Estimates for Euro periphery output gaps are oddly small, even where real GDP has fallen substantially in the last 10 years. These estimates implicitly assume lots of activity is permanently lost, with potential “bending” down, almost as if to validate low actual GDP. The reality is that economic slack on the periphery is likely still sizeable and holding down underlying inflation despite unprecedented ECB easing.
One factor behind global equity market jitters: the growing focus on credit risk. Credit spreads have widened only modestly in 2018, but look increasingly vulnerable to a trigger event. Rising rates highlight vulnerabilities in housing markets. Less reliance on hard-currency debt in EM Asia ex-China, but more in Africa/Middle East
Global debt declined by $1.5 trillion to $247 trillion in Q2 2018—mainly driven by mature markets. In contrast, EM debt continues to rise, topping $71 trillion in Q2.
At the IIF Digital Finance Regulation Symposium in Brussels, panelists Bob Contri (Deloitte), Andres Wolberg-Stok (Citibank) and Patrick Maes (Credit Suisse) share their top takeaways from the discussions on Open Banking, Cloud and Machine Learning (Brad Carr)
With business models built around advanced tech and data, and with the advantages of an immense domestic market, a supportive policy environment, and ample capital, Chinese bigtechs are constructing a new corporate model—one with reach into virtually every sector of the economy and state.
