Tag Archives: economic performance

Stocks Laughing on Economic Uncertainty, for Now | Instant News


US economic uncertainty remains at near record levels, and the stock market is at an all-time high. If history is any guide, something has to be given.

It’s the message that flashes from an index of economic uncertainty created by three finance professors: Scott Baker of Northwestern University, Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago. Prior to this year, there was a strong correlation between the rise in this index and the decline in stocks. In fact, based on this historical pattern in 1900, the S&P 500 appears to be about 20% taller than it should be.

Such signals may seem surprising given the near-final election resolution and the hopeful news on the Covid-19 vaccine front. But this is how the professor index works.

This index is based on the frequency of mention of words and phrases related to economic uncertainty in major newspapers. In the accompanying chart, this index – known as the Economic Policy Uncertainty Index, or EPU, – has retreated somewhat from its April and May spike, but remains nearly three times higher than average over the past several decades.

In an interview, Prof. Bloom explained that there are several ways in which increasing economic uncertainty is a barrier to economic growth. This increases the cost of capital, for example, which means that businesses can’t justify new projects as much as they do. This causes businesses and consumers to delay spending. And that reduces the effectiveness of the government’s stimulus program.

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How Donald Trump’s virus diagnosis blurs the outlook for the travel industry | Instant News


Financial markets absorbed the news that President Donald Trump contracted Covid-19 with serenity on Friday. The S&P 500 sold off slightly, while bond yields edged up and gold closed. The White House said late in the day that the president was going to the hospital with relatively mild symptoms and receiving experimental antibody treatment. Yet it would be far too premature to give a clear picture of the impact on financial markets and the economy in general. Sure… .



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Why Brazil’s Stock Market Struggles because Other Emerging Markets Rebound | Instant News


Brazil’s Chief of General Staff Walter Souza Braga Netto and Minister of Economy Paulo Guedes participated in the New Legal Framework for Basic Sanitation ceremony on July 15, 2020.

Pictures of Andressa Anholete / Getty

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German Economy Suffers Biggest Contraction on Record, but Green Buds Appear | Instant News


FRANKFURT – Germany suffered a record economic contraction in the second quarter as a move to slow the spread of a closed business pandemic and keep consumers home, but European power plants are expected to shrink less and recover faster than other major economies.

German gross domestic product fell 10.1% compared to the previous quarter, the biggest decline since comparable records began in 1970, and roughly doubled the contraction at the nadir of the global financial crisis in 2009, federal statistics …

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German GDP has fallen the most since 1970 in the second quarter | Instant News


People wearing protective masks walk on the main shopping street in Munich during the coronavirus crisis on April 30, 2020, in Germany.

Alexander Hassenstein / Getty Images

Germany recorded the worst setback in the economy in the second quarter since 1970, according to statistics released on Thursday.

German gross domestic product fell seasonally adjusted 10.1% quarter-on-quarter, which was worse than economists forecast a 9% decline.

The Federal Statistics Office said there was a “major downturn” in exports and imports of goods and services, as well as for household final consumption expenditure and capital formation in machinery and equipment.

Release comes much sooner than usual, only 30 days after the quarter ends versus 45 more typical days. The statistics agency warns that revisions may therefore be larger than usual.

“In the midst of significant uncertainty about current activities, this challenge is even more frightening than usual. While high frequency data such as retail footprint data, flight statistics and truck mileage provide guidance for current trends, it is still unclear how closely some of the steps recently watched track official statistics, “said Florian Hense, an economist at Berenberg The bank, which added the economy could recover about 40% of its losses in the third quarter.

US later on Thursday estimated to report a 35% annual decline in second quarter GDP.

Euro currency
EURUSD,
-0.25%

hovering lower after the release, which also came as Germany reported the unemployment rate remained at 6.4% in July. The most prominent reaction on the stock market, such as the German DAX
DAX,
-2,13%

slipped 2.5%.

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