Category: Economics

Macrosnap Brazil economy?

  • Big depreciation of currency.
  • Deep recession continues.
  • Multi-year government stimulus program (aimed at prolonging a consumption & credit-led boom) has failed, and all that's left is a huge budget deficit.

Saudi Arabia as an oil consumer?

  • Produces 10m barrels per day, but consumes 25% of them.
  • Believed that at current consumption rate, given reserves and estimated extraction potential, set to become a net oil importer by 2025/30.
  • Hence government is making announcements about investing in solar and wind energy + the need to phase out fossil fuel use by 2050.

Japan monetary policy?

  • Problem for Japan is that economy is looking better but still no signs of much-needed in inflation (big fear is for deflation coming back to spook the economy).
  • Central bank (BoJ) recently saying economic outlook ok and signs some signs of inflation, so therefore monetary easing on hold.
  • IMF warning recovery is weak hence 3 arrows of Abenomics should continue (and therefore monetary easing should continue).

US interest rates?

  • Consensus seemed to be rate rise for June.
  • But now emerges growth was weaker 1Q15 than expected.
  • Reduces likelihood of June rate rise.

China balance of payments deficit?

  • Record balance of payments deficit recorded 1Q15.
  • China exports more than it imports, so usually has a large trade surplus.
  • But funds being drawn out of the country exceed this.

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.
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