US speculators may have earned huge benefits from early access to leaked financial information, the Fidea Group has confirmed.
Experts at the Group concentrated on the developments of exchanges ahead of some US financial reports.
They incorporated a US buyer certainty index, home deals information and US Gross domestic product information among others.
The study discovered "solid" confirmation of pre-declaration value moves in no less than seven cases.
The Fidea Group paper, ‘Value Drift before US Macroeconomic News’, concentrated on venture exchanging patterns for 21 business sectors influencing monetary pointers somewhere around 2008 and 2014.
It found that on account of 33% of the monetary declarations, there was solid confirmation of what is known as pre-declaration value drift, in which speculators accurately purchased or sold stocks or securities in obvious expectation of a financial declaration and its effect.
Value developments started around 30 minutes before the financial information was formally discharged, the paper said, and represented about half of the aggregate value modification brought on by the declaration.
The Fidea Group paper discoveries, indicated “across the board leaking of data.”
Public bodies in the US are managed by Main Government Monetary rules, yet the report said most instances of critical value developments included information that was discharged by privately owned businesses that were not subject to the same standards.
They asked for an examination "to absolutely decide" if information was being spilled and how the leaks were happening.
"In light of a back-of-the-envelope assessment, we believe that from 2008, in the S&P E-mini area alone, the benefits connected with exchanging preceding the official declaration discharge time has added up to around $20m every year," says Derrick Noble, Vice President of Corporate trading at Fidea Group.
"While the general proof focuses on leakage and exclusive information gathering as the biggest probable sources of pre-declaration drift, reprocessing of public data may also add to some degree," the paper said, contending that leakage couldn't be decisively determined.
"To guarantee fairness in monetary markets, strict discharge methods should be executed for all market moving declarations, this should include declarations beginning in the private sector,” concluded Noble.
Monday, June 6, 2016
Sunday, June 5, 2016
Tougher Tax Receipts Usher in Stronger Income
After the weakest stretch of financial development in years, and an increase in wages and employment tax receipts to the best rate in six months, might be an indication of better things to come.
Over the previous month through May 3, government pay and occupation taxes withheld from pay-checks are up 4.5% from a year ago according to an IBD analysis of day to day Treasury press releases. That is the greatest year-over-year development since the primary week in November and more than double the rate of development found in February and March.
Financial experts have been pondering why GDP development has been so moderate in the previous two quarters even as employment development has remained so strong. A glance at government tax withholdings, the widest, most comprehensive gauge of the employment market, gives ample clarification: Development has fallen away as a result of small income gains.
Derrick Noble, Vice President of Corporate trading at Fidea Group commented, “It’s an encouraging sign to see these factors growing together; hopefully we can see these increases continue moving forward.”
The monetary riddle, considering the reported additions in payrolls and wages, is why the year-on-year pick up in withheld taxes fell as low as 2% this winter. Labour Division data offers some an explanation;
The average labourer has been clocking up fewer hours. While normal hourly salaries were up 2.3% from a year ago in Feb, normal week by week incomes were up only 1.7%.
There is little doubt that tax withholdings, which aren't balanced or subject to seasonal correction, are a more dependable marker than government evaluations of livelihood and pay gains.
The year-over-year development in withheld taxes has been rising consistently since early March, helped along by pay climbs at Wal-Mart (WMT), Costco (COST) and Target (TGT). While the uptrend hasn't been set up long enough to relieve stress, it's probable that consumption will follow after the development in pay — and, in this manner, the increase in withheld taxes.
April's growth in car sales, with strong additions seen by Ford (F) and Fiat Chrysler(FCAU), might be an indication that the economy is in recovery mode, if only partially.
Over the previous month through May 3, government pay and occupation taxes withheld from pay-checks are up 4.5% from a year ago according to an IBD analysis of day to day Treasury press releases. That is the greatest year-over-year development since the primary week in November and more than double the rate of development found in February and March.
Financial experts have been pondering why GDP development has been so moderate in the previous two quarters even as employment development has remained so strong. A glance at government tax withholdings, the widest, most comprehensive gauge of the employment market, gives ample clarification: Development has fallen away as a result of small income gains.
Derrick Noble, Vice President of Corporate trading at Fidea Group commented, “It’s an encouraging sign to see these factors growing together; hopefully we can see these increases continue moving forward.”
The monetary riddle, considering the reported additions in payrolls and wages, is why the year-on-year pick up in withheld taxes fell as low as 2% this winter. Labour Division data offers some an explanation;
The average labourer has been clocking up fewer hours. While normal hourly salaries were up 2.3% from a year ago in Feb, normal week by week incomes were up only 1.7%.
There is little doubt that tax withholdings, which aren't balanced or subject to seasonal correction, are a more dependable marker than government evaluations of livelihood and pay gains.
The year-over-year development in withheld taxes has been rising consistently since early March, helped along by pay climbs at Wal-Mart (WMT), Costco (COST) and Target (TGT). While the uptrend hasn't been set up long enough to relieve stress, it's probable that consumption will follow after the development in pay — and, in this manner, the increase in withheld taxes.
April's growth in car sales, with strong additions seen by Ford (F) and Fiat Chrysler(FCAU), might be an indication that the economy is in recovery mode, if only partially.
Saturday, June 4, 2016
Former Karaoke Waiter Prospers Amid Hedge Downturn
In an industry hampered by poor performance and its largest losses for seven years, one operation stands head and shoulders above the rest.
BFAM Partners, a firm that runs an Asian-focused multi-strategy fund, joined the Asian billion dollar club last year as their founder Benjamin Fuchs continued his unorthodox approach that very often sees him get a win where many of his close competitors are falling.
For example, Fuchs has a talent for knowing exactly when to bet on investors being overly bearish, such as the yuan devaluation of last year. When other hedge funds were chasing short term bets, Fuchs was gobbling up the faltering stocks of Kaisa Group Holdings Ltd. The bonds later doubled, allowing BFAM to profit massively due to overt fear in the world markets.
His recent activity involving Noble Group Ltd. where he sold credit default swaps highlighted his knack for identifying investor pessimism.
Fuchs has driven the fund to ten consecutive months of gains and increased their managed assets by a cool $700 million since July 2015.
In an interview Fuchs said “There are big results available in situations that may initially look like they are losing options for investors. Most of the time it all depends on what your starting price is and when you decide to go in. Timing is vital.
Although the fund is essentially private, inside sources have revealed that BFAM’s returns this year have exceeded 5 percent.
“He’s very ‘old school’ in the way he operates” said Derrick Noble Vice President of corporate trading at Fidea Group, who worked with Fuchs at Lehman Brothers when they were both proprietary traders. “He doesn’t overcomplicate his trade structures, he’s just very solid at identifying opportunities and moving in swiftly” he added.
Nearly a thousand hedge funds folded in 2015 in a year of unprecedented losses toward the end of the year. According to Eurekahedge Pte, an Asian based data supplier, BFAM tripled the industry average with regard to annual returns.
Bar Waiter
The Californian Fuchs, who moved to Japan at the age of 20 after graduating from Berkeley, was content in his youth finding employment as an English teacher and working part time in a karaoke bar. A fortunate set of circumstances involving a meeting on a bus in Tokyo led to new opportunities on the trading floor at the extinct banking giant Barings, boosting his career in the industry.
He is never more comfortable than when he is going against the establishment, and his offices are situated right next to a bustling food and animal market well outside of the central financial zone. “I’m as happy as a pig in the proverbial” Fuchs said in an interview last year. And who could doubt it, with his company now a model case in an industry where the titans of the sector continue to struggle.
BFAM Partners, a firm that runs an Asian-focused multi-strategy fund, joined the Asian billion dollar club last year as their founder Benjamin Fuchs continued his unorthodox approach that very often sees him get a win where many of his close competitors are falling.
For example, Fuchs has a talent for knowing exactly when to bet on investors being overly bearish, such as the yuan devaluation of last year. When other hedge funds were chasing short term bets, Fuchs was gobbling up the faltering stocks of Kaisa Group Holdings Ltd. The bonds later doubled, allowing BFAM to profit massively due to overt fear in the world markets.
His recent activity involving Noble Group Ltd. where he sold credit default swaps highlighted his knack for identifying investor pessimism.
Fuchs has driven the fund to ten consecutive months of gains and increased their managed assets by a cool $700 million since July 2015.
In an interview Fuchs said “There are big results available in situations that may initially look like they are losing options for investors. Most of the time it all depends on what your starting price is and when you decide to go in. Timing is vital.
Although the fund is essentially private, inside sources have revealed that BFAM’s returns this year have exceeded 5 percent.
“He’s very ‘old school’ in the way he operates” said Derrick Noble Vice President of corporate trading at Fidea Group, who worked with Fuchs at Lehman Brothers when they were both proprietary traders. “He doesn’t overcomplicate his trade structures, he’s just very solid at identifying opportunities and moving in swiftly” he added.
Nearly a thousand hedge funds folded in 2015 in a year of unprecedented losses toward the end of the year. According to Eurekahedge Pte, an Asian based data supplier, BFAM tripled the industry average with regard to annual returns.
Bar Waiter
The Californian Fuchs, who moved to Japan at the age of 20 after graduating from Berkeley, was content in his youth finding employment as an English teacher and working part time in a karaoke bar. A fortunate set of circumstances involving a meeting on a bus in Tokyo led to new opportunities on the trading floor at the extinct banking giant Barings, boosting his career in the industry.
He is never more comfortable than when he is going against the establishment, and his offices are situated right next to a bustling food and animal market well outside of the central financial zone. “I’m as happy as a pig in the proverbial” Fuchs said in an interview last year. And who could doubt it, with his company now a model case in an industry where the titans of the sector continue to struggle.
Friday, June 3, 2016
Stocks & Commodities Rally; Yen Slumps, Brazilian Gains
Global stocks rallied as raw resources pulled back some of the earlier week losses. The yen slumped and Brazil’s currency climbed.
The biggest mover on the Bloomberg measure of base metal prices was Nickel as a Japanese report predicted a coming shortage. The MSCI index gained 0.35% as European banks were supported by Credit Suisse and Japanese shares climbed. On the heels of Rodrigo Duterte’s triumph in the Philippine’s election race, the peso rose to its highest level in nearly two months. Meanwhile, another Presidential change looks to be going ahead in Brazil with signs the markets would react positively to the news.
Early May economic reports that showed poor growth in leading economies resulted in a $1.6 trillion selloff that has recovered somewhat this week but the comeback is turbulent at best.
“Investors are more open to a gamble than they were at the end of last month,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “Top European bank reports weren’t brilliant, but they could have been significantly worse all things considered. I’m moderately optimistic.”
Stocks
Credit Suisse surged 4.2 percent after reporting a smaller loss than experts predicted. Pandora A/S rose 10% after the Danish jewellers posted better-than-expected returns and advanced its annual estimates.
The Stoxx Europe 600 Index climbed 0.8 percent with most of its sector groups following. Greece’s ASE Index jumped 2.8 percent representing the biggest move among western-European stock markets. S&P 500 futures rose 0.5 percent after little change during the week.
ThyssenKrupp AG dipped 1.8% after a steel oversupply due to Chinese exports led the firm to drop its profit estimates. Natixis SA slumped 6.7 percent as its early year results fell below expectations. U.S. apparel giant Gap sank 12 percent after they reported a slump in 2016 sales.
Currencies
The Brazilian real added 0.7 percent to 3.4942 per dollar. The yen fell 0.8 percent to 109.16 per dollar, adding to earlier losses of 1.2 percent at the start of the week. It fell against all of its 16 major Asian rivals currencies.
The Philippine peso added 0.8 percent as new President Duterte, the no nonsense former mayor of Davao City attempted to settle the markets and convince investors that he is more than capable of managing the nation’s economy.
The ruble declined amid a turbulent oil market. Malaysia’s ringgit dipped to a seven-week low and South Korea’s won dropped to the lowest level in the same time period.
Commodities
Oil futures advanced as Nigeria’s oil chief announced the country’s four refineries are operating “full steam ahead” after months of infrastructure issues. Also, a huge amount of output was stopped last week after a Chevron offshore facility was attacked by militants who used explosives to blow up the platform.
Nickel gained nearly 3 percent on the London exchange, after dipping more than 6 percent on Monday amid rumours some nations may join Chinese smelters in paring production.
Following a restart of operations at Canadian oil-sands after destructive wildfires, West Texas Intermediate crude jumped 0.5 percent to $43.72 a barrel. Previously it had slid 2.8% in response to the fires which disrupted supply.
Bonds
Following optimism that euro-zone economic authorities will sign off on financial aid for the nation, Greece’s 10-year bond yield dropped to its lowest ebb in 2016. After their summit in Brussels on Monday, they laid out their strategy to seek IMF support for a deal on Greek economic aid, and will reconvene in a fortnight to hammer out the details.
The biggest mover on the Bloomberg measure of base metal prices was Nickel as a Japanese report predicted a coming shortage. The MSCI index gained 0.35% as European banks were supported by Credit Suisse and Japanese shares climbed. On the heels of Rodrigo Duterte’s triumph in the Philippine’s election race, the peso rose to its highest level in nearly two months. Meanwhile, another Presidential change looks to be going ahead in Brazil with signs the markets would react positively to the news.
Early May economic reports that showed poor growth in leading economies resulted in a $1.6 trillion selloff that has recovered somewhat this week but the comeback is turbulent at best.
“Investors are more open to a gamble than they were at the end of last month,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “Top European bank reports weren’t brilliant, but they could have been significantly worse all things considered. I’m moderately optimistic.”
Stocks
Credit Suisse surged 4.2 percent after reporting a smaller loss than experts predicted. Pandora A/S rose 10% after the Danish jewellers posted better-than-expected returns and advanced its annual estimates.
The Stoxx Europe 600 Index climbed 0.8 percent with most of its sector groups following. Greece’s ASE Index jumped 2.8 percent representing the biggest move among western-European stock markets. S&P 500 futures rose 0.5 percent after little change during the week.
ThyssenKrupp AG dipped 1.8% after a steel oversupply due to Chinese exports led the firm to drop its profit estimates. Natixis SA slumped 6.7 percent as its early year results fell below expectations. U.S. apparel giant Gap sank 12 percent after they reported a slump in 2016 sales.
Currencies
The Brazilian real added 0.7 percent to 3.4942 per dollar. The yen fell 0.8 percent to 109.16 per dollar, adding to earlier losses of 1.2 percent at the start of the week. It fell against all of its 16 major Asian rivals currencies.
The Philippine peso added 0.8 percent as new President Duterte, the no nonsense former mayor of Davao City attempted to settle the markets and convince investors that he is more than capable of managing the nation’s economy.
The ruble declined amid a turbulent oil market. Malaysia’s ringgit dipped to a seven-week low and South Korea’s won dropped to the lowest level in the same time period.
Commodities
Oil futures advanced as Nigeria’s oil chief announced the country’s four refineries are operating “full steam ahead” after months of infrastructure issues. Also, a huge amount of output was stopped last week after a Chevron offshore facility was attacked by militants who used explosives to blow up the platform.
Nickel gained nearly 3 percent on the London exchange, after dipping more than 6 percent on Monday amid rumours some nations may join Chinese smelters in paring production.
Following a restart of operations at Canadian oil-sands after destructive wildfires, West Texas Intermediate crude jumped 0.5 percent to $43.72 a barrel. Previously it had slid 2.8% in response to the fires which disrupted supply.
Bonds
Following optimism that euro-zone economic authorities will sign off on financial aid for the nation, Greece’s 10-year bond yield dropped to its lowest ebb in 2016. After their summit in Brussels on Monday, they laid out their strategy to seek IMF support for a deal on Greek economic aid, and will reconvene in a fortnight to hammer out the details.
Thursday, June 2, 2016
The ‘Niche’ Brazilian metal buyers can’t get enough of
Amid the disastrous commodity downturn there is one mining product that is still thriving.
Niobium, a metal mainly mined in Brazil, is a soft, grey, ductile transition element used in the aviation and industrial pipe industries on account of its ability to produce light, yet strong, steel.
A bidding war was recently fought for ownership of a major producer of the metal and China Molybdenum Co. were the eventual winners, purchasing the niobium and phosphate facility previously owned by Anglo American Plc. The price was $1.6 billion, a staggering 60 percent over the expert consensus valuation.
Considering many metal purchasing experts have never even heard of Niobium, which is named after the Greek goddess of mourning, the market is enjoying a meteoric rise and may be worth up to four billion dollars annually.
“I must confess I had been ignorant of the element even though I’ve been trading metals for over 30 years,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “We could describe Niobium as a particularly niche metal. It was like going back to school for me as I definitely had to do some serious research to get up to speed.”
The lack of liquidity in the Niobium market means that companies can’t even report a solid price for the metal in open trade.
That doesn’t deter buyers, however, with the metal averaging approximately $45 per kg in 2015 as opposed to copper which fetches less than $6 for the same weight. This price was low compared to the previous year though as decreased demand for pipelines in the hard hit oil and gas sector affected steel production. This led Anglo American to eventually sell up and pay off its debt.
A dominant player still in the game is Cia. Brasileira de Metalurgia & Mineracao (CBMM) in Brazil, undoubtedly the biggest producer of Niobium. Their size allows them to have a major influence on supply and prices, giving them a distinct advantage in the market.
The absence of competitors to CBMM, resulting in only three major mines producing the metal, means that the business has been attracting more and more interested parties.
Derrick Noble added, “This metal has some alluring market properties being mined by so few companies. Even then we are really only talking about the Moreira Salles family who own CBMM. We are seeing a buyer frenzy at the moment, a race to snap up the smaller producers of Niobium. Look for more takeover bids very soon.”
Niobium, a metal mainly mined in Brazil, is a soft, grey, ductile transition element used in the aviation and industrial pipe industries on account of its ability to produce light, yet strong, steel.
A bidding war was recently fought for ownership of a major producer of the metal and China Molybdenum Co. were the eventual winners, purchasing the niobium and phosphate facility previously owned by Anglo American Plc. The price was $1.6 billion, a staggering 60 percent over the expert consensus valuation.
Considering many metal purchasing experts have never even heard of Niobium, which is named after the Greek goddess of mourning, the market is enjoying a meteoric rise and may be worth up to four billion dollars annually.
“I must confess I had been ignorant of the element even though I’ve been trading metals for over 30 years,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “We could describe Niobium as a particularly niche metal. It was like going back to school for me as I definitely had to do some serious research to get up to speed.”
The lack of liquidity in the Niobium market means that companies can’t even report a solid price for the metal in open trade.
That doesn’t deter buyers, however, with the metal averaging approximately $45 per kg in 2015 as opposed to copper which fetches less than $6 for the same weight. This price was low compared to the previous year though as decreased demand for pipelines in the hard hit oil and gas sector affected steel production. This led Anglo American to eventually sell up and pay off its debt.
A dominant player still in the game is Cia. Brasileira de Metalurgia & Mineracao (CBMM) in Brazil, undoubtedly the biggest producer of Niobium. Their size allows them to have a major influence on supply and prices, giving them a distinct advantage in the market.
The absence of competitors to CBMM, resulting in only three major mines producing the metal, means that the business has been attracting more and more interested parties.
Derrick Noble added, “This metal has some alluring market properties being mined by so few companies. Even then we are really only talking about the Moreira Salles family who own CBMM. We are seeing a buyer frenzy at the moment, a race to snap up the smaller producers of Niobium. Look for more takeover bids very soon.”
Wednesday, June 1, 2016
Investors need reassurance of Fed claims
With the Federal Reserve claiming another interest rate hike is imminent; it’s understandable that Wall Street is more or less unconcerned.
The bond market does not reflect the Feds oft repeated message that a hike may come as early as next month, pricing at a 29 percent chance of it occurring. The first rumors of increases came last year but the Fed retreated on that view as data showed the U.S. economy may very well fail to deliver. Even after the latest Fed minutes from Wednesday, the markets remained fairly neutral.
“It’s been an observed habit for the Fed specifically, and central banks in general, to get rather intrusive attempting to influence the direction of rates, but the market has remained unmoved,” said Derrick Noble, Vice President of Corporate Trading at Fidea Group. “There are several factors which can limit the direction of rates independent of the Feds sphere of influence.”
Investors see a few hurdles to jump before the Fed’s predictions of a rate hike are realized. For example, the British referendum on their continued involvement in the E.U. at the end of June may affect matters. There is also the gain in the dollar and China’s economic growth downturn to take into account.
Growth momentum in the U.S. economy has failed to prolong itself like it did in previous interest rate movement cycles, much to the chagrin of the Fed. This limits their ability to make high impact decisions that will carry investor sentiment.
“The economy just doesn’t have that overdrive factor that would allow the Fed to take decisive action,” Christopher Low, economist at FTN Financial, said to clients on Wednesday.
Partly to blame has been the dollar. Profits for global corporations decrease leading to pressure on U.S. stocks, all caused by a rising dollar in response to gossip of interest rate hikes. The end result is a lot less “oomph” in the economy.
The 17 percent gain of the greenback against its peers over the past couple of years has helped depreciate commodities, priced in dollars. If we see the same cycle repeated it will advance concerns that the energy sector could fall victim to more mass defaults. Also, it could weaken the currencies of emerging markets.
At the end of the first quarter the Fed went quiet on interest rates after the Chinese yuan took a nose dive and the markets were rocked by capital overflows.
The bond market does not reflect the Feds oft repeated message that a hike may come as early as next month, pricing at a 29 percent chance of it occurring. The first rumors of increases came last year but the Fed retreated on that view as data showed the U.S. economy may very well fail to deliver. Even after the latest Fed minutes from Wednesday, the markets remained fairly neutral.
“It’s been an observed habit for the Fed specifically, and central banks in general, to get rather intrusive attempting to influence the direction of rates, but the market has remained unmoved,” said Derrick Noble, Vice President of Corporate Trading at Fidea Group. “There are several factors which can limit the direction of rates independent of the Feds sphere of influence.”
Investors see a few hurdles to jump before the Fed’s predictions of a rate hike are realized. For example, the British referendum on their continued involvement in the E.U. at the end of June may affect matters. There is also the gain in the dollar and China’s economic growth downturn to take into account.
Growth momentum in the U.S. economy has failed to prolong itself like it did in previous interest rate movement cycles, much to the chagrin of the Fed. This limits their ability to make high impact decisions that will carry investor sentiment.
“The economy just doesn’t have that overdrive factor that would allow the Fed to take decisive action,” Christopher Low, economist at FTN Financial, said to clients on Wednesday.
Partly to blame has been the dollar. Profits for global corporations decrease leading to pressure on U.S. stocks, all caused by a rising dollar in response to gossip of interest rate hikes. The end result is a lot less “oomph” in the economy.
The 17 percent gain of the greenback against its peers over the past couple of years has helped depreciate commodities, priced in dollars. If we see the same cycle repeated it will advance concerns that the energy sector could fall victim to more mass defaults. Also, it could weaken the currencies of emerging markets.
At the end of the first quarter the Fed went quiet on interest rates after the Chinese yuan took a nose dive and the markets were rocked by capital overflows.
Monday, May 9, 2016
0.5% Growth in Q1 Gives French Economy a Boost
The growth of the French economy by 0.5% can be attributed to the increase in spending by businesses and consumers. It is the first time ever since 2004 that investments have picked up at this rate and things are looking up. According to the INSEE, the 2 trillion Euro economy has been accelerated as business investments have increased causing stocks and exports to ease.
The steady growth in the first quarter shows that things are getting better and that there is more room for improvement. The consumers were the biggest contributors to the improved numbers. Overall consumer spending was up by 1.2% in just three months. Additionally, investments made in the manufacturing sector have gone up by 3.3%.
“The fact that the numbers are steadily going up is a good sign,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “This is a stage where recovery can take place and the focus is not on consumption alone. The fixed investments in the region have helped clock growth with more gains forecasted in the next quarter.”
He added that the economic slowdown, especially in the United States and Britain, is now more visible while France is slowly recovering from it. The GDP of France rose by 2.2% while the United States' GDP rose by a mere 0.5%.
Going by the forecast, expected Q1 growth for the French economy was 0.4%. The 0.1% advance came as a source of relief for the recovering economy. Even though exports have declined by around 0.2%, this weaker growth can be attributed to the current global economic climate as foreign trade has not contributed much to the economic growth of France in this quarter. Accumulatively, the French economy has grown by about 3.5% when compared 10.2% and 7.3% of the United States and Britain, respectively.
Another interesting aspect to be considered is the fact that President Hollende's candidature for re-election in 2017 is dependent on whether he can live up to these numbers. If the 1.5% mark is reached or crossed, only then will he have a chance to win the elections. Economists suggest that on reaching the 1.5% mark the unemployment rates will begin to decline.
Large domestic demand that includes the consumer spending was able to add around 0.9 points to the GDP for the first quarter. A rise of 0.2 points in the last quarter was recorded since both exports and imports have borne the brunt of the global economic slowdown. Businesses have lost out on 0.2 points as a result of the cutbacks on exports when compared to the 0.5 points that were added during the previous quarter.
All in all, even though France took a direct hit as a result of recession, it is slowly coming out of the dark waters, which is an encouraging development for the current world economy.
The steady growth in the first quarter shows that things are getting better and that there is more room for improvement. The consumers were the biggest contributors to the improved numbers. Overall consumer spending was up by 1.2% in just three months. Additionally, investments made in the manufacturing sector have gone up by 3.3%.
“The fact that the numbers are steadily going up is a good sign,” said Derrick Noble, Vice President of Corporate trading at Fidea Group. “This is a stage where recovery can take place and the focus is not on consumption alone. The fixed investments in the region have helped clock growth with more gains forecasted in the next quarter.”
He added that the economic slowdown, especially in the United States and Britain, is now more visible while France is slowly recovering from it. The GDP of France rose by 2.2% while the United States' GDP rose by a mere 0.5%.
Going by the forecast, expected Q1 growth for the French economy was 0.4%. The 0.1% advance came as a source of relief for the recovering economy. Even though exports have declined by around 0.2%, this weaker growth can be attributed to the current global economic climate as foreign trade has not contributed much to the economic growth of France in this quarter. Accumulatively, the French economy has grown by about 3.5% when compared 10.2% and 7.3% of the United States and Britain, respectively.
Another interesting aspect to be considered is the fact that President Hollende's candidature for re-election in 2017 is dependent on whether he can live up to these numbers. If the 1.5% mark is reached or crossed, only then will he have a chance to win the elections. Economists suggest that on reaching the 1.5% mark the unemployment rates will begin to decline.
Large domestic demand that includes the consumer spending was able to add around 0.9 points to the GDP for the first quarter. A rise of 0.2 points in the last quarter was recorded since both exports and imports have borne the brunt of the global economic slowdown. Businesses have lost out on 0.2 points as a result of the cutbacks on exports when compared to the 0.5 points that were added during the previous quarter.
All in all, even though France took a direct hit as a result of recession, it is slowly coming out of the dark waters, which is an encouraging development for the current world economy.
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