Fareed Zakaria GPS – CNN 05-08-16

Salient to Investors:

Fareed Zakaria said:

Trump has formidable marketing skills but commerce is different from government. FDR, LBJ and Reagan achieved the most with virtually no commercial background. George W. Bush and Herbert Hoover, despite commercial backgrounds performed much worse as Presidents.

Robert Rubin said the single overriding objective in business is to make a profit, but government has to deal with many legitimate and often competing objectives. Rubin said not even the president has the kind of authority every CEO does.

Dan Senor said that Trump will lose in November, and that history shows that parties can bounce back.

David Frum at the Atlantic said:

An immense wreck is coming: political and cultural.

Trump has a terrible work ethic, is unfit and dangerous to be President.

Globalization’s losers have to be more fairly compensated by the winners.

Ross Douthat at The New York Times said:

Returning to a conservative normalcy is unlikely given Trump.

Nationalism is resurgent around the world for understandable reasons: dislocation, globalization, terrorism, Successful politicians, especially conservative politicians, have to address that anxiety.

Emily Miller at Washington Times said:

What happened is the people decided the Republican nominee, not Washington, not New York.

The country is unfamiliar with the depth of Trump’s policies.

Trump has the temperament to be president: thoughtful, calm, direct, listens very well.

David Order at MIT found that between 2002 and 2010, congressional districts negatively impacted by trade with China were more likely to elect more ideologically extreme representatives, either left or right of the officials they replaced – benefiting conservatives much more than liberals.

A Gallup poll found that 58% percent of Americans view foreign trade as an opportunity, 34% see it as a threat.

Yanis Varoufakis said:

Europe is in deep crisis and falling apart. The EU is heading for a break up, and new borders are being erected.

Instead of banking union, countries are re-nationalizing debt. The probability of losing your money in an Italian bank is increasing, in a German bank decreasing.

Bassem Youssef said:

The West mistakenly believes that it is better to deal with a military regime than a religious one. Military and religious factions work hand in hand.

All authoritarian regimes need to fall back on a reason for failure.

The IMF predicts:

US GDP to grow 2.4% in 2016.

Venezuelan GDP to contract 8% in 2016, and inflation to rise to 720% in 2016 and to 2,200% in 2017.

Myanmar’s GDP to 8.6% in 2016, the world’s best.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1605/08/fzgps.01.html

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Eurozone outlook improves, International Monetary Fund says – BBC News 07-27-15

Salient to Investors:

The IMF said:

  • European growth will rise to 1.7% in 2016 versus 1.5% in 2015 thanks to falling oil prices, a weaker euro and ECB actions this year.
  • Europe remains vulnerable to shocks that could bring prolonged stagnation, like Greece or a moderate shock to confidence from lower expected future growth or heightened geopolitical tensions.
  • The growth outlook for the next 5 years is clouded by high unemployment, especially among the young, large corporate debt, rising non-performing bank loans.
  • Inflation will remain near zero in 2015 and rise to 1.1% in 2016.
  • The ECB’s asset-buying program has boosted confidence and improved financial conditions and should continue until at least September 2016.

Andrew Walker at  BBC said the IMF is saying the eurozone needs more than just reform of the structure of the eurozone and effort from struggling members: it wants countries with excessive current account surpluses, like Germany and Netherlands, to invest more in infrastructure and to boost demand.

Read the full article at http://www.bbc.com/news/business-33669031

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IMF asks US Federal Reserve to delay rate rise – BBC News 06-04-15

Salient to Investors:

Christine Lagarde at the IMF said:

  • The Fed should delay any rise in interest rates until 2016 and wait for more tangible signs of wage or price inflation.
  • Pockets of vulnerability in the US economy could cause serious trouble for the wider economy.
  • The IMF predicts US growth of 2.5% in 2015 and 3% for 2016; versus the OECD prediction of 2% growth in 2015.
  • The US dollar is moderately overvalued.
  • Greece will keep its word on the debt payment due on Friday.

Read the full article at http://www.bbc.com/news/uk-33011262

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Fareed Zakaria GPS – CNN 02-15-15

Salient to Investors:

Fareed Zakaria said:

  • The IEA said Russia faces a perfect storm of collapsing oil prices, international sanctions and currency depreciation.
  • The IMF predicts the Russian economy will contract by 3% in 2015.
  • Putin does not respond to higher costs in a rational calculating manner.
  • Military aid to Ukraine would stoke Russian nationalism, and the loss of men and money in a military operation will not deter it. No one believes that Ukraine can win a military contest with Russia. The consensus believes the only possible strategy is to raise costs for Russia.
  • Paul Krugman at the New York Times says Greece is only asking for what the Germans asked for in the 1950s.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.
  • Steve Ratner said most southern European economies are fundamentally uncompetitive – there are 2,700 pages of labor laws in Italy.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.

Bill Browder at Hermitage Capital Mgmt said:

  • The Russian oligarchs and government officials were stealing all the profits out of the companies he invested in.
  • Putin arrested the richest oligarch and told the others that if they did not want to be arrested they needed to share their money with him. Putin is the biggest oligarch and the richest man in the world, worth $200 billion in property, Swiss bank accounts, shares, and hedge funds.
  • In Russia, whoever has the power to arrest people is the person in power.
  • The one thing in Washington that everybody could agree on was that these Russians were bad.
  • While in power Putin will run Russia into the ground and cause the West many problems.

Zanny Minton Beddoes at The Economist said:

  • The Greek crisis will go down to the wire. The limited solution is relatively simple and that is more reform in return for debt relief. Greece cannot possibly repay its debt. Germany is wrong in demanding austerity and refusing to think about the debt.
  • The Greek economy has bottomed and is beginning to grow, but just as it appears they have got through the worst, they are throwing baby out with the bath water.
  • It is not clear that there would be massive contagion if Greece left the EU.
  • We will get the typical European solution which is akin to kicking fudge, but the odds of an accident this time are the highest in a long time.

Gillian Tett at Financial Times said:

  • Greece is only asking for what the Germans asked for in the 1950s and which has enjoyed a lot of debt relief in the last century.
  • The question is this Europe’s Lehman Brothers moment or will we see a chain reaction that could be extremely bad for the economy? The chance of an accident is rising.

Rana Foroohar at Time Magazine said:

  • Germany has benefited more than any other country from being in the euro zone, and will benefit from ECB QE because that will make the euro more competitive in the international market. Eventually the Germans will blink but expect much pain along the way and the problem not being fixed this time around.
  • Germany has done enough to create a consumption economy and bolster wages.
  • The political solution in Europe is a United States of Europe with real fiscal integration and more power in Brussels with Berlin holding the purse strings.
  • The periphery European economy needs to have a comfort zone in which they can reform.

Freedom House said:

  • Democracy has been declining for 9 straight years and is under greater threat than at any time in the last 25 years
  • 40% of the world’s population is free, 24% is partly free, and 36% is not free. In 2014, 61 countries saw their freedom deteriorate from 2013, versus 33 countries that saw freedom improve. The Middle East and North Africa are the least free.
  • Autocrats are no longer paying as much lip service to democracy and are returning to old 20th century modes of oppression: e.g. Russia’s invasion of Crimea, while China is detaining activists under stricter conditions than just house arrests and televising people’s confessions, and Egypt sentenced hundreds of political prisoners to be executed in sham trials.
  • Azerbaijan, Vietnam and Ethiopia do not receive the full ire of the free world despite their oppression.

Bill Gates said:

  • We are innovating at a wonderful speed and we will be reducing inequity for the basics faster than ever before.
  • Economists have always had a hard time with innovation because it is exogenous.
  • China’s growth is lower than it was but is still at a level that the US and the world would love to have.
  • Improving economic fundamentals will accelerate in the next 15 years.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript

at http://transcripts.cnn.com/TRANSCRIPTS/1502/15/fzgps.01.html

IMF downgrades global growth forecast – BBC News 01-19-15

Salient to Investors:

The IMF said:

  • The global economy will grow 3.5% in 2015 and 3.7% in 2016.
  • The boost from the sharp fall in oil prices will be more than offset by negative factors, including weaker investment.
  • The euro area recovery will continue at only 1.2% growth in 2015 and 1.4% in 2016.
  • China will slow to 6.3% growth in 2016 – versus an average of 10% over the three decades up to 2010 – but an orderly slowdown, though will have important effects in other emerging economies in Asia.
  • Russia will contract by 3% in 2015 and 1% in 2016 due to the fall in oil prices and the crisis in Ukraine and Western sanctions.
  • Nigeria will grow 4.8% in 2015.
  • The US will grow 3.6% in 2015 and 3.3% in 2016.
  • The UK will grow 2.7% in 2015 and 2.4% in 2016.

Olivier Blanchard at IMF said:

  • Deflation in Europe is not the kiss of death and won’t derail the recovery.
  • Many countries have recovered from the global crisis, notably the US, but countries with very high debt will take a very long time to rectify, especially Japan.
  • Things are improving though not as quickly as we would dream.

Read the full article at http://www.bbc.com/news/business-30876954

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Where have all the Spaniards gone? – BBC News 10-03-14

Salient to Investors:

  • Fundacion Alternativas said 700,000 Spaniards left Spain between 2008 and 2012. The National Statistics Institute reports 547,890 left in 2013, 79,306 of them Spanish nationals born in Spain.
  • Spaniards are fleeing 25% unemployment and flocking to Latin America, including Brazil, where language barriers are few, the cost of living is lower, and the opportunity to climb the corporate ladder are plenty. 5,739 Spaniards moved to just Chile in 2013, versus 3,700 to the whole of Latin America in 2005 .
  • Spaniards are prized for their European education and background. Spaniards are surprised by the modernity, opportunity and comforts of home in countries like Peru, Chile and Brazil.
  • The IMF predicts Spain to grow 1.2% in 2014, Peru 5.5% , Mexico 3%, Chile 3.6%  and Panama 7.2%.

Read the full article at http://www.bbc.com/capital/story/20141003-why-are-spaniards-fleeing-home

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Christine Lagarde downbeat on global economy – BBC News 10-02-14

Salient to Investors:

Christine Lagarde at the IMF said:

  • The global economic outlook is less positive than in April but is still in recovery, and improved from a year ago.
  • IMF growth forecasts for Hong Kong have not changed.
  • The financial crisis left more major scars and legacies that the economies have been able to deal and so the potential for growth is lower even for the medium term
  • The world risks long-term new mediocre, particularly in advanced economies with legacies of high debt and high unemployment and clouds in Ukraine and the Middle East.
  • The prospects for women integration in Japan and Korea are positive. The education of girls is critical for economic development.
  • The US has sufficient energy and confidence in the private sector to move the US economy forward. The US economy falls deeply but comes back more quickly than other economies.

Watch the video at http://www.bbc.com/news/world-us-canada-29469185

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U.S. Stocks Tumble as Russell 2000 Enters Correction – Bloomberg 10-01-14

Salient to Investors:

  • Randy Bateman at Huntington Asset Advisors said investors have always relied on the Fed priming the pump, which ends this month so investors are moving focus to the many geopolitical situations and economic concerns.
  • Economists forecast growth from Japan to China will slow every year through 2016.
  • Tim Courtney at Exencial Wealth Advisors said small caps have historically led the way down.
  • Richard Gilhooly at TD Securities said global deflation is developing.
  • IMF predicts Russia will grow 0.5% in 2015.

Read the full article at http://www.bloomberg.com/news/2014-09-30/index-futures-fall-amid-global-selloff-while-oil-rebounds.html

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Calm in Stocks Ending as Earnings Season Brings Volatility – Bloomberg 07-09-14

Salient to Investors:

  • Matt McCormick at Bahl & Gaynor says investors are bracing for more volatility on the basis that the economy and market are not as strong as they thought.
  • Raymond James said equities are vulnerable to losses. Citigroup is concerned about a severe pullback.
  • Christine Lagarde at IMF forecasts a cut in global growth forecasts on continued weak investment and US risks.
  • Peter Tuz at Chase Investment Counsel expects increased volatility and says the extremely low VIX period is over.
  • Frederic Dickson at D.A. Davidson says the rise in the VIX from 11 to 12 is just a technical correction and not a concern: going to 20 would be.
  • Jason Brady at Thornburg Investment Mgmt says the market is relatively high-priced and vulnerable to a selloff, so is increasing cash and replacing riskier stocks with safer ones.
  • The S&P 500 is at 18 times earnings, the highest since 2011. Analysts predict profit growth of 5 percent in Q2 2014. Over 130 S&P 500 companies report quarterly results in the next 2 weeks.

Read the full article at http://www.bloomberg.com/news/2014-07-09/stocks-calm-ending-as-earnings-season-brings-volatility.html

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Gold Analysts Get Most Bullish in a Year After Rout: Commodities – Bloomberg 01-06-14

Salient to Investors:

Gold analysts are the most bullish in a year, while short positions held by hedge funds et al rose almost fourfold from October to December 24th. The US Mint sold 56,000 ounces of American Eagle gold coins in December, the most since June sales gained 14 percent gain in 2013.

Ross Norman at Sharps Pixley said gold is primed for a short-covering rally as physical demand is very robust.

HSBC Securities (USA) said physical buyers viewed prices near $1,200 as attractive.

Mark O’Byrne at GoldCore said purchases may rise before China’s Lunar New Year festival on January 31. The World Gold Council believed China overtook India as the biggest user in 2013.

Australia & NZ Banking said the rally may stall above $1,230 as gold’s downtrend remains in place as investors continue to sell through ETPs.

Commerzbank said gold may fall to the lowest since September 2009 based on point and figure charts and a 45 degree resistance line from April.

Goldman Sachs said on December 5 that gold will rebound to $1,300 in 3 months, before declining to $1,110 in a year.

DZ Bank said on December 20 that gold will average $1,169 in 2014, the least since 2009. Credit Suisse predicts an average of $1,180 in 2014, while Barclays predicts an average of $1,310 in 2014 and $1,190 in 2015.

The IMF predicts global economic growth will accelerate to 3.6 percent in 2014 versus 2.9 percent in 2013, as Europe rebounds from recession. Christine Lagarde at IMF on December 22 raised its outlook for the US economy.

James Paulsen at Wells Capital Mgmt said growth is possible in the developed and developing world in 2014, and predicts a good year for commodities because of synchronized global growth.

Read the full article at http://www.bloomberg.com/news/2014-01-06/gold-analysts-get-most-bullish-in-a-year-after-rout-commodities.html

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