Category: Economics

Explain record China capital outflows, i.e. why is money flowing out of China?

  • International investor concerns about slowing China economy, so China stock-market looks less attractive.
  • Strong US$ has been a big and obvious trade, i.e. since the rest of the world is still cutting interest rates, but the US is poised to raise them, the US$ has surged.
  • Interest rates have been falling fast in China, hence making their currency less attractive.

Size of California’s economy?

  • Biggest in US.
  • If it was a country, would be 12th biggest in the world.
  • Roughly same size as Italy, India and Canada.

Macrosnap California economy?

  • Booming - led by Silicon Valley and housing market.
  • Budget surplus, 1m jobs added in last year, unemployment down from 12% in 2010 to 6.5%.
  • Medium-term challenges = tech bubble bursting and drought.

California Budget?

  • Big surplus (revenue > expenditure) under Jerry Brown.
  • Primarily due to revenue surge (levy on wealthy + booming Silicon Valley).
  • Resulting in record expenditure plans (primarily on education & drought relief).

Oil price up again?

  • Has rebounded approx. 40% year-to-date.
  • So has reversed just under a third of the 2014 fall.
  • Expected that recent rise will run out of steam as US shale industry is rebounding strongly.

Eurozone growth?

  • Currently outperforming UK and US.
  • France & Italy leading (pushed by consumer spending off low energy prices).
  • Germany lagging.

China interest rates down?

  • Interest rates being cut as central bank tries to boost growth (3rd cut in 6 months).
  • Rates expected to continue lower this year.
  • Growth slowing as China economy makes inevitable move from export-led smokestack industries to domestic-demand-led (consumption & services).
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