A senior economist with the United Nations has made a terse warning about the state of the global economy, saying that it is "is increasingly vulnerable and fragile."
"Although it has been ten years since the 2008 Lehman Brothers crisis, it is obvious that the markets have not yet taken any lesson," UN Economist Piergiuseppe Fortunato told Anadolu Agency on Wednesday following a lecture he gave at the Istanbul Commerce University. "It is difficult to find the origin of the financial collapse that started in 2007. During these ten years, there seems to be a widespread belief that many structural problems that facilitate the crisis cannot be changeable. The series of regulations were applied to reduce the leverage of banks. But, it is obvious that they are still not effective," said Fortunato, an economic affairs officer at the United Nations Conference on Trade and Development. US expects India to buy energy products, aircraft to fix trade gap
The United States expects India to increase purchases of U.S. energy products and aircraft so the U.S. trade deficit with the South Asian country is rectified, U.S. Secretary of State Mike Pompeo said on Thursday."They’re going to buy more energy products from the United States, they’re going to purchase more aircraft from the United States, we truly do appreciate that but the gap will remain," Pompeo told reporters after high-level talks with Indian officials in New Delhi."So we are urging them to do all that they can to narrow that gap. And at the same time it’s important that the trade barriers that are there, places that American companies, that American workers products, can’t be sold here be reduced." EU, US trade chiefs to mend ties after Trump tariff detenteUS Secretary of State Pompeo arrives in Pakistan; to meet new PM KhanUS military to end $300 million aid to Pakistan
On the current situation in the U.S. economy, Fortunato cited a recent report by the American National Bank that warned of a recession.
"This report warns on the possibility of an economic recession in the U.S., along with a narrowing gap between short and long-term borrowing costs," he said, adding that the report also signaled the heightened risk due to Pr
esident Trump’s protectionism.
Fortunato said a similar economic crisis is "knocking at the door"."The current economic recovery policies in America are inadequate. These policies have not been well defined yet we now see an example of a fragile economy. In further years, there may be a more serious crisis than in 2008."
Italian debt set for one of its best weeks since crisis era
Italian debt is heading towards one of its best weeks since the euro zone debt crisis as the Italian anti-austerity government's apparent willingness to curb budgetary excesses has the market sighing with relief.Italian debt rallied heavily in the first three days of the week on remarks from Italian ministers that suggested spending in 2019 would remain within European Union rules.On Thursday it largely held on to those gains, with five-year and 10-year yields dropping further."There are a lot of hopes on the markets that it will agree a budget below 3 percent (of GDP) and I think we will see a lot of headlines in the next few days confirming that," said DZ Bank strategist Sebastian Fellechner.Deputy Italian Prime Minister Luigi Di Maio said on Wednesday the forthcoming 2019 budget would be "courageous", but would nonetheless keep state accounts in order.Budget talks between officials in Italy's ruling coalition of the anti-establishment 5-Star Movement and far-right League are set to continue today, with more headlines likely to emerge as officials brief the media on these talks.Italy's 10-year bond yield fell another four basis points to 2.90 percent, making it a 34 basis point drop for the week so far.Barring the week commencing June 11 this year -- when that yield fell over 50 bps -- this would make it the best week for Italian 10-year debt since September 2012, back when the European Central Bank stepped in with strong measures to tackle the euro zone debt crisis.Italy's five-year borrowing costs shed 3.5 bps to 2.14 percent and two-year yields were flat at 1.06 percent; both down more than 40 bps this week so far.Yields are still well above the levels of April and early May, when Italy's 10-year borrowing costs went as low as 1.71 percent.Investors have heavily sold off Italian bonds since the new government took office in June on concerns that the coalition may implement budget plans that would put the country's already-huge debt pile under strain and breach EU fiscal rules.And they will remain cautious over the anti-establishment government's stance on spending and on EU membership."Even if they agree on a (EU-friendly) budget now, the topic is not off the table. It will accompany us during the next year, because they could hit higher spending at any time citing extraordinary circumstances," said Fellechner of DZ Bank.Other euro zone bond yields edged higher, adding to a week of rises. Germany's 10-year government bond yield, the benchmark for the region, inched higher to 0.38 percent, up five bps for the week so far.But that yield could come under downward pressure as the session wears on, with the United States possibly announcing a fresh round of tariffs, which could fuel a bid for safe assets such as government bonds. US, France, Italy, UK condemn violence in Libyan capital TripoliFitch cuts Italy's sovereign debt outlook to 'negative'Italy, after Fitch cuts outlook, vows to respect EU commitmentsItaly may reallocate Autostrade concession in tender
US STOCKS-Futures lower on tariff woes, social media stocks in focus
U.S. stock index futures fell on Wednesday, as investors weighed the possibility of President Donald Trump following through on plans to impose a fresh round of U.S. tariffs on Chinese goods right after a public comment period ends on Thursday.Also in focus are social media stocks Facebook and Twitter as their top executives face the U.S. Congress over what lawmakers see as a failure to combat continuing foreign efforts to influence U.S. politics.Facebook was down 0.7 percent in premarket trading, while Twitter dropped 0.5 percent. Snapchat-parent Snap Inc was off 0.8 percent.Meanwhile, tariff worries weighed on trade-sensitive companies, with Caterpillar and Boeing down 0.4 percent and 0.6 percent.Consultations on a U.S. proposal to impose tariffs on $200 billion more in Chinese imports ends on Sept. 6 with Trump ready to impose these tariffs as soon as the comment period ends, Bloomberg reported.The United States and Canada will also resume talks to settle differences on revamping the North American Free Trade Agreement (NAFTA), despite Trump's threats to continue trade deals with just Mexico in a bilateral agreement.At 7:18 a.m. ET, Dow e-minis were down 76 points, or 0.29 percent. S&P 500 e-minis were down 5.75 points, or 0.20 percent and Nasdaq 100 e-minis were down 17.5 points, or 0.23 percent.Among other stocks, Nike was off 0.13 percent, still suffering the effects of a social media backlash after it chose Colin Kaepernick, the first NFL player to kneel during the national anthem as a protest against racism, to participate in a new ad campaign.General Electric fell 1.5 percent after brokerage UBS cut its price target on the stock on concerns over the company's power business.JD.com declined 4.5 percent, down for the second day in a row, after a public information report released by police said the Chinese retailer's chief executive officer was arrested in Minneapolis last week following an allegation of rape. Richard Liu, who through his lawyers has denied any wrongdoing, was released from custody on Saturday without being charged or paying bail.Data from the Commerce Department on international trade deficit for the month of July is expected at 8:30 a.m. ET.
Economy in Europe
Fortunato gave even a grimmer picture of the European economy.
"If you look at figures in the European economy, you will face a worse scenario than the U.S. The improvement policies in Europe are progressing more slowly. As [UNCTAD] stated in the report published last year, the biggest reason for this slow recovery is the economic policy package signed by the EU countries," he said.
"There is no expectation of optimism in the long run due to the existence of political reasons that cannot be reached and countries such as Italy which are supporting anti-Euro markets."
As no clear political conclusion has yet been reached in the negotiations on Brexit, this situation negatively affects European markets," he said."Every day that the Brexit negotiations are not concluded, it creates serious damage to the European economy."
Turkey’s central bank to support price stability
The Central Bank of the Republic of Turkey (CBRT) on Monday announced that the bank will continue to use all available instruments in pursuit of the price stability objective."The Central Bank will take the necessary actions to support price stability," the bank said.The announcement came following the release of the inflation report for August by the country's statistical authority TurkStat.According to TurkStat, consumer prices in Turkey rose 17.90 percent on a yearly basis last month while the annual inflation was 15.85 percent in July.Turkey's central bank independent, will take necessary steps: Fin minTurkey's manufacturing index at 46.4 points in August"Recent developments regarding the inflation outlook indicate significant risks to price stability," the CBRT said, adding:"Accordingly, in line with the previous communication, monetary stance will be adjusted at the September Monetary Policy Committee Meeting in view of the latest developments."At the bank's sixth Monetary Policy Committee meeting this year, on July 24, the CBRT kept its one-week repo rate -- also known as the bank's policy rate -- constant at 17.75 percent.According to the bank's schedule, the next three meetings are to be held on Sept. 13, Oct. 25, and Dec. 13.
Erdoğan proposes to trade without US dollar
International trade's dependency on the U.S. dollar should be decreased as it became an obstacle for Turkey says Turkish President Recep Tayyip Erdoğan on Monday.Erdoğan attended the 6th Summit of Turkic Council at Rukh Ordo Cultural Center in Kyrgyzstan, where he said, "We are proposing to trade in our own currencies rather than U.S. dollar"Turkish leader separately said that events proved Turkey and its friends shouldn't delay fighting the Fetullah Terrorist Organization (FETO).FETO and its U.S.-based leader Fetullah Gulen orchestrated the defeated coup of July 15, 2016, which left 251 people martyred and nearly 2,200 injured.Ankara also accuses FETO of being behind a long-running campaign to overthrow the state through the infiltration of Turkish institutions, particularly the military, police, and judiciary.Erdogan added that this terrorist organization has organized themselves over educational institutions worldwide as it did in Turkey.The summit is hosted by Kyrgyzstan's President Sooronbay Jeenbekov at Rukh Ordo Cultural Center.In addition to presidents of Turkey, Azerbaijan, Kazakhstan and Uzbekistan, Hungary as an observer state has been represented by its prime minister.Turkish first lady opens cultural center in KyrgyzstanErdoğan: Turkey committed to strengthen judiciaryTurkey to save ties with Kyrgyzstan from shadow of FETÖKyrgyzstan invites Turkish investors