In a new report titled Stuck In A No-Growth Trap, Morgan Stanley’s Europe Economics team cut its 2012 and 2013 GDP forecasts for the euro area.
“The reasons for revising down our growth outlook are slower global growth, additional austerity measures, elevated funding costs and surging policy uncertainty,” wrote economist Elga Bartsch.
“Instead, we now expect the euro area economy to again contract after having stabilized in early 2012.”
Her current forecasts for the euro [...]
Economists spent the afternoon thumbing through the minutes of the June Federal Open Market Committee (FOMC) meeting.
They were searching for clues on what the Fed’s next move might be.
Bank of America’s economics team led by Michael Hanson and Ethan Harris think that the next move is QE3, a form of monetary policy that involves buying certain securities to lower interest rates.
From this afternoon’s note to clients:
The minutes from the June FOMC meeting [...]
The much-bandied about “Fiscal Cliff” is already here, according to economists and investors, as businesses curb spending in anticipation of the higher tax rates and reduced spending set to be enacted at the end of this year.
“The fiscal cliff is not just a year-end story,” wrote Michelle Meyer and the economics team at Bank of America Merrill Lynch in a report to clients. “We expect the uncertainty shock to be realized in the coming [...]
June macro data is giving a ‘cleaner’ picture of the economic state of our great nation. With seasonal affectations (unusually warm weather and the rebound in auto production) out of the way, June macro data has very much surprised consensus to the downside as BofAML’s economics team notes that 14 of the last 20 June indicators has come in below expectations. Over the next several weeks we will get more ‘hard’ [...]
Citi’s economics team led Willem Buiter and Michael Saunders made some noise late last week when they wrote that Greece would exit the euro on January 1, 2013.
Despite the results of this weekend’s Greek elections, which favors bailouts, austerity, and the euro, Citi continues to believe Greece is likely to exit the euro.
Here’s a clip from the published by Citi’s Jurgen Michels:
Initial reactions from European officials welcome the outcome of the election, but made very clear [...]
By Roland Gribben and Fiona Govan, Madrid
8:57PM BST 07 May 2012
Prime minister Marian Rajoy indicated the Government was ready to intervene to save banks wrestling with the collapse of the housing market.
Bankia, Spain’s fourth biggest bank, is the first in line for state aid. Rodrigo Rato, chairman and former IMF managing director, swiftly resigned after it was disclosed the finance ministry was preparing to refinance the bank and introduce legislation to protect [...]
On Monday, Goldman was the first bank to go ahead and hike its recession odds for the US from 30% to 40% (needless to say assigning probabilities to a non-linear outcome is utterly ridiculous but we’ll play along), additionally saying that both France and Germany will enter a recession shortly. Promptly, Wall Street followed. Yet despite the glaringly obvious, still nobody dares to assign [...]
Grim commentary from Morgan Stanley’s economics team lead by Joachin Fels.The outlook for growth is slashed everywhere around the world:
We cut our global GDP growth forecasts to 3.9% in 2011 and 3.8% in 2012, from 4.2% and 4.5%, respectively. DM growth looks set to average only 1.5% this year and next (down from 1.9% and 2.4% previously), making the BBB recovery even more bumpy, below-par and [...]
The first of many gold price upgrades is here, as Goldman’s David Greely finally catches on to what has been all too obvious to anyone with a frontal lobe: “Gold prices hit a new record high last week, closing at $1,663/toz on August 3. Despite this rally, the rise in gold prices has continued to lag the plunge in US real interest rates, with [...]
Citi’s economics team is forecasting +250k for Friday’s NFP release, well above the median estimate of +190k. The distribution of estimates has a substantial right tail and we expect that many forecasters are erring on the side of caution. Of the 83 forecasters, 72 lie between 150k and 230k, with the other 11 stretching from 235k to 295k.
The problem is that a weak number is [...]
1) U.S. Postal Service expects cash shortage in ’11
“The U.S. Postal Service will be unable to pay two major bills later this year unless Congress changes the law to eliminate Saturday mail deliveries, the postmaster general, Patrick R. Donahoe, told the House Postal Oversight Committee on Wednesday. Media reports say that as of Sept. 30, the end of the current fiscal year, the Postal Service [...]