Category: Markets

Property prices in Spain – ¿Por qué the fuss?

  • House prices in Spain are rising healthily again due to economic growth and better credit availability.
  • It's a big deal because the 2008 collapse in Spain's housing market triggered the country's economic & financial crisis.
  • Good news + seems like Spain will be one of Europe's best performing economies this year.

Why has Brazil’s currency fallen so much?

  • Currently at an 11 year low against US$ - bad time for emerging market currencies (weak commodity prices and resurgent US$) but domestic issues in Brazil playing substantial role in sell-off.
  • Economy doing badly and fiscal tightening needed, but domestic hostility to austerity.
  • Concerns that increasing political uncertainty will undermine president Rousseff's reform program.

How’s the euro doing against the dollar?

  • Terribly - currently at an 11-year low.
  • US economy strong, european economy weak.
  • US interest rates expected to rise mid-year-ish while europe's will remain zero and negative.

What is the “greater transparency for the Fed” debate?

  • Republicans want greater transparency and allege that Fed's interest rate decisions have become politicised.
  • Republicans also want rates to be set by mechanical rules, not opinions.
  • Fed Chairman Janet Yellen (Democrat) wants system to stay "as is"

Expectations re US interest rates?

  • Monetary policy has been accommodative (i.e. low and even zero interest rates) for a while - but economy now showing consistent signs of strengthening.
  • Fed stating now that this consistent growth is likely to start pushing up inflation to their 2% target.
  • Translates as Fed preparing markets for possible rate rises soon.

Greek debt battle so far?

  • Greece does not have an actual plan for exiting the euro - this weakens their negotiating position markedly.
  • Also, depositors extremely nervous, and Greek banking system will collapse if their negotiating stance is not modified.
  • Hence Greek strategy has thusfar failed to challenge German economic orthodoxy.

How much has the oil price fallen?

  • Was $115 per barrel in June last year.
  • Had fallen to $45 by January.
  • Has now rebounded to $60.
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