Concerns are growing in Germany
Germany is currently experiencing growing concerns about the growth of the German economy in October due to increasing growth in coronavirus infections. As the results of the survey published today by the ZEW Institute show. The confidence index fell to 56.1 points from 77.4 points in September. On the other hand, the index, which assesses current conditions, rose to minus 59.5 from minus 66.2 points last month.
In the second quarter, according to published data, the German economy fell by 9.7 per cent compared to the previous three months. It thus recorded the sharpest decline since 1970, when quarterly data began to be monitored. On the other hand, the Ifo prospect assumes that the German economy will grow by 6.6 per cent in the third quarter and slow to 2.8 per cent in the last quarter of this year.
As ZEW President Achim Wambach said: “The recent sharp rise in covid-19 has increased uncertainty about future economic developments, as has the prospect of the UK leaving the EU without a trade agreement. Uncertainty is further exacerbated by the current situation before the US presidential election.”
The IMF is improving the outlook
Although according to the IMF, it is still the worst economic crisis since the Great Depression in the 1930s, the IMF predicts a global decline of 4.4% in its latest World Economic Outlook, up from 5.2% in 2020. Next year the global economy should return to growth of 5.2%, which is a slightly weaker recovery than originally expected in June.
The new forecasts for the global economy are “slightly less catastrophic”, thanks to developed countries and China, which have opened up faster than expected. On the other hand, the IMF warns that the outlook is deteriorating in many emerging markets.
Gita Gopinath, the IMF’s chief economist, said fiscal support of about $12 trillion and the unprecedented loosening of governments ‘and central banks’ monetary systems have helped curb damage, but employment remains well below pre-pandemic levels, with low-income workers, youth and women.
Rocket growth of China
Juan is currently appreciating all currencies as China removes regulations on a currency that artificially devalues its value. Juan will likely continue to grow in value due to the spread of interest rates, the inflow of money into Chinese stocks and a strong economic recovery. The Chinese government and representatives of the People’s Bank of China (PBOC) are probably only concerned about the pace of Juan’s appreciation, and not of the appreciation itself.
Even though the PBOC has taken steps to slow down the appreciation of the Chinese Yuan by abolishing the requirements of financial companies to hold a 20% reserve when purchasing foreign currency for forward transactions.
Demand for Juan will continue as imports to China peaked in September as the world’s second-largest economy increased purchases of iron ore, agricultural commodities, and semiconductors to accelerate coronavirus recovery.
JPMorgan surprised positively with its economic results
JPMorgan Chase predicts better prospects for the US economy than three months ago. Overall, JPMorgan reported revenue of $29.1 billion, compared to the expected $28.2 billion. Net income of $9.4 billion was more than $9.1 billion in the same quarter of 2019.
JPMorgan revenues in the markets jumped 30% year-on-year, better than the 20% increase the bank expected in mid-September. Revenues from trading in fixed income increased by 29% and revenues from trading in shares by 32%.
Performance of the JPMorgan Chase’s shares (Source of the graph: Tradingview)
The airline industry will continue to bleed
Delta Air Lines does not expect to resume traditional operations due to the COVID-19 pandemic next spring, although it has the remaining federal aid for $1.3 billion in employee payouts. The aid is expected to cover about 32% of the decline in labour costs this quarter
The US airline, which reported results for the third quarter, said it expects daily losses to fall to $10 to $12 million a day in December. Daily losses climbed to an average of $18 million a day in September before the end of the year.
Performance of the Delta Air Lines’s shares (Source of the graph: Tradingview)
Watch this week:
Thursday, October 15, 2020
The United States will publish initial unemployment claims. A slight decrease to 825 thousand from expected 840 thousand applications.
Friday, October 16, 2020
The eurozone will publish the development of CPI inflation in September. A decline of 0.3% is expected on a year-on-year basis.
The United States will publish the core development of retail sales for September. Analysts expect 0.7% growth on a month-on-month basis.
Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview