Bill Witherell's Blog

According to the May 4th Wall Street Journal, the International Monetary Fund (IMF) is expected to declare in a forthcoming report that China’s currency, the yuan, is “fairly valued.” As stated on the IMF website...

Financial markets let out a sigh of relief when they learned that the new Greek leftist government led by Prime Minister Alexis Tsipras has put aside its earlier demands that a large share of its debt be written down...

Global stock markets tumbled Tuesday, due in part to a sharp fall in China’s stocks, the sharpest correction in five years. In a day that saw a 2.4% gain at one point, the Shanghai Composite Index closed down 5.4%, led by financials and energy.

The slowdown in China’s economy, which in the first half had been one of the negative factors affecting the global economy and equity markets, appears to have come to an end, with Chinese manufacturers reporting...

Global growth is projected to grow by 3.6% this year, compared with 3% in 2013. For the advanced economies the outlook is for 2.2% growth versus 1.3% last year. For the emerging and developing economies, the quickening is slight, 4.9% versus 4.7%, but the rate is over twice that for the advanced economies.

Global markets are relieved that the risk of a shooting war has receded (but not disappeared), and they are rallying. The situation remains highly volatile. Threats and counter-threats are issued daily. We do not know how this drama will end. There are some substantive developments, however; and these are the subject of this note.

Following the dramatic collapse of the pro-Russia government in Ukraine over the weekend, the Ukraine parliament is working on establishing a coalition government and seeking a much-needed international financial aid package.

The Netherlands has lost its triple A credit rating by Standard & Poor’s, leaving just Germany, Finland, and Luxembourg in the Eurozone at the highest level. The downgrade to AA+ is ironic, as it appears to be the result of an overdose of “responsible” budgetary policy.

Two weeks ago the OECD published their revised outlook for the global economy for 2014 and 2015. Global growth for this year is marked down to 2.7% and to 3.6% in 2014. The nearly half-a-percentage-point reductions as compared with the May projections are due to slower growth in emerging markets.

The latest data on the United Kingdom economy confirm that the recovery continues and is wide-based. The UK equity market is also advancing – but not at the pace one might expect in view of economic performance.