Thursday, June 02, 2016

Black Swan Events May Threaten 
The World Economy: Societe Generale
CNBC article reports on warnings from Societe Generale that risks to the global economy remain to the downside & include weaker global growth & a sudden change to expectations regarding the Federal Reserve's interest rate path .. "The potential for policy errors in China is substantial, and all the more so since a new bubble appears to be building in the property market .. The authorities are clearly keen to start recognizing and tackling the mountain of non-performing loans. The approach will be one of trial and error, with the downside risks implied in the name .. With a very busy political agenda lined up for the coming quarters, the risk of an event delivering an unexpected outcome remains high, be it the OMT (outright monetary transactions) judgment from the German Constitutional Court on June 21, the U.K. 'Brexit' referendum on June 23, Spanish election on June 26, Italian referendum in October and heading into 2017, elections in France, Germany, Netherlands and possibly Italy .. If the Fed sends too hawkish a message, the risk is that the re-pricing could turn disorderly. On the flip side, too dovish a Fed could see bond markets unnerved by higher inflation readings and an ever tighter labor market."
LINK HERE to the article

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