U.S. Household Net Worth Rises in Q2

The total net worth of U.S. households is currently higher than ever, helped by improving home values and stock prices. According to the Federal Reserve, the net worth of U.S. households, the total of all assets minus all liabilities, rose by $1.7 trillion in Q2 2017 to a record $96.2 trillion. “The U.S. household balance sheet is healthy and continues to be one of the key themes of our view that the current economic expansion is far from over” said Keith Knutsson of Integrale Advisors. Household wealth in the stock market climbed by $1.1 trillion in Q2. Despite a smaller increase than in the first quarter, the performance still reflects a steady trend in equity prices supported by business

Portuguese Investment Bonds: A Sign of New Opportunities?

Portugal’s drastic reduction in its debt in 2017 and best growth in decades has rallied its bonds. The S&P and the IMF reinstated investment-grade credit rating to a country whose bonds were previously in junk territory. Overall, the country’s export performance has improved, investment increased, and growth accelerated. The S&P’s upgraded rating to BBB- from BB+ stated an expected growth of more than 2% on average for the next 3 years. Moody’s Investors Service and Fitch Ratings still value Portuguese bonds on par with junk level, but both agencies recently raised their outlook. Bond indexes require investment-grade ratings from at least two of the three major credit rating agencies: S&P,

Interest Rates and The Federal Reserve’s Reversal of The Stimulus Program

Federal Reserve chairwoman Janet Yellen stated Wednesday that rates are being held, but hinted of a possibility that a rate-hike is under consideration. Additionally, Yellen confirmed that through unanimous decision the Fed will reduce its balance sheet starting in October this year. The statement shows confidence that recent stagnant inflation measures are temporary. The dollar bounced back from losses earlier in the day as announcements were being made. The balance sheet, which roughly quintupled in size to $4.5 trillion since before the financial crisis, is supposed to be reduced in October by $10 billion and $10 billion for every month after. One year later, on October 2018, the Fed is p

Financial Flooding Will Recede

The physical damage from Hurricane’s Harvey and Irma can last for a long period of time, however, the overall economic damage is likely to recede and should do little to alter the US Federal Reserve’s strategy for tightening monetary policy. In 2005, the Fed lifted short-term interest rates just a month after Hurricane Katrina ripped through the Gulf of Mexico. Janet Yellen, chair of the Federal Reserve may take a similar position in the wake of the recent storms affecting Texas, Florida, and Georgia. Economists’ estimate the total damage from Harvey and Irma will be $150bn-$200bn. The result is weakened annualized GDP growth in the third quarter. Inflation could rise in the aftermath of the

The Drive for a Circular Economy

Technology is at the forefront of the economy as we progress through the 21st century. The circular economy is fueled by advancing technology geared toward making the world more efficient and less resource dependent. The basic principle of a circular economy strays away from a linear economy focused on making and disposing of resources. The circular economy focuses on rethinking a product’s life cycle by creating value from waste, efficient resource extraction, remanufacturing, innovative design and recycling. The drive for a circular economy derives from the implications of a linear economy. The linear economy relies on a finite amount of resources that are cheap and readily available. Furt

Brexit Timeline: Events Leading Up To Brexit

As the clock on Brexit negotiations is ticking, Britain’s political winds are shifting. In two months, the European Council decides whether Brexit negotiations can advance to focus solely on future relationship and any potential transitional deal based on a report of the Chief negotiator Michel Barnier. Currently the logistics of managing the actual political exit of Britain are slowing down proceedings. To understand future developments, it’s vital to begin with an understanding of the events leading up to Brexit. Keith Knuttson of Integrale Advisors says:” Over the past few months an array of invalidated speculation has played a part in shaping the misunderstandings regarding the proceedin

Lagging capital flows: A Sign of Safer Financial Markets?

With gross cross-border capital flows totaling 65 percent less than in 2007, the global financial crisis is continuing to shape the global financial system; large European and US banks have retrenched from foreign markets. Investors should be aware that these facts don’t symbolize a detrimental future for financial globalization. Despite inherent risks, the slow recovery from pre-crisis conditions signals towards an increasingly stable and risk-sensitive opportunity for financial globalization. Measurements in the volatility of foreign direct investment reveal a larger share in global equity than before the crisis. Overall, current financial and capital accounts imbalances have decreased – d

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