Summary for the 8th of February 2019


The European Commission publishes the Winter 2019 EconomicForecast (EU and Eurozone). The Commission has considerably adjusted downward the future economic growth of the major european economies. It has forecasted  the GDP growth in the Eurozone to be 1.3% this year, from the last forecasted of 1.9%. The forecast for next year’s growth is 1.6%, unchanged from the last time. The downward adjustment is because of the weaker than anticipated economic growth in the third and fourth quarter of 2018.

The Commission forecasted the real GDP growth in Italy to be 0.2% in 2019 and is expected to pick up to 0.8% in 2020. In the last forecast, the Commission was expecting a growth of about 1% each year. Even though the Italian government has implemented an expansionary fiscal policy, the uncertainty in financing conditions will overshadowed the policy. Italy’s new populist government, and it’s proposed budget that will lead to a higher deficit (estimated 2.4% of GDP), will lead to a decline in the Italian economic activity, which in turn, will lead to higher deficit than estimated 2.4%.

German’s industrial production, November to December, fell by 0.4%. The market was expecting a rise by 0.7%. This shows a slowed activity growth in the German economy at the end of 2018. The fall in the industrial production was mostly in the construction activity, which fell by 4% from the previous month. The activity in this sector is quite volatile, due to weather condition and the lack of labour force. The capital goods output rose by 0.9%, this sector gives a better picture of the underlying trend in the economy. The rise in capital goods outputs was due to a higher activity in the automotive industry which rose by 7%. The automotive industry was having a slow activity since September 2018, due to the new emission regulations. Now it seems like the car producers have adapted to the new regulations.

The Bank of England is keeping the interest rate unchanged at 0.75%. The central bank is expecting a GDP growth of 1.2%, 0.5% lower than forecasted in November 2018. The downward adjustment was due to weaker global economic growth and the Brexit uncertainty. The forecasted inflation is revised down in the short term to reflect a weaker capacity utilization and lower oil price. In the long term, the forecasted inflation is unchanged. The Bank of England will let the inflation rise little over the objective rate of 2% in 2020-2022. The Bank of England is still indicating a gradual and limited interest rate hike.

Indices on 8th of February: A potential prolonged trade conflict between the US and China, weak economic indicators from Europe and risk of the US government shutdown next week have led to decline in the stock market.
Dow: -0.9% (7th of February )
S&P 500: -0.9% (7th of February)
Nasdaq: -1.8% (7th of February)
Nikkei: -0.6% (8th  of February)
STOXX Europe 600 Index: -0.56% (8th  of February)

If you are looking for a course in finance, check out my video course in Portfolio Analysis:
Quick and Easy Portfolio Analysis Video Course  (Skillshare)
Quick and Easy Portfolio AnalysisVideo Course  (Udemy)
and Facebook page for other information:
Quick&Easy Finance


Next post will be on Monday, 11th of February

Comments

Post a Comment

Popular posts from this blog

Summary for the 2nd of October -Weaker manufacturing outlook

Last week’s flash PMI estimates for the EU area and yesterday’ final PMI numbers are indicating that the weakening in the manufacturing sector isn’t country specific, but rather the weakening is across countries. The decline in Germany’s manufacturing sector is less than expected by the financial markets, while the decline in France is higher than expected. The same goes for Spain and Italy. The UK’s PMI index has increased by 0.9 to 48.3 and is more than expected, though 48.3 still indicates a weaker outlook. The US Manufacturing PMI has increased to 51.1 while the ISM index declines by 1.3 percent to 47.8, the lowest value since 2009. Despite weakening activities in the manufacturing sector for the developed countries, for the developing countries the outlook is still positive. The global PMI value in the manufacturing sector has risen from August to September. Past months’ decline has been due to weaker growth in the global trade. The WTO has updated its global trade forecast ...
Read more

Summary for the 15th of October

China’s balance of trade shows a fall in exports by 3.2 percent, comparing to a year ago and the imports fall by 8.5 percent, the first fall since May this year. China is the largest contributor to world economic growth, through the weaker imports, China’s economic decline is affecting the rest of the world economy, such as the Euro area. The Euro area’s industrial production for  August has risen by a little more than the markets have expected. The industrial production in the Euro area has been weakening since the start of 2018. Finland is currently holding the council of the EU presidency. At a press conference with the European Council President elect, Charles Michel, the Finnish prime minister, Antti Rinne, says that The EU needs more time to reach a Brexit agreement. Boris Johnson is hoping to seal a Brexit deal before the EU summit on Thursday, so that he will be able to present it to the British Parliament on Saturday for approval, in doing so, he won’t need to postpo...
Read more

Summary for the 21st of October Brexit drama

On Saturday, the British parliament is withholding the final decision of the revised Brexit deal and forcing Boris Johnson to ask the European Council for an extension to the 31 st of January. Instead the parliament has greed on Oliver Letwin’ amendment, which states that there wont be a no deal Brexit until the parliament has agreed on the revised Brexit deal this week. And on Saturday night, Boris Johnson has sent an unsigned letter to the European Council asking for a Brexit delay as well as a personal letter to the Council asking the EU leaders not to delay Brexit. The US stock exchange has closed in negative on Friday after Johnson & Johnson has to recall 33 000 bottles of baby powder in the US after health regulators found trace amounts of asbestos in a bottle purchased online. Boeing has admitted that two of its employers in 2016 misled the FAA about the 737 Max and its technical system. Weaker than expected Chinese economic indicators also contributes to the negative...
Read more