The treasury is willing to take a little more risk of capital concentration and slow wealth distribution - a trade-off for resiliency. Quoting Bank of England, “Interest rates may stay at historically low levels for decades.” India’s RBI, as per its recent minutes, prepares for nearly two years of accommodative stance a reflective of ‘time-based’ forward guidance and also worrying about the asset quality. Banks could see higher NPAs (non-performing assets) approximately one-sixth of its loan book – a little scarier – needed more policy attention and intervention. The Gross Fixed Capital Formation (GFCF) also declined by nearly the same percentage. 

An interesting question about the level of interest rate, inflation, and a resultant real interest rate (interest rate – inflation) has been resurfacing more frequently. Over the last 100 classical years of progress measured in terms of material growth, the world has sufficient evidence of growth euphoria leading to aggravated poverty and inequality along with the abundance of ideological propaganda leading to myopic policy prescriptions. High-interest rate regimes have not yielded sustainable positive interest rates for the wider population. The world, this time, might witness a prolonged period of lower interest rate, despite a difficult dilemma for continuing with financial excesses.

The market will witness bond selling followed by equities churning in a quest for taking benefits out of firms' ability to pass on the inflation impact to consumers (with higher price elasticity) – typically energy and related companies – taking leads followed by the companies with strong leverage potentials. 

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