Australia received a warning from Standard & Poor’s (S&P) this week that it is on downgrade watch. Although the nation presently enjoys a AAA rating, the downgrade warning signals that Australia will likely soon receive a reduced rating.

Australia received a warning from Standard & Poor’s (S&P) this week that it is on downgrade watch. Although the nation presently enjoys a AAA rating, the downgrade warning signals that Australia will likely soon receive a reduced rating.

According to analysts, there is now a one-in-three chance of reduction in Australia’s rating within the next two years. The likeliest cause would be a failure to increase taxes or cut spending sufficiently to head off ever-increasing budget deficits and public debt. If it occurs, it would be the first downgrade of the nation’s credit since the late 1980s.

Although less damaging than an actual downgrade, S&P did put the nation’s rating on a “negative” outlook this week, moving it from “stable,” in the wake of Saturday’s election. According to Australian Treasurer, Scott Morrison, “We all, the government in particular, need to live within our means…Fiscal consolidation cannot be postponed or slowed…This is an important reminder of something the government has always known and sought to deliver upon in the three budgets we’ve sought to deliver over the last three years.”

A major point of concern for S&P remains Australia’s offshore debt levels. The agency feels that Australia is allowing its debts to become far too high to continue to justify the top rating of AAA.

In a statement, the agency released Thursday, it said, “We believe that without remedial action the government’s fiscal stance may no longer be compatible with the country’s high level of external indebtedness.”  Further “We will continue to monitor, over the next six to 12 months, the success or otherwise of the new government’s ability to pass revenue and expenditure measures through both houses of parliament.”

It went on to say “ We could also lower the rating with any further weakening of Australia’s external position…This could come from current account deficits remaining at the higher end of the historical range, from a further weakening of terms of trade, or from an increase in the banking sector’s cost of external funding.”

Some analysts say the possible downturn is not surprising.

According to AMP Capital Economist, Shane Oliver, “Australia has now seen years of slippage in returning the budget to surplus and the messy election outcome threatens more slippage whichever way it goes.”

He added, “Of course being put on negative watch is not the same as a downgrade and a country can remain on a negative outlook for up to two years without being formally downgraded.”

Oliver offered “But I suspect it’s probable that a formal downgrade will follow unless the new government is able to hold the line on the budget deficit projections, which will be hard given the likely state of the Senate.”

Although one way out of the possible downgrade would be to increase tax revenues, Treasurer Morrison suggests that this would be folly for the nation at this time.

“You have to be very careful if you increase the tax burden on the Australian economy at such a sensitive time as this,” he said. “The idea of ‘let’s tax the economy more because it will raise more revenue’, I think, really is a fairly short-sighted approach in terms of how you grow the economy.”

The post Australia in Danger of Credit Downgrade appeared first on Economy Watch.

Initial previews of America’s job market indicate resurgence for workers, but economists remain wary. Jobless claims fell to their lowest point in three months last week, falling to 254,000 versus 270,000 the previous week. That is far below consensus expectations of flat jobless claims, as more Americans find new jobs and return to work.

Initial previews of America’s job market indicate resurgence for workers, but economists remain wary. Jobless claims fell to their lowest point in three months last week, falling to 254,000 versus 270,000 the previous week. That is far below consensus expectations of flat jobless claims, as more Americans find new jobs and return to work.

At the same time, private payroll firm ADP reported that America’s private sector gained 156,000 jobs in April, with most of the gains coming from small businesses, which hired 93,000 employees in April. Large businesses trailed significantly, with just 24,000 new jobs added.

While manufacturing was the only industry to see a decline in jobs, with a loss of 13,000, construction job gains of 14,000 compensated for the loss, while professional and business services led with a gain of 27,000 jobs. Of industries seeing job growth, financial services trailed the rest, with just 4,000 jobs added.

Vice President and ADP Research institute chief Ahu Yildirmaz noted that small businesses remain the primary engine of America’s labor market, and the country’s economy as a whole. “Despite the softest overall monthly jobs added in three years, small businesses remained an engine for job growth in April,” he said, adding that this is largely thanks to the fact that macro headwinds do not impact small businesses as much as they do larger ones. “Smaller businesses are less susceptible to global conditions, such as low commodity prices and the strong dollar, which may have caused larger businesses to ease up on hiring.”

The decline in financial jobs is a continuing trend that has persisted since the Global Financial Crisis of 2007-2009, when many large investment banks shed jobs amidst a liquidity crisis and fears of spreading insolvency throughout the financial industry.

Since then, the financial industry has rapidly shrunk, with large investment banks in both America and abroad routinely shedding thousands of jobs as a cost-cutting measure. Many banks have said they are streamlining operations and looking for more efficient uses of human capital to offset declining profitability and weak demand.

Moody’s Analytics Chief Economist Mark Zandi warns that the job growth is a disappointment, as it represents a 24% decline in the growth rate from March. “The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors. One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring,” he said.

The data comes shortly after a report by Challenger, Gray, & Christmas, a human resources specialist firm, which saw America lose 38,536 jobs in June.

CEO John A. Challenger said job cuts may slow in future months on economic uncertainty, but that will also cause new job growth to slow as well. “We may continue to see low job cut totals throughout the remainder of 2016, as employers take a wait-and-see stance on workforce levels. Several uncertainties, including national elections, the recent Brexit, and global security and economic issues are giving employers pause when it comes to workforce decisions,” he said. “We are seeing it in layoff numbers, as well as the job creation numbers, which have been lackluster in recent months.”

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Russia’s GDP failed to improve as lower oil prices and Western sanctions hamper growth. Oil prices increased in the past year, but not enough for Russia to secure economic prosperity. The Moscow Times notes that the ruble strengthened to over 60% compared to the dollar, but has failed to enhance the economy thus far.

Russia’s GDP failed to improve as lower oil prices and Western sanctions hamper growth. Oil prices increased in the past year, but not enough for Russia to secure economic prosperity. The Moscow Times notes that the ruble strengthened to over 60% compared to the dollar, but has failed to enhance the economy thus far.

President Vladimir Putin has maintained a strong resolve as his country suffers economically, and Moscow continues to weather the storm. Russia’s problem not only lies with lower oil prices and persistent Western sanctions over Crimea, but the Chinese slowdown as well.

Moscow pivoted to the East in reaction to wrath from the West, but China’s economic setbacks have dampened Putin’s efforts to strengthen his economy using Beijing. Further, Russia’s ESPO benchmark crude has failed to gain a stronger foothold in Asia, and Saudi Arabia’s push to maintain its market-share has hurt the Russian energy sector.

Russia’s fate is also tied to the West, especially with the Brexit situation. Prime Minister David Cameron has maintained a hardline stance when it comes to Russian sanctions, and Britain’s departure from the EU could lead to some leniency on Moscow. Moreover, Germany could favor fewer restrictions on Russia for the sake of the business community.

Sanctions have prevented Germany from continuing various trade and business deals with the Russians, and there are growing calls within Berlin to rekindle ties with Russia. A stronger relationship between Moscow and Berlin would secure the necessary investment and trade needed to offset shortfalls in the Russian oil sector.

Russia is one of the world’s top oil producers, but the energy sector has suffered numerous layoffs. The government, however, is trying to save as many jobs as possible. For example, Moscow is attempting to prevent auto firm AvtoVAZ from laying off its workers while asking employers to take other measures, such as reducing salaries, notes Stratfor.

The government cannot afford additional layoffs in other sectors as higher costs and lacking opportunities place added stress on the citizenry. Moreover, officials fear some blowback during fall elections, as voters could respond by voting against incumbent politicians, and officials fear a diminished presence in the Kremlin if elections do not swing in their favor.

Putin has ridden on a wave of nationalistic fervor, as Western sanctions have unified much of the populace, but the same cannot be said of politicians in the Kremlin. Politicians running against the established order face an insurmountable battle ahead, however.

For example, the establishment is determined to minimize the opposition using unscrupulous tactics if the pendulum swings away from incumbents. Further, the opposition does not have its act together, as various political opponents are involved in sex scandals and violent incidents.

Russia’s opposition has been severely degraded due to Putin’s iron grip, but alternative leaders are gaining additional support as the economy withers, especially as the government exercises greater authority. Putin’s policies grow more repressive, and the president must consolidate power at a time when Western powers seek his ouster through internal rebellion. Despite Putin’s troubles, he is projected to win the 2018 presidential election.

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The Chinese government has put a heavy focus on innovation as a means of driving its economy and improving its recent, flagging performance. Local governments have heard the call and have rushed to erect new infrastructure and buildings designed to support this movement.

Unfortunately, there appears to be a big problem with this plan as an economic driver: businesses are not on board and nobody is making use of these newly built spaces and services.

The Chinese government has put a heavy focus on innovation as a means of driving its economy and improving its recent, flagging performance. Local governments have heard the call and have rushed to erect new infrastructure and buildings designed to support this movement.

Unfortunately, there appears to be a big problem with this plan as an economic driver: businesses are not on board and nobody is making use of these newly built spaces and services.

China has been notorious for its over-adjustments and excessive push in promising new directions. It is a uniquely Chinese tendency to flock behind programs suggested by senior leadership with a fanatical zeal that usually results in wild production swings, short-term gains, and long-term problems. Previous examples of such programs that resulted in such bubbles over the last several years have included housing, steel, and theme parks, to name but a few.

According to Shi Jiqiang, a Partner at Leilai Management, a startup management firm near Beijing, “The risk of a bubble is extremely large…This is both a test for [the] government and for the managers of startup spaces…there aren’t enough entrepreneurs.”

For its part, the Chinese government in Beijing does not see prior bubbles as failures at all. In fact, it considers each a great success for its time, and plans to pursue a similar approach with innovation. It has encouraged students and migrant workers to create their own technology-based startups in an effort to shift the economy’s focus away from production and into the potentially much more profitable technology and services sectors.

Nearly 80% of the capital for the infrastructure and building projects designed to support this push has come from the government, however. This has raised a number of red flags for outside analysts, who are concerned this could create a huge drag on China’s financial resources.

“In any sort of market, you want the experts making the decisions, not some technocrat or bureaucrat,” according to William Bao Bean, Investment Partner at venture capital fund SOSV, a firm specialized in startup investments. “You don’t tend to see too many successful companies come out of a government-based decision-making process.”

The sentiment seems to be mirrored by people on the street, as well. “I wouldn’t consider becoming an entrepreneur. You need money to do that. No, for someone like me, I don’t really have many options,” said Liu Haiyang. Haiyang runs a shop selling bathroom fittings in a space next to one of the recently constructed “innovation centers” created by the government.

Most venture capitalists agree that startups tend to gravitate toward, and experience the greatest success, in locations where successful innovation centers already exist. Simply creating locations dubbed “innovation centers” by the government fails to produce the requisite mix of talent, expertise, market, and culture necessary to prompt success in this sort of venture.

Moreover, cultural influences, like social pressure to find “dependable” work has caused many to shun the idea of moving into the uncertain realm of technology startups.

As a result, many analysts fear that China is simply pushing for growth too hard in a direction it is not yet prepared to go. Until deeper roots have grown for this sort of economic transformation, many fear it will simply lead to yet another bubble, which, when it pops, could have negative implications for the economies dependent on China.

The post Is Chinese Push for Innovation Just a New Economic Bubble? appeared first on Economy Watch.

Federal Reserve chiefs are reversing course on America’s economy as the country’s trade deficit widens with foreign nations.  In May, the trade balance deficit rose 9.9% to $41.1 billion, far above expectations as exports fell and imports rose. Total imports were up 1.6% from the prior month, indicating America’s continued dependence on foreign production to meet domestic demand.

Federal Reserve chiefs are reversing course on America’s economy as the country’s trade deficit widens with foreign nations.  In May, the trade balance deficit rose 9.9% to $41.1 billion, far above expectations as exports fell and imports rose. Total imports were up 1.6% from the prior month, indicating America’s continued dependence on foreign production to meet domestic demand.

The increasing trade deficit runs counter to government policy, as President Barack Obama’s recent aggressive pushes for more free trade pacts and deals with Asian, North American, and European counterparts have been sold to American workers as a way to boost foreign demand for American goods and services.

That foreign demand has failed to materialize, with economists warning that declining global growth and weakness in emerging markets due to low commodity prices will hinder the growth of foreign middle classes, who are the biggest consumers of American products outside of the U.S.

Several official economic policies continue to push large trade agreements. The controversial Trans-Pacific Partnership (TPP) followed several bilateral deals with Asian nations executed in the 2000s and early 2010s, such as a free trade agreement between America and South Korea.

That agreement, known as KORUS FTA, passed the U.S. Senate in 2011 as policymakers heralded it as a major win for American manufacturers. Since then, however, America’s trade deficit with South Korea has widened as Americans continue to buy significantly more Korean products per capita on a dollar cost basis than their South Korean counterparts.

While the expansive TPP promises to not make the same mistakes of KORUS FTA, growing dissent with FTAs has given rise to political discussions of more protectionist economic policies, helping fuel the rise of presidential candidates Bernie Sanders and Donald Trump, who have both argued for more aggressive protection of American workers vis-a-vis their foreign counterparts.

Dour Fed Goes Dove

Federal Reserve heads have thrown in the towel, abandoning earlier confident pronouncements of a resurgent U.S. economy. The Federal Open Market Committee (FOMC), comprised of Fed chiefs, admitted in their June meeting that America’s labor market is in trouble. “Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,” the FOMC said.

At the same time, the Fed noted GDP growth is accelerating significantly after a sluggish first quarter. “The information reviewed for the June 14–15 meeting indicated that the pace of improvement in labor market conditions slowed in April and May but that real gross domestic product (GDP) appeared to be rising faster than in the first quarter,” the FOMC said in its meeting.

The Fed failed to explain the disconnect between labor markets and broad GDP growth, but emphasized that it will not be looking at a rate hike until the market has improved.

Most crucially for the Fed, several labor data points suggest that workers’ bargaining power in the labor market has declined as employers fail to hire more aggressively and provide better working conditions for Americans. “Over the first two months of the second quarter, both the labor force participation rate and the employment-to-population ratio moved down on net.

The share of workers employed part time for economic reasons rose noticeably in May. Although the rate of private-sector job openings remained elevated, the rate of hires declined in both March and April and the rate of quits was unchanged,” the FOMC said.

A weak labor market has been the focus of several fringe economists.  They argue that America’s income inequality gap is creating an economy in which growth comes not as a rising tide for all Americans, but at the expense of workers who are increasingly squeezed by globalization, automation, and a fiscal policy that fails to distribute economic gains to displaced workers.

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Prime Minister Narendra Modi will begin a four-day tour throughout Africa, with his first stop in Mozambique, according to The Tribune. The prime minister has agreed to a Memorandum of Understanding with the southern African country to double the amount of legume imports by 2021. Mozambique’s economy has struggled due to such factors as corruption and decreased donor aid from the international community.

Prime Minister Narendra Modi will begin a four-day tour throughout Africa, with his first stop in Mozambique, according to The Tribune. The prime minister has agreed to a Memorandum of Understanding with the southern African country to double the amount of legume imports by 2021. Mozambique’s economy has struggled due to such factors as corruption and decreased donor aid from the international community.

The deal with India will provide an economic cushion that Mozambique desperately needs while giving Maputo access to a vital emerging market. In return for increased legume imports, India will provide Mozambique with seeds as well as any support the country may need. Agriculture is an important sector in Mozambique, and the deal will enhance the sector as a devastating drought may lead to food shortages in the region.

Modi aims to counter China’s growing influence in Africa, and India strives to increase investment throughout the continent. India, however, has some competition.  China has a firm business presence in Mozambique, and Maputo authorities rely on the Chinese now more than ever.

Mozambique has drawn the ire of the world community in wake of several high-profile scandals. For instance, Mozambique diverted bond funds designed to finance a fishing fleet and used it to fund the defense budget. Moreover, Mozambique admitted to accepting loans without disclosing them to the IMF.

Mozambique’s tainted history has caused donors and investors to withdraw financial support, hampering development. As a result, policymakers have pivoted to Beijing for help, but the Chinese have taken advantage of the African country’s vulnerability.

The Chinese have mostly rendered aid in the form of infrastructure projects, but Mozambique’s relationship with China is of little help as Chinese companies contract workers and materials from within instead of utilizing local talent.

Mozambican companies and workers have been left behind in the process, and the ultimate goal of China is to gain access to the nation’s precious natural resources. Maputo has substantial offshore natural gas reserves and intends to enhance its energy sector in the coming years.

India has a chance to gain a larger foothold in Mozambique, but it will take some time, as India has failed to maintain ties with the country throughout the decades. Modi’s visit will be the first time an Indian prime minister has visited Mozambique in 34 years.

With that, New Delhi can counter China’s policy by offering enticing deals that African officials can ill afford to refuse. The legume deal is a first step, but the prime minister will also address potential investments outside of agriculture, including possible development assistance within Mozambique’s energy sector, notes Business Standard.

The West shunned Mozambique temporarily, but the government is finding support among powerful emerging markets that could carry the nation forward. Transparency remains an issue, however, and it remains to be seen if leaders will commence reforms that would clean up corruption and foster truthfulness.

Mozambique not only contends with state corruption, but also corruption within the business sector, which could potentially prevent further development efforts with India. It will take some time for Mozambique to regain trust with Western powers, and it is incumbent upon authorities to learn from past mistakes and clean up their act to avoid further isolation from the world community.

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Lower factory orders and a lower growth expectation show cracks in America’s already slow recovery.  Factory orders for manufactured goods fell 1% in May, according to a new report by the Census Bureau. That is a sharp reversal of April’s 1.8% growth for new orders of manufactured goods. Meanwhile, shipments were almost flat, down from the 0.4% increase in April.

Lower factory orders and a lower growth expectation show cracks in America’s already slow recovery.  Factory orders for manufactured goods fell 1% in May, according to a new report by the Census Bureau. That is a sharp reversal of April’s 1.8% growth for new orders of manufactured goods. Meanwhile, shipments were almost flat, down from the 0.4% increase in April.

Inventories for manufactured goods also fell, after falling virtually every month over the last year.  The biggest declines in new shipment orders were in transportation equipment, which fell 5.7% in May. Large American companies, such as Caterpillar, which builds and exports transportation equipment for foreign firms and governments, are particularly exposed to this loss.

The decline in shipments may have encouraged the Atlanta Federal Reserve’s GDPNow model, a real-time analysis of economic data that predicts GDP growth for the current quarter. Now the GDPNow model expects just 2.6% growth in the second quarter, down from 2.7% growth estimates a week ago. The GDPNow model has lowered growth expectations several times this year, as revisions and weaker-than-expected economic data drove down the model’s results.

Since the global financial crisis of 2007-2009, economists have been expecting a return to normal growth rates. Nine years after the crisis began, growth remains far below its prior levels, leading noted economist and former presidential advisor Lawrence Summers to declare the world is in a state of “secular stagnation” in which growth rates may never return to their pre-crisis levels.

Economists have largely dismissed Summers’s hypothesis, although many of his theories are otherwise respected. Improving growth rates in recent months encouraged some economists to dismiss the secular stagnation idea as fearmongering, including the Federal Reserve, who prominently and confidently proclaimed America’s economy fully healed in December, when it began raising interest rates—with promises of further interest rate hikes as the labor market continues to strengthen in 2016.

Since then, weak data showing low job growth and growing unemployment claims demonstrates that America’s job market is not as good as it would first appear. Additionally, global risks from Britain’s departure from the European Union and lower growth rates in emerging markets have given economists pause; even inspiring Fed chairwoman Janet Yellen to publicly suggest interest rate increases would remain on hold.

The Fed continues to focus on both growth and inflation rates in its monetary policies, but market participants expect the Fed to keep interest rates unchanged until 2018.

Markets declined at the beginning of trading this week, with America’s first trading day showing declines for all indices. Weakness was particularly acute in Europe, while the British pound continued to fall to nearly $1.31 against the United States dollar.

U.S. Treasuries have also fallen to record lows as expectations for future economic growth decline.

The post U.S. Economy Weakens: GDP Estimates Chopped, Factory Orders Fall appeared first on Economy Watch.

Manufacturing companies in Argentina have postponed investments in the second half of the year, as the economy takes longer than expected to recover, according to Reuters. President Mauricio Macri has sought to reform the economy through market-oriented reforms and settling Argentina’s debt with creditors. In addition, the economy is threatened by higher living costs and decreased consumption.

Manufacturing companies in Argentina have postponed investments in the second half of the year, as the economy takes longer than expected to recover, according to Reuters. President Mauricio Macri has sought to reform the economy through market-oriented reforms and settling Argentina’s debt with creditors. In addition, the economy is threatened by higher living costs and decreased consumption.

Macri has remained ambitious in his endeavor to repair the economy, but he got off to a rocky start, as the nation’s investment level contracted over 3% during the first part of his tenure. Hesitance from the business community is indicative of Argentina’s struggle to maintain traction, but the South American nation is in a better place when compared to previous years.

The government is close to reaching a full settlement after a hefty 2001 bond default. Further, Macri has liberalized the economy in certain respects, such as lifting currency controls. The government’s new policies are in stark contrast to predecessor Cristina Fernandez de Kirchner, whose leftist policies gave way to strict control over the economy.

Further, Kirchner maintained an antagonistic stance toward the United States and creditors, resulting in lawsuits and a lack of faith from the business community. Kirchner isolated her country from world markets, but Macri’s reform measures have integrated Argentina back into the financial community.

Macri’s pro-business policies have added renewed vigor to the economy, but more work lies ahead. For instance, Argentina’s job market remains in a precarious position not seen in over 10 years, as employment skyrocketed to its highest rate in seven years, notes Staffing Industry Analysts.

Part of the problem stems from employers who remain on the fence as the economy embarks on an unstable course. Further, the jobless rate could not have come at a worse time for the public as many struggle to pay bills and purchase goods. Inflation has run rampant due to the government’s incessant money printing in previous years to counter economic turmoil.

Inflation is bad to the point where the government will establish price controls for medication, and while such a move will help many, no policies have been implemented that would stabilize food prices. Argentina is among the wealthiest nations in South America, but poverty has become a looming issue, with destitution increasing from 29% in 2015 to over 32% in 2016.

So far, authorities are ill prepared in fostering job creation and instilling confidence in the business world. Leaders are overly concerned with the needs of creditors, and while debt is a large problem for Argentina, officials should be more concerned about an economy that is not producing enough jobs that would lift more people out of poverty.

Argentina’s economy is seeing job growth in certain sectors, namely agriculture, but it is enough to add new life to the economy. With that, officials are hoping that a floodgate of investment will come into the country, but analysts do not see this happening anytime soon. The construction sector, however, could be the nation’s redeeming quality, and although it would add some short-term gains, the sector could propel the economy forward after years of stagnation.

Macri’s administration hopes to take advantage of the export sector to create additional jobs, especially with access to international markets, most notably China.

The post Argentine Business Community Remains Nervous as Economy Recovers appeared first on Economy Watch.

Ireland has been slowly recovering from a long economic roller coaster that started with the global financial crisis in 2008 and has not improved as quickly as the rest of the world has. Canada, on the other hand, is also facing economic uncertainty thanks to a significant downturn in the commodities trade around the world.

Ireland has been slowly recovering from a long economic roller coaster that started with the global financial crisis in 2008 and has not improved as quickly as the rest of the world has. Canada, on the other hand, is also facing economic uncertainty thanks to a significant downturn in the commodities trade around the world.

As a result, it should perhaps be no surprise that these two nations should seek to create a mutually beneficial economic treaty, and, as announced Tuesday by Canada’s Minister of Canadian Heritage, Melanie Joly, that is just what they have done. The Minister announced the creation of the Canada-Ireland Audiovisual Co-Production Treaty during a press conference.

During the announcement of the treaty, Minister Joly said, “Canada has a longstanding co-production partnership with Ireland, and I am thrilled that producers will be able to use this new treaty to create even more world-class content.

In addition to positioning Canada as an audiovisual co-production partner of choice, the new treaty has been adapted to new audiovisual practices and technology, and puts the Canadian audiovisual industry at the forefront and offers Canada a competitive advantage on the co-production world stage.”

Seeking to delve more deeply into each nation’s expanding entertainment industry; the treaty will allow Canada and Ireland to combine their technical, creative, and financial resources to create movies, television productions, audio recordings, and more as a joint venture.

The two countries will help one another, sharing their best practices, legal frameworks, expertise, and more. The goal, as always, will be to help the two countries expand their respective economies by moving into a space that has offered them both much promise over the last few years.

The new treaty replaces an older agreement, reached in 1989, which sought to accomplish many similar goals, but offered far fewer avenues for cooperation and information sharing. It also was created at a time prior to the rise of the vast array of digital media that exist today, which the new treaty addresses.

If all goes to plan, from Canada’s perspective, the Canada-Ireland Audiovisual Co-Production Treaty should position the North American nation as a co-production partner of choice for Ireland, while attracting other such treaties from other nations seeking Canada’s generous incentive programs for creative businesses.

Notably, many United States’ television productions have migrated north to Canada to take advantage of these very programs. The new treaty should demonstrate to the world Canada’s focus on the rapidly evolving world of media and audiovisual technologies, and make it an even more inviting destination for foreign businesses.

At present, Canada co-produces shows for many nations around the world, and has done so for almost 50 years. While the Canada-Ireland Audiovisual Co-Production Treaty is the most recent and advanced, Canada actually has some form of co-production treaty with 54 nations spanning the entire globe.

Within the past 10 years, as Canada’s economy has sought new opportunities for expansion, the entertainment industry has been of particular interest. To that end, it has aggressively pursued outside production opportunities, having successfully attracted 654 such co-productions and generating some $4.8 billion in fresh revenues for the nation.

The post Canada and Ireland Economic Treaty Strengthens Cultural and Financial Ties appeared first on Economy Watch.

The problem of negative returns on sovereign bonds may be spreading.  U.S. Treasuries are seeing yields fall on all parts of the curve, with 10-year and 30-year yields reaching historical lows. The 10-year Treasury fell to 1.38% in early morning trading Tuesday, a historic low as fears about growing global uncertainty hit growth expectations both in America and globally. The 30-year Treasury fell to 2.15%, a 101 basis point decline from a year ago (10-year yields fell 100 basis points over the same period).

The problem of negative returns on sovereign bonds may be spreading.  U.S. Treasuries are seeing yields fall on all parts of the curve, with 10-year and 30-year yields reaching historical lows. The 10-year Treasury fell to 1.38% in early morning trading Tuesday, a historic low as fears about growing global uncertainty hit growth expectations both in America and globally. The 30-year Treasury fell to 2.15%, a 101 basis point decline from a year ago (10-year yields fell 100 basis points over the same period).

While short-term rates are still up from a year ago, all rates have fallen in the past month. The three-month yield is down to 0.25%, down three basis points in the past month, or a decline of over 10%.

The specter of negative interests is growing over American markets, with growing fears that the Federal Reserve is powerless to change the fall in interest rates. As Treasury rates theoretically reflect market expectations for future economic growth and inflation, the decline indicates that the market expects growth and price growth to remain weak despite the central bank’s moves to catalyze both.

Federal Reserve chairwoman Janet Yellen has rejected a negative interest rate policy. Although acknowledging their legality, Yellen last month said that a NIRP was unlikely to come to American soil as growth remained strong and inflationary tailwinds would bring both prices and wages up.

More recently, the Federal Reserve has been significantly more downbeat on global growth. The United Kingdom’s decision to leave the European Union, a shock to markets and political analysts alike, has caused expectations of interest rate hikes later in 2016 to reverse, with the Federal Reserve hinting that it is likelier to postpone rate hikes until the uncertainty around the Brexit is more fully resolved.

NIRP Ineffectiveness

At the same time, the effectiveness of NIRP in countries where it has been implemented has remained heavily under question.

Japan was the first country to implement a negative interest rate as a matter of monetary policy, but the technique has spread to the Eurozone, Denmark, Sweden, and Switzerland. To stave off low growth and increasingly low money velocity, these countries have effectively instigated a tax on deposits to encourage savers to invest in riskier asset classes.

While some investors have looked to riskier assets, the net effect of NIRP remains unclear and controversial. At the core of NIRP’s criticisms in Europe, analysts and economists warn that banks’ inability to pass on NIRP costs to savers has resulted in shrinking margins and inevitable losses due to banks’ business model of borrowing at short-term rates and lending at longer-term rates.

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