The Leather Pipeline - 17.11.15
Macroeconomics
There has been nothing more important than the terrorist attacks in Paris last Friday. Anyone who needed more proof for the disgusting and cynical positions of the IS fanatics got it. Let’s stand together.
The global financial markets have not digested the situation. A lot depends on the decisions about interest rates.
In the US, everyone is expecting tightening policies and rising interest rates, possibly as soon as December, but the Europeans are expecting the opposite: more easing and injections of further liquidity. In US, the labour market is showing strength and the economy seems to be on a relatively stable growth path.
China remains the wild card and the future remains unclear. Looking at the stock and commodity markets one has to assume that there are more concerns than hopes, with several of the core commodities such as copper and oil falling. This is not a particularly good sign considering that China is one of the biggest consumers of industrial raw materials.
Almost every day the so-called experts and analysts are beating each other with pros and cons. The retail sales for [Chinese online shopping event] ‘Singles Day’ are reported to have reached a record – $14 billion with Alibaba alone – and some consider this to be proof of a recovery while others do not believe the published figures.
In Europe, the refugee problem is ongoing. They are still arriving in big numbers and countries have begun to install border controls. Since many are not registered is it is difficult to judge the impact on the economy, as well as the social tensions, that might threaten stability in some EU member states.
In Portugal, a new government has been installed and many are worried the economy might suffer. Greece is now paralysed by strikes and the government is sitting on the other side of the table trying to handle the situation. Financial aid from the European Union has been frozen because the country has not fulfilled a number of the reform requests.
Commodities are falling again with oil looking at the $40 mark and gold not being far away from $1,000. The US dollar got stronger or the euro weaker, depending on your perspective. Expectations of the widening spread between interest rates has sent the euro down a few cents, trading now in the range around $1.07 versus the euro.
