In its first 2020 policy meeting, the Bank of Mexico cut its overnight interest rate from 7.25 percent to 7. It was the fifth consecutive quarter-point rate cut to come out of the bank’s board of governors’ quarterly meetings. The cut was the board’s first unanimous decision since May 2019. The cut was made after...
Category: TRENDS ON THE U.S. ECONOMIC FRONT
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AUSTRALIA: DOUBLE WHAMMY
Australia’s three straight decades of economic growth without a recession are due in large measure to its robust trade with nearby China. Now the good times might be ending. First, drought and abnormally high temperatures have combined to fan the worst wildfires the continent has confronted in decades. An area the size of Belgium and...
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THE NETHERLANDS: BAD LOANS ON THE RISE
ABN Amro, a Dutch bank majority-owned by the Dutch government, is conducting the second review in two years of its lending and investment banking practices after a dramatic increase in bad loans. The bank’s profits in 2019’s final quarter were down 43 percent year-on-year and the bank’s share price lost 6 percent last Wednesday after...
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JAPAN: ECONOMY SHRINKS DRASTICALLY
Japan’s economy, the world’s third largest, contracted by 6.3 percent during the last three months of December, the sharpest contraction since a 7.4-percent hit in the second quarter of 2014. The drop is almost twice the 3.7-percent shrinkage that had been expected. The contraction is being attributed, in part, to last September’s sales tax hike...
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EURO TAKES A BEATING
The Eurozone’s common currency plunged to its weakest point in two-and-a-half years as investors fled the Eurozone’s sagging economy and the coronavirus scare and took refuge in the dollar. The dollar has been 2020’s strongest currency among the G10 group of nations. The euro sank even further Thursday afternoon when the Trump administration said it...
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FACTORY SLUMP CASTS DOUBT ON ECONOMIC REBOUND
The Eurozone’s factory output fell 2.1 percent in December, reflecting earlier reports of poor performance in France, Italy, and Germany. The slump was worse than expected. During the first 11 months of 2019, the region’s industrial production fell 4.1 percent, its worst drop since 2012’s sovereign debt crisis. Analysts are revising downward their projections for...
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EUROZONE GROWTH SLOWEST IN SEVEN YEARS
It had nothing to do with the coronavirus. It happened last year. The Eurozone’s economy grew at a rate of 0.1 percent in 2019’s final quarter, a slowdown unmatched since the currency crisis of 2012. The rate blew apart hopes that the region’s economy was beginning to improve. Germany was the greatest disappointment, reporting zero...
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GLOBAL SLOWDOWN: WINNERS AND LOSERS
Global trade grew at just 1 percent in 2019, down from 4 percent in 2018 and 6 percent in 2017. It was the fourth worst performance in 40 years and the worst ever for a time not in recession. China’s imports fell by $59 billion, the U.S.’s by $42 million during the year. The trade...
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CORONAVIRUS DISRUPTS SUPPLY CHAINS
With China a vital link in many manufacturing supply chains, the coronavirus’s impact is shaking the global economy. In fact, it is one of the reasons equities have declined three days in a row. Today, Apple, the most valuable company in the U.S., cautioned that it does not expect to meet its quarterly revenue forecast,...
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CHINA BANK FEVER
The coronavirus, which has closed factories and businesses across China for weeks, will weaken and already weakening Chinese banks. As much as 6.5 trillion renminbi in loans could go bad if the crisis lasts for months, according to S&P Global Ratings. The default rate could soar from less than 2 percent in December to 6.3,...