“Greece…”

Greece

Greece has successfully exited its final, three-year bailout programme which was agreed in August 2015 to help it cope with the continued fallout from a debt crisis, as stated by the Eurozone’s European Stability Mechanism rescue fund.  The ESM has disbursed EUR 61.9 billion over three years in support of macroeconomic adjustment and bank recapitalisation.  The Fund further added that a further EUR 24.1 billion that was available to Athens under the programme was not needed.  Mario Centeno who is the chairman of the ESM board of governors said “Today we can safely conclude that the ESM program with no follow-up rescue programs as, for the first time since early 2010, Greece can stand on its own feet.”  He further added, this was possible thanks to the extraordinary effort of the Greek people, the good cooperation with the current Greek government and the support of the European partners through loans and debt relief.

Euro-Area Economy Growth

The euro-area economy showed it is still robust as the European Central Bank prepares to wind down its bond-purchase program.  The IHS Markit composite index of manufacturing and services increased to 54.4 in August from 54.3.  Third quarter growth could match the second quarter growth of 0.4 percent and indicators of current activity, employment and prices, were elevated, a report showed.  Markit added that the current rate of expansion is one of the weakest over the past year and a half.  The firm’s expectations for future growth slipped to the lowest for almost two years.  The ECB has cited the “solid and broad-based” expansion of the region as the reason to continue with the plan to end asset purchases in December and lay the ground for a possible interest rate hike in late 2019.

Germany’s Growth

Germany’s economic expansion has increased to its fastest pace in six months in August, as strong growth in services offset a decline in goods production.  IHS Markit’s composite index of manufacturing and services rose to 55.7 from 55.  The euro area’s biggest economy is benefiting from record-low unemployment at home and solid growth domestically and in the rest of the EU.  The conflicts about the tariffs seem to have eased and the Bundesbank said this week that while Germany’s expansion will cool this quarter, the economy remains on a “sound” path of growth.  Markit further added that business confidence improved to the highest in four months although manufacturers were more pessimistic than service providers.  New economic projections for the Eurozone will be published on 13^th September after officials meet to set monetary policy.

Malta: Retail Price Index – July 2018

In July 2018 the annual rate of inflation as measured by the Retail Price Index (RPI) was 1 percent up from 0.97 percent in June 2018.  The largest upward impact on annual inflation was measured in the Food Index, while the largest downward impact was recorded in the Clothing and Footwear Index.  The Retail price index measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services and is closely linked with the cost-of-living adjustment (COLA) increases and periodic rent payment adjustments.

Malta:  Outbound Tourism Q2/2018

During the second quarter of 2018 outbound tourists  trips towards non-EU countries increased by 39.8 percent over the same quarter in 2017.  Total outbound tourists for the second quarter in 2018 were estimated at 146,162 an increase of 16.5 percent over the corresponding quarter of 2017. Italy and the United Kingdom remained the most popular destinations, jointly sharing 49 percent of total tourist trips.

UK’s Aim To Boost Exports

The UK is aiming to boost exports to 35 percent of gross domestic product after leaving the European Union.  The purpose is to increase trade ties with the rest of the world according to the trade minister.  However no target of the timeframe was given.  The Department for International Trade which was set up after the 2016 Brexit vote estimates that 400,000 businesses believe they could export, however they don’t.  It further added that last year goods and services exported by British companies accounted for 30 percent of GDP.  The EU is the UK’s largest single trading partner and accounted for 44 percent of exports in 2017.  Some supporters of Brexit say one of the benefits of Brexit is to strike new trade deals independently of the EU.  However, some critics say that the UK will not have the same negotiating powers as it has when forming part of the EU.

US-China Trade War

The US and China trade war escalated on Thursday by implementing 25 percent tariffs on $16 billion worth of each other’s goods.  Meanwhile, mid-level officials from both countries resumed two days of talks in Washington.  Since July the two countries have slapped tariffs on a combined $100 billion of products and more are in the pipeline, risking an impact on global economic growth.  President Trump has threatened to put duties on almost all of the more than $500 billion of Chinese goods exported to the United States annually unless Beijing agrees to change its intellectual property practices.  The latest Washington tariffs apply to 279 product categories including semiconductors, plastics, chemicals and railway equipment that the Office of the US trade Representative has said benefit from Beijing’s “Made in China 2025” industrial plan to make China competitive in high-tech industries. Meanwhile, the Chinese list of 333 US product categories hit with duties includes; coal, copper scrap, fuel, steel products, buses and medical equipment.  Tariffs are beginning to increase the costs to consumers and businesses on both sides with companies having to adjust their supply chains and pricing with some US firms looking to decrease their reliance on China.

Meeting Between US and China Officials

US and China officials met for the first time in more than two months to try and find a way out of the trade conflict.  Business groups expressed their hope that the two-day meeting would be the beginning of serious negotiations over Chinese trade and economic policy changes demanded by President Donald Trump.  Beijing has denied the allegations by the US that it systematically forces the unfair transfer of US technology and has said that it adheres to the World Trade Organisations rules.  The talks are the first formal interaction since June, between US and Chinese officials.  Trump on Monday told Reuters that he did not “anticipate much” from the talks led by US Treasury under Secretary and Chinese Commerce Vice Minister.

Oil

On Wednesday oil hit a two-week high above $74 a barrel as an industry report shows a drop in US crude inventories whilst the US Sanctions on Iran indicate tighter supplies.  The American Petroleum Institute reported US crude stocks fell last week by 5.2 million barrels, which is more than three times the drop analysts expected.  Brent crude, the international benchmark rose to $74.15 a barrel and reached $74.19 which is the highest since 8^th August.  US crude reached $67.22.  Oil has also found support from the weak dollar which has slipped after comments by Donald Trump about the Federal Reserve actions on the interest rates.  A weak dollar will make it cheaper for buyers using other currencies.  Furthermore, the prospective drop in oil exports from Iran, in view of the new sanctions, is also supporting the market.  European companies have started to cut back on Iranian purchases although Chinese buyers are shifting their cargoes to Iranian-owned vessels to keep supplies flowing.  OPEC started to boost supplies following a deal with Russia and other allies in June, although producers have been cautious so far.  Saudi Arabia told OPEC it cut supply in July, rather than increasing output as expected.

The S&P 500 Share Index Hit A Record High

The benchmark S&P 500 touched a record high on Tuesday and equalled its longest-ever bull market, as US stocks rose on encouraging earnings reports in the consumer sector and the calmness in the ongoing trade dispute between the United States and China.  The S&P rose as much as 0.6 percent to a record high of 2873.23 points, topping its previous record high of 2,872.87 on 26 January.   The index’s bull market run is now 3,452 days old and Wednesday will become the longest such streak in history.

Iran Threatens To Hit The US

On Wednesday Iran warned that it would hit US and Israeli targets if it were attacked by the United States after President Trump’s security adviser said Washington would exert maximum pressure on Tehran going beyond economic sanctions.  The sanctions imposed by the US this month targeted Iran’s car industry, trade in gold and other precious metals and purchases of US Dollars which are crucial to international financing, investment and trade relations.  Other sanctions are to follow in November on Iran’s banking sector and oil exports.

China

China’s Central bank said that it will not resort to strong stimulus to support the slowing economy but will keep liquidity reasonably sufficient and offer more help to companies which are having trouble obtaining financing.  A day after Donald trump said that Beijing was manipulating its currency in response to the US tariffs on Chinese goods, officials in China reiterated that officials will not use the yuan as a weapon to deal with trade frictions.  The People’s Bank of China said in a statement that policies will be made more forward looking, flexible and effective.  The statement follows after weak data from the world’s largest economy in recent months, a sharp drop in the yuan against the dollar and a downfall in the Chinese stock market.  As the Chinese economy cools and the impact of US trade tariffs still to be felt, policy makers are shifting their priorities to reducing any risks to growth.  Small companies are finding it difficult to secure a loan due to rising borrowing and operating costs.  The PBOC said it will “effectively ease” companies’ financing problems and improve coordination with other agencies to ensure monetary policy measures are transmitted across the economy.

Fed Minutes    

US Central bankers are ready to raise interest rates as long as the economy stays healthy according to the Federal Reserve’s most recent policy meeting.  The July 31- Aug 1 minutes said that, “many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step in removing policy accommodation.  On a separate note, President Donald Trump said that he was “not thrilled” with the Federal Reserve for raising rates and that the central bank should do more to help him boost the economy.  The criticism came ahead of the release of the minutes of the FED of the August policy meeting on Wednesday.

‘Disclaimer: The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice. Similarly, any views or options expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Timberland Finance has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Timberland Finance does not accept liability for losses suffered by persons as a result of information, views of opinions appearing on this website. This website is owned and operated by Timberland Invest Ltd.’