The Debt Crisis and the World Economy
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The Debt Crisis and the World Economy Nick Kounis Head Macro Research Athens, 17 October 2012 Marine Money Greek Forum
description
The Debt Crisis and the World Economy. Nick Kounis Head Macro Research Athens, 17 October 2012. Marine Money Greek Forum. Introducing the Stop-Go Recovery. Global PMI index. Source: ABN AMRO Group Economics. Euro crisis has been the main culprit. S. - PowerPoint PPT Presentation
Transcript of The Debt Crisis and the World Economy
The Debt Crisis and the World Economy Nick Kounis
Head Macro ResearchAthens, 17 October 2012Marine Money Greek Forum
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Global PMI index
Source: ABN AMRO Group Economics
Introducing the Stop-Go Recovery
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40
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60
07 08 09 10 11 12
World composite PMI - output
III III
serial soft patch
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Euro crisis has been the main culprit
S
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10152025303540455055
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Spain Italy
Foreign holdings of Spanish and Italian government debt, share in total, %
Source: National central banks
Foreign investors running for the exit!
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ECB President Draghi to the rescue
“The ECB is ready to do whatever it takes
…believe me it will be enough”
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The Draghi effect: bond markets
2-Y government bond yield spread over Germany, %
Source: Thomson Reuters Datastream
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5/28 6/28 7/28 8/28
Italy Spain
Draghi's London remarks
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Spanish PM Rajoy: I’m still thinking about it!
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Big systemic risks to the euro have been reduced
Source: EBA, ABN AMRO Group Economics
Eurozone big bank exposure to sovereign debt (% tier 1 capital)
0
20
40
60
80
100
GR incl. IR and PT incl. SP incl. IT
end December 2010 end September 2011
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The Draghi effect: equity markets
Index
Source: Thomson Reuters Datastream
200
210
220
230
240
250
260
5/28 6/28 7/28 8/28
1250
1300
1350
1400
1450
1500
Euro stoxx S&P 500 (rhs)
Draghi's London remarks
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Signs of bottoming out in global industrial cycle, but…
% yoy
Source: Website Fraport, Thomson Reuters Datastream
-40
-30
-20
-10
0
10
20
30
40
01 02 03 04 05 06 07 08 09 10 11 12
Frankfurt air freight World trade
1111
Fixing the euro will take time
1212
Budget cuts, joblessness will weigh on eurozone growth
3% GDP cuts in 2012-13
Unemployment: 11.3%
1313
Muddling through remains main scenario for euro
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China’s economic growth slowing down…
%
Source: Thomson Reuters Datastream
4
6
8
10
12
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Q1 2000 Q1 2003 Q1 2006 Q1 2009 Q1 2012
% qoq annualised % yoy
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…policymakers responding cautiously
%
Source: Thomson Reuters Datastream
0
5
10
15
20
25
92 96 00 04 08 12
Official rate RRR big banks RRR small banks
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China’s great transformation
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Fed Chairman Bernanke has taken a bold step
USD 85bn
a month !!
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Impact of QE: equities
Index
Source: Thomson Reuters Datastream, ABN AMRO GE
600
800
1000
1200
1400
1600
1800
2000
08 09 10 11 12
Fed's QE announcements S&P 500
QE-1 QE-2 QE-3Twist
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Impact of QE: commodities
Index
Source: Thomson Reuters Datastream, ABN AMRO GE
250
300
350
400
450
500
550
600
08 09 10 11 12
Fed's QE announcements CRB commodity prices
QE-1 QE-2 Twist QE-3
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The debt crisis across the Atlantic: the US fiscal cliff
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Global Economic Forecasts
Source: ABN AMRO GE
Economic outlook 2011 2012 2013
Global GDP 3.8 3.1 3.5
US 1.8 2.2 2.0
Eurozone 1.4 -0.5 0.2
China 9.3 7.5 8.0
World trade 6.5 3.5 5.5
Rates and FX Spot 3M 2013
US 3-M Libor rate 0.33 0.30 0.30
US 10-Y yield 1.66 1.60 2.40
EUR/USD 1.30 1.25 1.15
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Commodity Price Forecasts
Source: ABN AMRO GE
Metals (USD/tonne) Spot 3M 2013
Steel (HRC) 574 615 580
Iron Ore 118 125 125
Coking Coal 146 155 170
Energy ($) Spot 3M 2013
Brent oil 115 105 110
WTI 92 95 105
Natural Gas 3.38 3.00 3.50
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