News 

The right way to attack the budget deficit is to cut spending, not to raise taxes

“Some Democrats want to substantially raise income taxes on the rich, both to reduce income inequality and to cut the federal deficit” writes Alberto Alesina for marketwatch.com. The evidence shows that if the focus is on tackling the deficit, fiscal conservatives are right.This doesn’t mean that Democrats shouldn’t consider substantially raising income taxes on the rich if they are concerned about inequality.In addition, basic principles of public finance show that a smarter way to tax the rich more is by reducing tax loopholes and deductions rather than raising tax rates.Continuously…

Read More
News 

Global debt is not yet at financial crisis levels — but could be set for an explosion with China leading the way

“Global debt is at elevated levels, but isn’t high enough to draw comparisons with the 2008 financial crisis just yet” writes Callum Burroughs for businessinsider.com. The danger of not adjusting debt levels could have a severe impact on already slowing global growth. Emerging markets are seeing a boom in private sector debt Oxford Economics/Haver Analytics. Emerging markets have been the main driver of this trend with debt levels in major growing economies such as China increasing rapidly in the past decade.Since 2015, world private sector debt has risen by around…

Read More
News 

EUR/USD Forecast Feb. 18-22 – Soft German and eurozone data weighing on euro

“The German and eurozone economies are in slowdown mode, as inflation, GDP and manufacturing data continue to struggle” writes Kenny Fisher for forexcrunch.com. We’ll also get a look at German and  eurozone PMIs.If there is a breakthrough in the conflict between the U.S. and China, sentiment could improve for the euro. Source: forexcrunch.com

Read More
News 

Retail sales slump endangers Trump goal of 3% GDP

“The government on Thursday said retail sales fell a preliminary 1.2% in December in the biggest plunge in nine years” writes Jeffry Bartash for marketwatch.com. Read: The stunning drop in retail sales has Wall Street’s economists skeptical Before the retail report, economists polled by MarketWatch estimated the U.S. would grow 2.7% in the fourth quarter.Trump and his senior economic advisers have steadfastly contended their pro-business policies would regularly drive growth above 3% again. Source: marketwatch.com

Read More
News 

There’s now clear proof the threat of no deal Brexit is hurting the UK economy

“The final quarter of 2018’s number was only beaten by the 0.1% growth witnessed in the first quarter of last year” writes Will Martin for businessinsider.com. “The fog of Brexit is causing short term volatility in economic data, and more fundamentally is creating a series of tensions in the economy,” Bank of England Governor Mark Carney said at a press conference.On an annual basis, the ONS said that the economy grew 1.4% in 2018, the lowest growth since 2012.The central bank lowered its economic growth forecast for the UK in…

Read More
News 

EUR/USD Forecast Feb. 11-15 – Euro slips on weak retail sales, manufacturing reports

“The German and eurozone economies continue to produce weak numbers, underscored by weak scores in retail sales and manufacturing” writes Kenny Fisher for forexcrunch.com. The bank revised downwards its growth forecast for the eurozone to 1.9% in 2018, from 2.1% in the November forecast.For 2019, the growth forecast has also been revised down to 1.5%, compared to 1.9% in the November forecast.The European Commission economic forecasts projected moderate growth in the eurozone for 2019, but warned that significant uncertainties lie ahead.Eurozone retail sales plunged 1.6% in January, its worst reading…

Read More
News Oil 

IMF’s Lagarde: Oil exporters not fully recovered from 2014 shock, warns of ‘white elephant projects’

“Oil exporters have not fully recovered from the dramatic oil price shock of 2014, the head of the International Monetary Fund said on Saturday, and she cautioned against spending money on “white elephant projects.”” writes Simon Dawson for cnbc.com. Speaking about the global economy, Lagarde said the IMF was not seeing a global recession on the horizon, but risks were rising for global growth due to trade tensions and tightening financial conditions. Source: cnbc.com

Read More
News 

‘Fragility in Italy’s economy needs to be addressed,’ EU warns as it slashes growth forecasts

“The 19-member bloc is set to grow 1.3 percent this year, from a previous forecast of 1.9 percent” writes Tiziana Fabi for cnbc.com. Italy’s economy is already in trouble, however, with the latest GDP data showing that the euro zone’s third-largest economy had entered its third recession in a decade.Dombrovskis’ comments come as the European Commission cut its forecast for Italy’s growth in 2019 to 0.2 percent, from a previous prediction (made last November) of 1.2 percent. Source: cnbc.com

Read More
News 

Three bears chase away the Goldilocks economy — and we set them loose

“The bears returned, and though Goldilocks escaped, she took our 3 percent GDP growth economy with her” reports washingtonexaminer.com. We seemed to be on a roll, but three bears came home and chased Goldilocks away: trade uncertainty, monetary policy uncertainty, and the government shutdown.If angered, any one of these three bears — trade wars, Fed uncertainty, and shutdowns — poses a threat to an otherwise happy situation.Until December 2018, strong GDP growth, the lowest unemployment rate in almost 50 years, and a stable price level were just right. Source: washingtonexaminer.com

Read More