User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday December 10, 2007 - 11:33:36 GMT
Lloyds TSB Financial Markets - www.lloydstsb.com/corporatemarkets

Share This Story:
| | Email

Economics Weekly - Sovereign Wealth Funds importance to the global economy; Weekly economic data preview - US Fed will almost certainly cut interest rates on Tuesday

Economics Weekly  10 December 2007

Sovereign Wealth Funds importance to the global economy

Sovereign Wealth Funds are here to stay…
Global financial markets have awoken to the rise of Sovereign Wealth Funds (SWFs), although they have been around since 1953. But what has made them so much more important and given them prominence recently is their size, their strong potential rise over the coming years and the fact that so much of the increased wealth is in emerging market funds, see table 1. This implies a shift in the balance of power in financial markets from the developed economies to the new emerging economies. This, of course, is a mirror image of the shift in relative economic power taking place, away from the current developed economies to those that are rapidly emerging. The surprise would be if this rise in wealth in emerging markets were not to be happening. The fear for many is that the size of these funds is estimated to rise from around $2 trillion currently to over $14 trillion in a decade, i.e. by 2017, if current rates of growth persist. And that could lead to a takeover of many firms in developed economies and control by foreign governments. But are these fears justified?

...and there is little to fear…
These funds manage national saving in the form of stocks, bonds, property and other financial instruments, much in the same way as traditional fund management firms. They clearly have their origins in the form of rising foreign currency reserves, from the proceeds of exports of a range of goods, including commodities, see chart a. These exports in total are a function of fast economic growth and of commodity price rises coupled with growing demand. Many of these wealth funds are derived from oil and gas and from general exports, see chart a. But they are managed not as reserve currencies but as investable funds as is the case in a conventional fund.

So what is the difference between SWFs, fund management firms and the management of official reserves? The answer appears to be: not a lot. They seek to raise returns so that future income is maximised, to diversify future earnings, and to protect future wealth when current income streams are depleted.

The concern about these funds stems from their sheer size, buying power and a worry that they are or could become tools of government policy. But in our view many of these funds are acting more like actively managed central bank reserves funds, under the auspices of central banks but usually separate from them.

…but transparency from these funds is needed to ally concern
What is needed is transparency, about holdings and underlying business rationale. But this is an issue about financial openness not about national or other risks from these funds. Faster economic growth, in official reserves and so in global financial markets is what is in prospect, see table 2 and chart b. This is why the UK government recently came out and said that it welcomes sovereign wealth fund investments from China, so long as these funds are transparent – the strategic and business rationale is there for all to see - they would clearly be a good thing for the UK.

SWFs will boost global capital markets and raise wealth
The SWFs derive their position from high commodity prices and fast economic growth in the emerging markets. This process is not going to end in the next few years and so we expect the SWFs to become even larger and consequently more important in the years ahead. But these funds have the potential to boost global financial markets, especially in future years, and also to change ownership of many of these assets, though in a much bigger overall market. This should not be feared. For example, there is a lot of evidence that these funds have underpinned equity and bond markets as the turmoil in credit markets has hit global financial markets. The main lesson is that this new wealth has the capacity to revitalise and recapitalise many of the potentially ailing financial companies in the developed economies.

Conclusion
SWFs take equity stakes in firms and invest in the usual range of assets, but rarely take full control. Hence, for many years they will act to underpin the global financial system. Moreover, the rise in the wealth of these emerging markets should be recycled so that borrowers and savers are more easily matched. Not doing so runs the risk of undermining the global economic system, as funds need to be shifted from savers to borrowers (in other words, from exporters to importers) to keep savings and investment in equilibrium. Preventing this process by banning SWF investments could cause future global financial crises, not prevent them.
Trevor Williams, Chief Economist

Weekly economic data preview

US Fed will almost certainly cut interest rates on Tuesday

Comments by Fed members, including Chairman Bernanke, as well as another month of weak data declines in the November ISM manufacturing and services surveys and continued weakness in the housing market - have cemented the market view that US interest rates will be cut by 25bp or even by as much as 50bp on Tuesday. We are calling a cut of 25bp to 4.25%, although given growing concern by some that the economy could dip into recession, a larger 50bp cut is a possibility, although unlikely in our view. With the US Fed ahead with cutting rates, the Bank of England having delivered its first in a series of expected cuts and the ECB holding rates at 4%, despite serious concerns over inflation, markets have largely reacted to data on growth rather than prices. But this may be about to change as inflation fears resurface, leading to a softening in market perceptions of the speed and direction of interest rate movements. This week, data may show strong growth of producer prices and wages, as well as high levels of capacity utilisation, bringing a chilling reminder that inflation pressures are mounting in the major economies. The Norwegian Central Bank and the Swiss National Bank may pause their long run of hikes, holding rates, at 5.0% and 2.75% respectively.

• The US issues a plethora of data this week, which will help the debate about how low and how quickly the Fed can cut interest rates. US jobs and earnings growth data published last Friday were indicative of an economy growing at least at a trend rate, certainly not one facing recession and for this reason we believe that US interest rates will rise in H2 2008. This week, reports could support this view as import prices could rise at an annual rate of 11.1% in November. This may contribute to 6.2% annual growth in producer prices and 2.6% growth in core producer prices. Also, figures may show that US industrial companies were operating at 81.6% of capacity in October. This set of data combined, suggests that Friday's release of November consumer price inflation may show a sharp jump of 0.8% on the month, equivalent to 4.3% on the year - the strongest rate of growth since June 2006. Core inflation may edge up from 2.2% in October to 2.3% in November, suggesting that higher foodstuffs/ energy prices are not the only problem, but prices of manufactures and services are rising as well. On Wednesday, data may show the US trade deficit worsening to $57bn in October from $56.5bn in September. In Q3, foreign outflows of US TICS capital of $24.7bn failed to match the $172.3bn trade deficit, highlighting the possibility of a large external funding gap.

• In the wake of a pre-emptive rate cut by the BoE against slower economic growth, producer prices and labour market data may come as a reminder that near term inflation risks are high in the UK as well. On Monday, November producer input prices rose 1.7% on the month, 10.3% on the year. Producer output price growth accelerated to 4.5% from 3.9% in October, the highest annual increase in 16 years. Although part of this rise is related to higher prices of foodstuffs and commodities, 2.2% growth in core prices (2.3% in October) suggests that inflation is not yet being fully passed on to the wider economy. But jobs and earnings growth data, published Wednesday, may suggest that there is no room for complacency on the inflation front – the unemployment rate on a claimant count basis should remain at just 2.6%, while average 3-month earnings may rise by 4.2% in October from 3.7% in September. A UK trade deficit of £7.7bn is forecast for October, just a touch down from £7.8n in September, bringing the cumulative YTD outcome to £70.9bn. This suggests that 2007 is likely to break last year's record trade deficit.

• November's EU-13 inflation rate will be confirmed at 3% on Friday, highlighting the main reason for the ECB's debate about whether to raise rates from 4%. The ZEW survey of investor sentiment may weaken further to minus 34.5, but this may reflect tight credit conditions and market turbulence rather than any lasting problems with the German economy.
Nichola James, Senior Economist

Economic Research,
Lloyds TSB Corporate
Markets,
10 Gresham Street,
London EC2V 7AE
,
Switchboard:
0207 626 - 1500
www.lloydstsb.com/corporatemarkets

<i>Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.</i>

 

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales

Forex Trading Outlook


Trading Opportunities


  • POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.

  • POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.



  • POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.

  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.



  • POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.


  • POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105