MACRO NOTES Last fortnight was interesting and all eyes are now on US for various reasons. Quoting The Economists “US is undergoing three economic experiments at the same time: Huge fiscal stimulus (at around 14% of pre-Covid GDP) Monetary policy which is far more tolerant to inflation [In new framework FED is targeting average inflation of 2%] Households holding huge savings level and question is whether they will spend? In the light of above facts, it pays to be attentive to what is happening in US on both Monetary and Fiscal front: Fiscal President Joe Biden has taken huge gamble by going in for big fiscal stimulus of $ 1.9 Trn upfront. Alternate approach suggested was nibble with small stimulus and wait for impact of Vaccine + recovery. Post that go for a larger stimulus, if required. Composition of stimulus is as below: Covid Containment and Aid to States and increased federal spending: $ 750 Bn= Unemployment Benefits: Cont...
Looks like we are entering phase of some bargain hunting here in US. Based upon squabbling over political issues by both parties in US (Repubs & Dems) we are going to see a steady decline in US influence on global stage. It seems like days of solo super power on global stage are behind us and we are entering new phase of multi-major players on global stage. This could lead into new era of global co-operation and mutual build up for everyone. Which in turn could be blessing in disguise for USA, it will no longer have to carry burden of mega-consumer society as other parts of world increases consumption in their domestic markets. Whatever it is but second half of this year and run-up to 2012 US presidential election is going to be one of very challenging period for Analysts trying to decipher US financial market.
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