Markets Archives - Page 385 of 729

Japan’s New Foreign Aid Policy Breaks with Tradition

The usage of aid solely to support economic development and not for strategic reasons has been the bedrock principle of Japan’s aid policy since the country first began providing foreign aid to developing countries in 1954. Japan’s Official Development Assistance (ODA) Charter unequivocally declared a total prohibition of ‘any use of ODA for military purpose’. However, the ODA’s replacement, the Development Cooperation Charter introduced in February 2015, emphasises balancing security and development.

Markets Reel on China Exports Crash, IMF Cautions

American and Chinese markets suffered a setback after Chinese exports plummeted by over 25%. Exports fell by 25.4% according to official figures, while imports fell by over 14%. Both numbers are the worst seen since 2009, as Chinese consumers spend less and Chinese companies find less opportunities to sell to foreign firms.

The decline drove the International Monetary Fund (IMF) to issue another warning on global growth—the recent of several in the last few years.

Hitting a New Growth Target

China’s new growth target of 6.5-7% will ensure more flexibility amid deceleration at home and stagnation in the West. It is a balancing act between reforms and deleveraging.

Forces Impacting Chinese Trade Figures

Investors are skeptical of Chinese economic data. However, news yesterday that Chinese exports fell by a quarter in February shocked investors. Many worry about the implications not just for China, but also for world growth. It comes as the IMF is signaling it will likely cut its 3.4% global growth forecast next month.

U.S. Small Business Sentiment Softens

Across America, small businesses are feeling less confident about their future businesses and the economy as a whole. The NFIB Small Business Optimism Business Index fell 1 point to 92.9, its lowest point in two years. The survey, which asks small business owners general questions about their attitude towards their own futures and the future of the economy from various perspectives, resulted in an increasingly negative index reading from January.

China’s ‘Market Economy Status’

The future of the EU–China trade relationship — one of the largest in the world — will be substantially impacted by a debate over whether China should be granted ‘market economy status’ (MES) this year. Under the terms of China’s ‘Protocol of Accession’ to the World Trade Organization, WTO members are allowed to treat China as a ‘non-market economy’ until December 2016. After that time — at least in the Chinese interpretation — WTO members are to accord China MES.

Recession Signals Sound as Credit, Labor Markets Weaken

Labor market conditions and consumer credit are weakening significantly, indicating recessionary pressures are hitting the United States.

The Federal Reserve released a report on the job market, and saw that conditions for workers have worsened significantly, falling to -2.4 from -0.8 in January. That tripling of the negative read was a significant surprise, as the Fed expected steady improvement in the job market after it raised borrowing costs on Americans in December by raising its Fed funds target.

Japan’s Slow Motion Crisis Response

In the face of the 2011 triple disaster, the residents of Fukushima banded together to manage the crisis. The word kizuna has become widely used to describe the people-to-people bonds underpinning the remarkable endurance displayed by the residents of Fukushima. Kizuna refers to the strength of Japanese society. It signifies the ties that bind people together and thus Japan’s intangible social resources.

Do You Want to Bet Against another Japanese Rate Cut?

Early Tuesday in Tokyo, Japan will announce revisions to Q4 GDP. A downward revision to business spending risks will shave the initial estimate from a contraction of 1.4% at an annualized rate to 1.5%. Regardless, the key takeaway is that the world’s third-largest economy contracted in two of the four quarters last year. Recall initially, the consensus was for a 0.8% annualized contraction in Q4. The anticipated revision means the contraction was nearly twice as much as initially expected.

The Rally in Several Emerging Markets is Looking for Traction

Risk sentiment ended last week on a strong note, and that should carry over into this week. The global liquidity backdrop remains positive for EM, with the ECB widely expected to add more stimulus on Thursday. In a similar vein, the Fed is widely expected to remain on hold until June.