David Fuller and Eoin Treacy's Comment of the Day
Category - General

    China Turns Fiscal Screws While Targeting GDP Growth Around 6.5%

    This article from Bloomberg News may be of interest to subscribers. Here is a section:

    Xi has ratcheted up his drive to curb debt risk, pollution and poverty at a time when the world’s second-largest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with an historic expansion of U.S. borrowing under Donald Trump during a period of economic expansion.

    The 2018 targets “suggest slower growth and a fiscal drag,” said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. “This makes sense for China in the context of the new focus on financial de-risking, poverty alleviation and environmental clean-up, but is less good news at the margin for those economies that have high export exposure to China.”

    Growth handily surpassed 2017’s target with a 6.9 percent expansion that was the first acceleration since 2010. Economists forecast a moderation to 6.5 percent this year amid the ongoing deleveraging drive and trade tensions with the Trump administration and a further deceleration to 6.2 percent in 2019.

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    Bitcoin's Plunge in Volume Stirs Questions About Its Usage

    This article by Eddie Van Der Walt for Bloomberg may be of interest to subscribers. Here is a section:

    Earlier this year, when Bitcoin’s price fell by more than 60 percent from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions.

    There are many explanations for the fall-off in trading, from software- to news-related. What’s less understood is why the level hasn’t recovered as Bitcoin’s price made a 50 percent comeback since Feb. 5. That’s left some investors wondering whether the cryptocurrency is waning in popularity.

    The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back to near $11,000.

    The transaction data may be bad news for Bitcoin bulls, according to Charles Morris, chief investment officer of Newscape Capital Group in London, who invests in cryptocurrencies. Trading and purchases on the Bitcoin network, which can be measured by metrics like transaction volume, is indicative of price direction, he said.

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    OPEC Must Rethink Plans as $60 Oil Brings New Glut, IEA Says

    This article by Javier Blas and Grant Smith for Bloomberg may be of interest to subscribers. Here is a section:

    "Established producers need to reconsider their production plans quickly and substantially in light of the huge production increase from U.S. shale," the agency’s Executive Director Fatih Birol said Monday on the sidelines of the CERAWeek by IHS Markit conference in Houston. Asked whether he was referring to OPEC nations, Birol said: "All OPEC producers are established producers."

    The Organization of Petroleum Exporting Countries and allies including Russia, Mexico and Kazakhstan agreed to cut production in late 2016 in an effort to clear a glut in crude inventories. They defied the skeptics by going deeper than their pledged curbs and maintaining them for long enough to deplete the bloated stockpiles.

    Yet the strategy has also backfired by unleashing “a new wave of growth from the U.S.” that leaves little space for OPEC to increase output once the cuts expire at the end of the year, according to the agency’s report.

    The U.S. will dominate global oil markets for years to come, satisfying 80 percent of global demand growth to 2020, the IEA said. Supplies from other non-OPEC nations will make up the rest.

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    Email of the day on the yield curve spread and medium-term outlook for bonds

    I just have a couple of queries for you:

    Where can I find the US yield curve spread chart (10yY-2yY) in your chart library?

    Based on expected MT to LT yield rising environment, should I keep my PIMCO income Fund (Global Investor Series Plc), or dispose of it? 

    Thank you and best regards 

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    Welcome to Dubai 2.0

    This article by Donna Abu-Nasr may be of interest to subscribers. Here is a section:

    It tackled oppressive summer heat and sandstorms, the population more than doubling in a decade to approach 3 million. Foreigners, who make up the vast majority of Dubai’s residents, flocked for work, banking and fun.

    Now it’s about how to keep the party going, even one in a country where unmarried couples can’t legally live together and where free voice calls over the Internet and Apple’s FaceTime are blocked.

    Few places reflect the challenge more than the site of the expo, without which the emirate could face a sharp economic slowdown. Dozens of cranes are busy working on the 438-hectare (1,080-acre) site south of Dubai’s center. The city is the first in the Middle East to be awarded the event in its 167-year history. The pressure is on to make it work beyond the short-term influx of visitors.

    “The impact that it has in terms of generating opportunities for the economy is definitely big,” said Marjan Faraidooni, who’s in charge of the legacy impact and development for the expo. “If we don’t showcase things that are cool, then we’re not living up to our reputation.”

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    Diesel ban approved for German cities to cut pollution

    This article from the BBC may be of interest to subscribers. Here is a section:

    The likelihood now is that the German government will rush to introduce some sort of national policy, to ensure at least some level of consistency across the country.

    It's not just about Germany either - cities across Europe are struggling to meet EU air quality standards, and may well see the German ruling as setting a precedent.

    New diesel cars won't be affected, but that's not really the point. Consumers are already moving away from the technology - and the prospect of city bans will only accelerate that process.

    So diesel's decline is likely to gather momentum.

    That's a problem for the industry, because while diesels produce high levels of nitrogen oxide - a major urban pollutant - they emit relatively low levels of carbon dioxide, a greenhouse gas.

    So moves to control one environmental problem may end up undermining efforts to combat another - unless we all start driving electric cars very soon.

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