Global Economic & Financial Outlook - CFA Institute Presentations/Global... · Global Economic &...
Transcript of Global Economic & Financial Outlook - CFA Institute Presentations/Global... · Global Economic &...
Global Economic Intelligence
Pablo F.G. BréardVice-President, Head International Economist
George Town – October 2013
Global Economic & Financial Outlook
Emerging Markets in Context
Global Economic Intelligence
Global Economic Intelligence
Key Issues in Focus
Global Economic Intelligence
2.1%2.8%
18.5%
2.6% 2.7% 3.0%3.7%
5.4% 5.8%
16.0%
0
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
13,500
15,000
16,500
Mex
ico
Fran
ce UK
Bra
zil
Rus
sia
Ger
man
y
Japa
n
Indi
a
Chi
na
USA
GD
P si
ze in
pur
chas
ing
pow
er p
arity
term
s -
2013
-14
(e) U
S$ b
ln
Source: IMF World Economic Outlook (April 2013)
Americas
Europe
Asia
Global Economic Rebalancing ► The New G10
Global Economic Intelligence
0
1
2
3
4
5
6
7
Fran
ce
Ger
man
y
Uni
ted
Kin
gdom
Japa
n
USA
Rus
sia
Bra
zil
Mex
ico
Indi
a
Chi
na
Rea
l GD
P G
row
th –
Ann
ual A
vera
ge %
201
3-14
(e)
Source: Scotiabank & IMF World Economic Outlook Report
High IncomeEmerging
G10 Growth 2013-14 ► Emerging Markets in Focus
Global Economic Intelligence
Global Growth Trends ► Improving in 2014
Global Economic Intelligence
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2
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4
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9
Japa
n
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Ger
man
y
USA
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Kin
gdom
Chi
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Mex
ico
Bra
zil
Rus
sia
Indi
a
Con
sum
er P
rice
Infla
tion
% 2
013-
14 (e
)
Source: Scotiabank & IMF World Economic Outlook
High Income
Emerging
Global Inflation ► Emerging Markets in Context
Global Economic Intelligence
“The Federal Reserve’s Acquisition of long-term Treasury securities boosted the prices of such securities and
caused long-term Treasury yields to be lower than they would have been otherwise”
Ben Bernanke
The Fed Focus ► Inflation & Employment Targeting
Global Economic Intelligence
US Growth ► Policy Mix Focused on Employment
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290,800327,750364,700401,650438,600475,550512,500549,450586,400623,350660,300
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Jobless Claims
129,320130,194131,068131,942132,816133,690134,564135,438136,312137,186
Nov
-03
Mar
-04
Jul-0
4N
ov-0
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Non-Farm Payrolls
Declining Unemployment Rate
Global Economic Intelligence
US Growth ► Housing Market Metrics
400500600700800900
1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,300
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-10-8-6-4-202468
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US house price Index
US house price purchase-ony SA Index
100110120130140150160170180190200210
814212734404653596672
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Home Builders Market Index
Homebuyer Affordability
US Housing Starts (‘000 units/year)
Global Economic Intelligence
Global Liquidity ► Aggressive Monetary Stimulus
0.00
0.25
0.50O
ct-1
2
Nov
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Dec
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Jan-
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Feb-
13
Mar
-13
Apr
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May
-13
Jun-
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Jul-1
3
Aug
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Sep-
13
US FED FUNDS
Fut Dec 2013
Fut Jun 2014
0.75
1.00
1.25
1.50
1.75
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr
-13
May
-13
Jun-
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Jul-1
3
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-13
Sep-
13
CANADA BANK RATEFut Dec 2013Fut Jun 2014
0.25
0.50
0.75
1.00
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr
-13
May
-13
Jun-
13
Jul-1
3
Aug
-13
Sep-
13
UK BASE RATE
Fut Dec 2013
Fut Jun 2014
0.25
0.50
0.75
1.00
1.25
1.50
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr
-13
May
-13
Jun-
13
Jul-1
3
Aug
-13
Sep-
13
ECB REPO RATEFut Dec 2013Fut Jun 2014
Global Economic Intelligence
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
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MARKET (CRB)GOLDCOPPERCRUDE OILSOYBEANS
Steady Price Adjustments in Commodity Markets
2012 2013f 2014f
Crude Oil
94 → 100 102
Natural Gas
2.25 ↑ 3.75 4.00
Copper 3.61 ↓ 3.3 3.1
Gold 1,670 ↓ 1,420 1,325
Commodity Prices – 5-year Trends
Global Economic Intelligence
Commodity Markets – Energy Price Outlook
14-Oct-13 Oil US Gasoline Natural GasToday 102.41 266.68 3.82
3-year Minimum 75.67 204.10 1.91 3-year Maximum 113.93 346.48 4.85 12-mth Average 96.12 283.54 3.66
1 month 102.48 264.89 3.97 change from spot 0.1% -0.7% 3.8%
3 months 102.23 264.33 4.06 change from spot -0.2% -0.9% 6.3%
6 months 100.29 282.04 3.97 change from spot -2.1% 5.8% 4.0%
9 months 97.93 277.57 4.05 change from spot -4.4% 4.1% 5.9%
12 months 95.91 257.37 4.07 change from spot -6.3% -3.5% 6.4%
Average 12 mths ahead 99.68 270.94 4.07 change from 12 months past 3.7% -4.4% 11.1%
Spot
Futu
res
Global Economic Intelligence
Shale GAS Reserves0
200
400
600
800
1000
1200
China
Argentina
Algeria
USA
Canada
Mexico
Australia
South Africa
Russia
Brazil
Trillion Cubic Feet
AmericasAsiaAfricaEurope
Global Energy Rebalancing – Shale Resources
Shale OIL Reserves
0 10 20 30 40 50 60 70
Russia
USA
China
Argentina
Libya
Venezuela
Mexico
Pakistan
Canada
Indonesia
Billion Barrels
AmericasAsiaAfricaEurope
Global Economic Intelligence
Global Risk Rebalancing ► Falling Angels
Global Economic Intelligence
NEG
ATIVE x 1
NEG
ATIVE x 3
NEG
ATIVE x 1
0
500
1,000
1,500
2,000
2,500
3,000
3,500
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C A
N A
D A
Aus
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Net
herla
nds
Swed
en
Switz
erla
nd
Sing
apor
e
Nor
way
Den
mar
k
Finl
and
Luxe
mbo
urg
GD
P si
ze in
US$
trill
ion
(ppp
ter
ms)
201
3-14
(e)
Americas
Europe
Asia/Pacific
Global Risk Rebalancing ► The “AAA” Rating Club
Global Economic Intelligence
Global Risk Rebalancing ► Europe in Context
Stable
NegativeStable
NegativeStable
NegativeNegative
NegativeNegative
-12 -10 -8 -6 -4 -2 0 2 4 6 8 10
Moody'sGREECE - S&P
Moody'sPORTUGAL - S&P
Moody'sIRELAND - S&P
Moody'sITALY - S&P
Moody'sSPAIN - S&P
Notches Below / Above Investment Grade Rating
Oct-13
Oct-08
Global Economic Intelligence
0
20
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60
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120
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160
180
200
220
240
Rus
sia
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Bra
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Indi
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man
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ted
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gdom
Uni
ted
Stat
es
Japa
n
Gro
ss P
ublic
Sec
tor D
ebt
% G
DP
201
3-14
(e)
Source: Scotiabank & IMF World Economic Outlook Report
High Income
Emerging
Sovereign Debt (un) Sustainability in the G10
Global Economic Intelligence
(10)
(9)
(8)
(7)
(6)
(5)
(4)
(3)
(2)
(1)
0
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man
y
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eral
Gov
ernm
ent D
efic
it %
GD
P 2
013-
14 (e
)
Source: Scotiabank & IMF World Economic Outlook Report
High Income
Emerging
Global Fiscal Position – Deep Adjustments in Sight
Global Economic Intelligence
Top-10 = US$7.7 trillion FX Reserves by Holder
Americas5%
Asia75%
Middle East8%
Europe12%
3,496
0
500
1000
1500
2000
2500
3000
3500
China
Japan
Saudi Arabia
Russia
Switzerland
Taiwan
Brazil
South Korea
Hong Kong
India
Eurozone
AmericasAsia/PacificMiddle EastEurope
Global Cash Rebalancing ► FX Reserves Holdings
Global Economic Intelligence
Global FX Trends: The US Dollar in Context
Global Economic Intelligence
EUR per USD rate (2008-13)
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1.50
1.55
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Trade-Weighted USD (2008-13)
Global FX Trends: EUR & USD
68
70
72
74
76
78
80
82
84
86
73
75
77
79
81
83
85
87
89
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USD (DXY index)USD (Fed Index)
Global Economic Intelligence
Global FX Trends: “Currency War” vs US Dollar?
CHINA KOREA MEXICO CANADA UK AUSTRALIA EUROZONE RUSSIA INDIA BRAZIL JAPANMAX 6% 4% 2% 3% 2% 4% 4% 2% 2% 6% 7%MIN 0% -9% -18% -8% -8% -10% -15% -16% -22% -23% -21%Last 6% -2% -3% -4% -5% -6% -8% -10% -18% -19% -21%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
24-month % change vs. USD
Global Economic Intelligence
102154
201171
500
508357
461524
536
574 529
-200
0
200
400
600
800
1,000
1,200
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
f
2014
f
US$
bill
ion
Source: Institute of International Finance – October 2013
Foreign Direct InvestmentPortfolio InvestmentMultilateral FinanceBank LendingBond Issuance
Net Foreign Capital Flows to Emerging Markets
Global Economic Intelligence
World Market Cap = US$57 trillion By Major Country (US$ trillion)
0 2 4 6 8 10 12 14 16 18 20
USAJapan
UKHong Kong
ChinaC A N A D A
FranceGermanyAustralia
SwitzerlandIndia
Brazil
AmericasAsia/PacificEuropeAfrica/M.East
Americas42%
Asia/Pacific
31%
Europe24%
Africa/Middle East
3%
Global Equity Rebalancing – The US Influence
Global Economic Intelligence
World Equity Market (MSCI) % Return since Mar 2009
-30%-20%-10%
0%10%20%30%40%50%60%70%80%90%
100%110%
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GLOBAL indexDevelopedEmerging
0 20 40 60 80 100
120
140
160
USA
EmergingEurope
EmergingAsia
UK
EU
LatinAmerica
BRIC
CHINA
JapanEmerging MarketsHigh Income
Uneven Performance in Major Equity Markets
Global Economic Intelligence
EMBIG – Regional Breakdown EMBIG – Top 10 Credits
LATAM42%
EUROPE33%
ASIA17%
M.EAST/AFRICA
7%
0 2 4 6 8 10 12
Mexico
Russia
Venezuela
Turkey
Brazil
Indonesia
Philipppines
Colombia
Poland
Chile
South Africa
AmericasAsiaEuropeAfrica
Who is Who in the Emerging Market Debt Universe?
Global Economic Intelligence
G10 Credit Default SwapsG10 Credit Default Swaps
11
18
25
32
39
46
53
60
67
74
222
391
559
728
897
1,065
1,234
1,403
1,571
1,740
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Bon
d Yi
eld
Spre
ad –
basi
s po
ints
(bps
)
US Corp High Yield Debt
EM Sovereign Debt
US Equity Market Volatility
Risk Aversion/Appetite Metrics
Global Sovereign Debt: Credit Risk Differentiation
0 50 100
150
200
250
300
350
400
450
500
Germany
UK
USA
Japan
France
China
Mexico
Brazil
Russia
CDS (basis points)
Oct 2008Oct 2013
Global Economic Intelligence
Interdependence - Cooperation – Joint Intervention
Global Economic Intelligence
MerciGracias
Thank You