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Jerome Powell becomes anti-Volcker – Finances Herald

Jerome Powell becomes anti-Volcker – Finances Herald

The Federal Reserve reaffirmed that we live in a strange monetary world, announcing two paradoxical forecasts. The wise people from the Federal Open Market Committee (FOMC) said the economy was recovering faster than expected, but interest rates would have to stay close to zero until 2023.In a sense, the Federal Reserve’s statement simply gives more specificity to the new inflation targeting policy that Fed Chairman Jerome Powell outlined last month. We call it, half-jokingly, “low interest rates forever!”. Wednesday’s statement fixed these expectations for zero interest rates at least...

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Sep 18
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Will home office kill big city centers? – Finances Herald

Will home office kill big city centers? – Finances Herald

The first packaged sandwich in the UK was sold by Marks and Spencer in 1980 for 43 pence, and the first sandwich chain, Pret A Manger, opened six years later. It was a decade of economic transformation: offices in big cities were replacing factories as engines of growth, and sandwiches were their fuel. Pret’s sites are now everywhere in the capital. There are as many on one of London’s main streets as there are in all of Wales. Pret’s rise followed that of the city, and until recently it was not clear how this would end.Recently, however, Pret announced it would cut 2,890 jobs, nearly a...

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Sep 16
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Rishi Sunak is preparing new measures to support jobs in the UK – Finances Herald

Rishi Sunak is preparing new measures to support jobs in the UK – Finances Herald

British Finance Minister Rishi Sunak has made the clearest hint so far that he supports plans to protect jobs in the kingdom after the government’s program to help companies struggling to keep their workers ends in October. Thus, Rishi Sunak intends to respond to the demands of business and the opposition Labor Party for additional support.Speaking in parliament, after economic figures showed that the British economy had wiped out nearly 700,000 jobs during the recession due to anti-pandemic blockades, Rishi Sunak acknowledged that “business needs support”. He answered questions from...

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Sep 16
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Labor costs in the Eurozone rose in Q2 2020 – Finances Herald

Labor costs in the Eurozone rose in Q2 2020 – Finances Herald

Labor costs in the Eurozone rose in the second quarter amid blockades due to the coronavirus, which led to the closure of large parts of the economy and reduced working hours.The loss of working hours is not combined with wage cuts as companies continued to pay salaries to their employees thanks to government subsidy programs.According to Eurostat, the state support in question has increased the cost of hourly wages by 5.2% on an annual basis, which is twice the average growth rate in 2019.At the same time, total labor costs increased by 4.2%, according to the European Union’s (EU)...

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Sep 16
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The Fed is reducing its 7-day swap operations – Finances Herald

The Fed is reducing its 7-day swap operations – Finances Herald

The US Federal Reserve will reduce the number of its seven-day swap operations with major central banks from September 1, as funding conditions improve, the European Central Bank said in a statement posted on the institution’s website on Thursday.In view of the continuous improvements in US dollar financing conditions and the low demand in recent swap operations with a maturity of up to 7 days to provide US dollar liquidity, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss Central Bank, in consultation with the Federal Reserve, together decided to reduce the...

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Aug 23
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The new debt flow in Japan obliges the BoJ to buy more bonds – Finances Herald

The new debt flow in Japan obliges the BoJ to buy more bonds – Finances Herald

The speed of bond issuance in Japan is putting upward pressure on yields and increasing calls for the central bank to buy more.Yields on three-month government bonds rose to -0.06% last week. This level was last reached in early 2016 before the Central Bank of Japan introduced its policy of negative interest rates. Demand for global funds, usually the largest buyers, failed to cope with supply, which prompted the NSC to intensify purchases.The government’s 2.2 million USD stimulus plan unleashed a flood of bonds, with issuance expected to increase by almost two-thirds this fiscal year....

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Aug 23
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The crisis is an opportunity to improve the American labor market – Finances Herald

The crisis is an opportunity to improve the American labor market – Finances Herald

The coronavirus revealed a major weakness of the US economy: the poor quality of its labor market. The key workers who supported the economy during quarantine – grocery store vendors, suppliers, cleaning staff – may have become heroes, but they are certainly not paid as such.Although the aforementioned have managed to keep their jobs, more than 30 million Americans have now applied for unemployment benefits, the vast majority of low-paid and part-time sectors. Once the virus is under control, we should take the opportunity to reboot while recovering.For decades in the United States, the...

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Aug 23
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Olaf Scholz proposes a 10-billion-euro plan to protect jobs in Germany – Finances Herald

Olaf Scholz proposes a 10-billion-euro plan to protect jobs in Germany – Finances Herald

German Finance Minister Olaf Scholz has proposed extending job support subsidies during the coronavirus crisis to 24 months, saying the measure would cost the government an additional 10 billion EUR.Chancellor Angela Merkel’s government has resumed short-term compensation to protect workers and companies in Germany from massive job cuts during the pandemic.Benefits, usually limited to 12 months, initially covered up to 67% for households with children, gradually expanding in recent months.Olaf Scholz’s proposal contrasts sharply with British Finance Minister Rishi Sunak’s intention to end...

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Aug 18
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Hong Kong lowered its economic forecast to new record lows – Finances Herald

Hong Kong lowered its economic forecast to new record lows – Finances Herald

The Hong Kong government has revised its 2020 forecast for the administrative economy to record lows of -6% to -8% amid a global coronavirus pandemic and growing trade tensions.The latter forecast is worse than the previous one, indicating an expected decline of 4% to 7%. The government also provided an unchanged final GDP indicator for the second quarter of -9% on an annual basis and -0.1% over the previous quarter.“If the current wave of local infections can be contained in the short term and a further sharp deterioration in the external environment is prevented, the economic results for...

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Aug 16
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Germany expects a strong economic expansion in the third quarter – Finances Herald

Germany expects a strong economic expansion in the third quarter – Finances Herald

Germany’s economy, which was hit hard by the new coronavirus pandemic, will expand strongly in the third quarter, but full recovery will take a long time, according to the country’s economy ministry.Gross domestic product (GDP) will “recover strongly” in the third quarter after the historic collapse between April and June. Europe’s largest economy has been recovering since May thanks to easing restrictions imposed to slow the spread of the coronavirus, the ministry said in a monthly report.The rapid improvement of Germany’s powerful industrial sector will lose momentum due to weak demand...

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Aug 16
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German companies want the federal government to become a shareholder in them – Finances Herald

German companies want the federal government to become a shareholder in them – Finances Herald

Following the partial nationalization of Lufthansa, the federal government is considering joining other companies. “14 companies have already explicitly indicated the need for recapitalization”, wrote Secretary of State for Economic Affairs Ulrich Nussbaum in response to a written question from Green MP Katharina Droege. For the “vast majority of companies”, the inspection is in its early stages.To protect German companies from the effects of the crisis and, as the Economic Minister Peter Altmaier (CDU) points out, to preserve the “essence of our economy”, the federal government launched a...

financesherald.com
Aug 15
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The Fed is trapped in corporate indebtedness – Finances Herald

The Fed is trapped in corporate indebtedness – Finances Herald

Central bankers have spent years warning of the dangers of excessive corporate debt. But their response to this year’s coronavirus storm in the financial markets has exacerbated the problem.This is Paragraph 22 of the policies after 2008, and now of those after the pandemic. To avoid a debt crisis, monetary authorities are creating conditions that allow companies to borrow even more, increasing the potential burden of the next crisis. No central banker wants to encourage over-borrowing, but no one wants to watch companies go bankrupt, raising unemployment and stifling economic growth.“The...

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Aug 15
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Aurubis confirmed its annual forecast after a strong earnings report – Finances Herald

Aurubis confirmed its annual forecast after a strong earnings report – Finances Herald

Europe’s largest metallurgical company Aurubis withstands the effects of the corona crisis and adheres to its goals for the whole year. Earnings before tax (EBT) doubled between April and June to 42 million EUR.The good load on the copper production facilities and the strong recycling business contributed to the result. The increase in profit was so strong, not least because the same quarter of the previous year was burdened with one-off effects. The takeover of Metallo Group, which was included in the consolidated financial statements for the first time in June, was also helpful....

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Aug 15
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Spain’s economy shrank more than expected in Q2 2020 – Finances Herald

Spain’s economy shrank more than expected in Q2 2020 – Finances Herald

Spain’s economy shrank more than expected in the second quarter of the year, making the recovery even more complicated given the headwinds facing the tourism industry.The decline reached a record 18.5% – driven by declining consumer spending and investment and is the largest ever reported in Europe. The statistical office also warns that it has had difficulty reporting the real situation due to the economic blockade and that even deeper revisions may follow.Economists forecast a 16.6% drop in Spain’s GDP.The coronavirus crisis, which has blocked EU economies, has shrunk just over 10% of the...

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Jul 31
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German economy collapsed dramatically by 10.1% – Finances Herald

German economy collapsed dramatically by 10.1% – Finances Herald

The German economy collapsed in the second quarter due to the coronavirus crisis. From April to June, gross domestic product (GDP) fell by 10.1% from the previous quarter, according to the Federal Statistical Office.Meanwhile, the economists expected a 9% drop.This is the largest decline since the beginning of quarterly calculations for Germany in 1970. By comparison, even in the worst three months of the financial crisis in 2009, the economy shrank by less than 5%.Measures to control the pandemic paralyzed much of the economy: shops, hotels, and restaurants had to close, factories also...

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Jul 31
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The Rescue Package of the Republicans: financial aid primarily for entrepreneurs – Finances Herald

The Rescue Package of the Republicans: financial aid primarily for entrepreneurs – Finances Herald

In the end, they agreed. Republicans in the US Senate actually planned to finalize their plan for the next exit package last week, but President Donald Trump’s party failed to reach an agreement on Thursday due to internal strife. On Monday, Republican Majority Leader Mitch McConnell and his colleagues finally announced how they plan to take control of the country’s economic crisis in the coming weeks. However, the Republicans failed to achieve large-scale measures.At the heart of the problem in the negotiations so far are the increased unemployment benefits, the payment of which expires...

financesherald.com
Jul 29
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ECB: The danger to the Eurozone is not over yet – Finances Herald

ECB: The danger to the Eurozone is not over yet – Finances Herald

According to the director of the European Central Bank (ECB) Fabio Panetta, the danger of a coronavirus pandemic for the Еurozone is not over. “It’s too early to declare victory”, said Fabio Panetta in an interview.The latest data show an improvement in industrial production and retail sales, but according to the financier, this is not enough to make us happy.“Economic activity is still well below pre-crisis levels and based on our forecasts we will not see a return to these levels before the end of 2022. There is uncertainty about both the economic and job prospects. Finally, growth is...

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Jul 27
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The European economy will recover faster from the crisis than the US – Finances Herald

The European economy will recover faster from the crisis than the US – Finances Herald

The Eurozone economy is on the path to a faster recovery from the coronavirus crisis than the United States, due to the different response to the pandemic.America’s failure to control the pandemic is holding back recovery from Europe, where some of the virus’s “hot spots” have been able to resume economic activity without such a surge in new infections.The confidence that the virus is already under control is crucial for sustainable recovery. Europe can also be relatively successful in supporting consumers to spend and businesses to invest, further boosting demand and growth.The region has...

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Jul 27
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The return of inflation in developed countries is impossible without currency devaluation – Finances Herald

The return of inflation in developed countries is impossible without currency devaluation – Finances Herald

Here is an interesting question: What connects the following historical periods: Venezuela 2017-2020, Zimbabwe 2018-2020 and 2006-2008, Turkey 1994-1995 and 1980, Argentina, Brazil, and Latin America in the 1980s and Germany 1923-1924?If you guess that they all suffer annual inflation of over 100%, you will be right. However, there is something else that is common to this group of countries, which is usually overlooked in the ongoing debate over whether inflation will return to developed economies. In the three years preceding inflation of more than 100%, all of these countries experienced...

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Jul 27
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G20: Further action is needed to ensure global economic growth – Finances Herald

G20: Further action is needed to ensure global economic growth – Finances Herald

The top financial officials of the world’s 20 largest economies, known as the G20, pledged over the weekend to continue using “all available financial policy instruments” to fight the coronavirus pandemic and work together to strengthen the global economy while warning that global prospects remain very uncertain.In a statement issued after Saturday’s virtual meeting, finance ministers and G20 central bankers said the global economy would recover as individual economies gradually reopened, but further action was needed to guarantees growth.Finance ministers and central bank governors of the...

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Jul 20
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The coronavirus threatens the fight with world poverty – Finances Herald

The coronavirus threatens the fight with world poverty – Finances Herald

Productivity growth slowed globally before the coronavirus, but the pandemic, combined with the blockade imposed by governments to slow its spread, risks exacerbating the situation. Not only will additional uncertainty reduce the attractiveness of business investment and trade, but higher levels of public and private debt will also limit their effectiveness. Education was interrupted, as progressed in improving health care. A recent World Bank report warns that this could turn decades of global poverty reduction: the world cannot allow this to happen.On the other side of the collapse in...

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Jul 20
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Rising copper prices are an optimistic signal for the world economy – Finances Herald

Rising copper prices are an optimistic signal for the world economy – Finances Herald

Global investors are betting on copper prices, causing the fastest rally in industrial metal in years. This is a signal that many wealth management funds remain optimistic about the economic outlook despite the growing number of coronavirus cases in most of the United States.As investors focus their money on assets that have performed well recently, copper futures rose in 12 consecutive sessions until Monday, reaching 2.94 USD per pound, its highest level since April 2019. It dropped on Tuesday. The ascending series is the longest for the metal since the end of 2017 when the favorable...

financesherald.com
Jul 18
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China will not be able to help to take the global economy out of the recession – Finances Herald

China will not be able to help to take the global economy out of the recession – Finances Herald

The revival of the world economy this year will not be easy. But it will be even more difficult if China, the locomotive that pulled the economy out of the latest major crisis, does not provide additional support.During the financial crisis of 2008-2009, China’s growing demand for raw materials and other commodities boosted global growth, supporting recovery in places such as Brazil and Germany. Some countries, such as Australia, have avoided the recession almost entirely thanks to trade with China.This time, however, the Asian super economy is not ready to help to such an extent. Despite...

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Jul 18
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Chinese economy is shaking despite reported growth – Finances Herald

Chinese economy is shaking despite reported growth – Finances Herald

China’s economic data released on Thursday showed 3.2% growth in the second quarter, a strong recovery from the first three months of the year, when the country saw its first contraction in GDP since the end of the Cultural Revolution in the mid-1970s.Thus, the overall decline in the first half of the year is only 1.6% – an enviable performance compared to most major economies still struggling with the pandemic that began in the central Chinese city of Wuhan.“China’s growth foundation has not changed and will not change”, said President Xi Jinping.But therein lies the problem. The serious...

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Jul 18
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Divination about the form of the economic recovery obscures the view – Finances Herald

Divination about the form of the economic recovery obscures the view – Finances Herald

All the time spent trying to identify good V-, bad U-, and unfortunate L-shaped recovery, letters may not be the clearest way to understand the rebound after a coronavirus pandemic. Perhaps a better analogy is a scribble that depicts the vicissitudes of economic life in and out of the blockages due to the disease.This is nowhere more obvious than in Asia, where the data are contradictory. A recent quarterly Tankan survey by the Bank of Japan found that economic confidence among the largest producers has shrunk to levels not seen since the global financial crisis. If you dig deeper into the...

financesherald.com
Jul 13
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