financial markets

Equity markets and the global economy

Traders on the floor of the New York Stock Exchange

03.04.2019

Company earnings are a traditional gauge of economic health and a powerful driver of financial markets. Recently, however, they have been sending contradictory signals. One reason could be the expansionary credit policies of the past decade, which have distorted balance sheets and weakened competition. The most likely outcome of this process is not necessarily a sudden market meltdown, but rather a steady erosion of corporate finances and economic growth.

Professor Enrico Colombatto

ECONOMY

2019 Global Outlook: Another year near zero

Federal Reserve Chairman Jerome Powell testifies before the U.S. Congress

30.01.2019

It has been a decade since global interest rates reached the zero lower bound, where monetary policymakers lose their ability to stimulate the economy using conventional policy tools. Among the largest global central banks, only the United States Federal Reserve has set its benchmark above 2 percent. Will this anomaly end in 2019?

Henrique Schneider

ECONOMY

2019 Global Outlook: The economy we left behind

New York Stock Exchange traders observe a losing session in November 2018

21.01.2019

2018 was not a bad year for the world economy, and 2019 should be only a little worse. Consistent with our forecasts, last year brought no disasters: no recession in the West, no major slump in China, no public finance crisis in Europe or global trade wars. Instead, there was satisfactory growth and a long overdue cleanup on financial markets. 2019 will be more sluggish as China keeps slowing and the U.S. administration spurs commercial tensions. Yet the biggest brake will be applied by the world economy’s silent actor – lagging productivity growth.

Professor Enrico Colombatto

ECONOMY

Real economies and financial markets: Outlook for 2019

A cartoon showing a money printing press being stopped by a politician in tall hat

19.11.2018

Financial markets are hesitant, as many sources of concern pile up on analysts’ desks. This report argues that the future of the world economy depends on three sets of variables: policymakers’ ability to adjust to the end of generous monetary policies and profligate fiscal practices; their willingness to recognise the need to engage in structural reforms and act accordingly; the possibility that significant shocks occur – such as a crash in China or an all-out trade war.

Professor Enrico Colombatto

ECONOMY

From regulation to supervision – the trajectory of MiFID II

A trader at the Deutsche Boerse in Frankfurt, Germany

21.08.2018

The European Union’s ambitious attempt to re-regulate the financial industry (MiFID II) took effect this year. Companies are struggling to meet its complex disclosure requirements, which can only be met by powerful and costly IT solutions. Early experience suggests MiFID II is so unworkable that it may soon have to be replaced; but the bigger worry is that it may be the precursor of a real-time, global surveillance apparatus.

Professor Elisabeth Krecké

ECONOMY

Opinion: The OECD’s problematic global tax ‘standard’

Global

15.09.2017

The OECD’s global standard for the Automatic Exchange of Information (AEOI) in tax matters is far less global, standardized and automatic than its name suggests. It is structured so that countries tend to apply the rules bilaterally, leading to a complicated web of regulations that the “standard” was designed to avoid. This is leading to higher costs and troublesome legislation.

Henrique Schneider

ECONOMY

Opinion: Conventional measures give false reassurance on global risk

U.S. home with a for-sale sign in Atlanta, Georgia

04.08.2017

Conventional measures could be the wrong ones to gauge the risk of a financial shock to the global economy. Imbalances created by cheap money are building up in the economy. A close look at market capitalization, share buybacks, and interest-rate spreads presents a troubling picture.

Henrique Schneider

ECONOMY

Loose monetary policy could be on its way out

Brussels, Feb. 15, 2016: Mario Draghi, president of the European Central Bank, deserves credit for stating clearly that easy money cannot work miracles (source: dpa)

18.04.2016

In March, the United States Federal Reserve kept its main interest rate on hold, while the European Central Bank cut its main interest rate to zero. The moves confirmed what investors already knew: the American and European economies still have plenty of weaknesses. But despite appearances, the Fed and the ECB are on track to end their expansionary monetary policie...

Professor Enrico Colombatto

ECONOMY

Argentina’s new president will find it hard to make a fresh start

Buenos Aires, Dec. 10, 2015: Argentina’s new President Mauricio Macri greets the crowd after taking the oath of office (source: dpa)

15.12.2015

Let’s Change – Cambiemos – led by former Buenos Aires Mayor Mauricio Macri, won Argentina’s presidential run-off by less than 3 per cent of the popular vote. Headlines in Europe, the United States and Latin America heralded the opposition coalition’s victory as marking a reversal of the ‘pink tide’ – the swing to the left that has dominated South American politics ...

Dr. Joseph S. Tulchin

ECONOMY

Productivity trend suggests policymakers should stop obsessing about GDP

In China, the authorities feel compelled to react to disappointing growth figures. Their responses create uncertainty and increase market volatility (photo: dpa)

08.09.2015

Economic growth around the world is below expectations. In particular, the Western economies are not generating the kind of recovery needed to solve the problems accumulated over the past decades. Yet despite missing forecasts, the gross domestic product figures themselves are not dismal. In 2015, GDP growth will be better than 2 per cent in the United States and w...

Professor Enrico Colombatto

ECONOMY

Equity markets and the global economy

2019 Global Outlook: Another year near zero

2019 Global Outlook: The economy we left behind

Real economies and financial markets: Outlook for 2019

From regulation to supervision – the trajectory of MiFID II

Opinion: The OECD’s problematic global tax ‘standard’

Opinion: Conventional measures give false reassurance on global risk

Loose monetary policy could be on its way out

Argentina’s new president will find it hard to make a fresh start

Productivity trend suggests policymakers should stop obsessing about GDP