Tyson plan B " Everyone has one until they get punched"

Theresa May survived a vote of no confidence, not a great surprise. The Brexit saga will continue as demands for a people’s vote increases. One feels the idea of those calling for a second vote may want to be careful what they wish for. The consequences of another vote, in the unlikely event it will occur, could be damaging for the country whichever way it goes. Despite the uncertainty, the pound continues its recent recovery. Speculators must hope for an eventual improvement to the original deal or believe the 29th of March, the scheduled date for the UK to leave the EU, will be postponed.

Europe’s woes continue away from Brexit as German authorities look to find a partner for Deutsche Bank. Bringing back memories of 2008 as Governments looked for one bank to help bail out another. French Bank Société General announced disappointing results and offered shareholders a scrip (shares not cash) dividend in an attempt to preserve capital. As we mentioned the other day, Italian banks remain undercapitalised.

In contrast equity markets in the US, have been supported by the banking sector results, which have in general beaten analyst’s forecasts. Aluminium producer Alcoa announced results that beat expectations but did warn that demand for aluminium was at a ten-year low. As economists continue to lower global growth expectations, these comments from Alcoa are another indication of a slowdown in the global economy.

As the pile of debt in the world, today climbs to 300 pct. of GDP, and central banks will not want to see a recession which could further increase that ratio. It may be of some note that the signs of a global slow down have coincided with central bank liquidity shrinking to a point where for the first time in several years central bank liquidity for the global economy goes from positive to negative.

We have added what seemed an interesting chart on the shape of the global economy in 2030, as considered by Standard Chartered Bank. Remembering this is a bank with a broad exposure to the Asian economy the chart shows that Standard Chartered Bank expects the Asian economy to go from being 20% of the global GDP to 35% in 2030. Egypt will be the seventh largest economy in the world, going from 21st presently. Its population is expected to rise by 30% in that time.  Emerging markets will become the growth driver of the global economy; the UK did not make top 10.

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Posted on January 17, 2019 .