Household Sector Financial Balance, Financing Gap, Financial Markets, and Economic Cycle in the US Economy: A Structural VAR Analysis

Subject Financial markets outlook. Significance The decision of the US Federal Reserve (Fed) on September 18 to lower its main policy rate while not assuring investors that it will continue to loosen monetary policy is exposing divisions within the Federal Open Market Committee (FOMC), and between the Fed and bond markets. The ‘hawkish cut’ came with three dissensions, reflecting the disconnect between the resilient US economy and the deterioration in the global growth outlook. Impacts Cautious investor optimism that a US-China trade truce will be struck is fuelling US equity gains, but a substantial deal seems unlikely. The Brent oil price fell back within days following the drone attacks on Saudi Arabian oil facilities, but more short spikes are possible. Almost one-third of investment-grade government and corporate bonds are negative yielding; those with zero lifetime coupon are riskiest.

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Vaccines will drive financial markets over US politics

Emerald Expert Briefings ◽

10.1108/oxan-db257477 ◽

2020 ◽

Keyword(s):

Stock Market ◽

Financial Markets ◽

World Trade ◽

Divided Government ◽

Content Type ◽

Us Economy ◽

The Us ◽

The World

Significance Divided government provides scope for volatility at a perilous time for the pandemic-ravaged US economy, but markets are putting greater weight on the prospect of a vaccine accelerating the global recovery. Tech stocks have fallen as investors take their gains and opt for 'reflation trades' predicated on a recovery in sectors hit hard by the pandemic. Impacts Apple, Amazon, Alphabet, Microsoft and Facebook make up over 20% of the US stock market; firm fundamentals guard against a sharp sell-off. China’s renminbi has risen to the highest to the dollar since the US-China tariff battle ramped up in early 2018; more strength is likely. China’s export orders grew only marginally in October and import growth slowed, signposting that the world trade recovery could plateau.

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Financial Crisis-2008: Entering Global Recession

Voprosy Ekonomiki ◽

10.32609/0042-8736-2008-12-27-45 ◽

2008 ◽

pp. 27-45 ◽

Cited By ~ 4

Author(s):

L. Grigoriev ◽

M. Salikhov

Keyword(s):

Financial Crisis ◽

Financial Markets ◽

Global Financial Crisis ◽

Negative Consequences ◽

Global Recession ◽

Structural Problems ◽

Us Economy ◽

Russian Economy ◽

The Us ◽

The Global Financial Crisis

Main factors and development of the global financial crisis-2008 are generally discussed in the paper. The downturn in one of the local sectors of the US economy has caused major threats to functioning global financial markets. Structural problems of the Russian financial sector ("illusion of adequacy") have greatly enhanced negative consequences of the global crisis for the Russian economy. On the global level, main steps to minimize the costs of the crisis should deal with limiting protectionism growth, coordinating measures of economic policy and preventing a hard landing of a large group of economies.

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Risk and Equity Market Weakness: Their Implications for the World Economy

National Institute Economic Review ◽

10.1177/002795010117800103 ◽

2001 ◽

Vol 178 ◽

pp. 9-13

Author(s):

Ray Barrell

Keyword(s):

New York ◽

Stock Market ◽

Financial Markets ◽

World Economy ◽

Terrorist Attack ◽

Initial Reaction ◽

Us Economy ◽

The Us ◽

The World ◽

Stock Market Valuations

The terrorist attack on New York on 11 September 2001 caused considerable disruption to the US economy, and especially to the US financial markets. The initial reaction of the financial markets was to increase the discount factor on future profits and reduce future profit projections, and hence stock market valuations fell markedly, as can be seen from charts 1 and 2. This fall has been largely reversed since the attack, but markets have in general continued their decline from their peaks a year or so ago. Falls have been particularly precipitate since July 2001, with the German and French stock market indices falling by 20 per cent over the last three months, whilst the Canadian markets have fallen even more. Stock market falls of the scale we have seen since July are almost bound to impact on the level of economic activity in the major economies. They are likely to reduce the rate of growth of the world economy over the medium term as well as change the structure of saving and investment.

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The Influence of Internal Contradictions in the Us Economy on Global Financialization and the Expansion of Fictitious Capital

Finance Theory and Practice ◽

10.26794/2587-5671-2021-25-2-6-34 ◽

2021 ◽

Vol 25 (2) ◽

pp. 6-34

Author(s):

D. A. Dinets ◽

R. A. Kamaev

Keyword(s):

Financial Markets ◽

Global Economy ◽

Capital Investment ◽

Balance Sheet ◽

The United States ◽

Market Liquidity ◽

Financial Flows ◽

Us Economy ◽

Fictitious Capital ◽

The Us

The financialization genesis of the global economy centered in the United States is on the bifurcation point now— a fictive capital’ expansion is damaging with the social capital regeneration mechanism disaster. The method of identifying and estimating the fictive capital’ extension is absent for now. The fictive capital exists as a metaphor on the science papers but not as an institutional basis of the capital flows directions. The paper aims to update the configuration of the global financial system, its dependence on the performance of US corporations and banks; to identify the sources of vulnerability of world finance and global liquidity from the fictitious capital of American financial markets. The methodology is theoretical pattern’ of financial capital movements and its real statistical market indicators comparison. The empirical base is statistical data about the financial flows and financial results especially about the US as a global financial center. Based on the results the authors have revealed an origin of fictive capital on the US bank sector by the justification for the conclusion of liquidity above the profitable as the purpose of financial operations. This conclusion is confirmed with the scale of off-balance sheet transactions of banks. Besides the regression between the prices of derivative’ basis assets and stock indexes has been shown. Also, the market capitalization of American companies is not sensitive to change in market liquidity indicators. The authors concluded that global financialization is supported by significant internal contradictions in the US economy. The source of contradictions is the financial mechanism for withdrawing liquidity from the sphere of production and circulation into the sphere of financial markets. Capital investment using instruments of the US financial market entails the threat of losing their liquidity. Forecasting the dynamics of the global economy without taking into account the role of fictitious capital, which is emerging in the American financial markets, leads to global vulnerability and may cause the next financial crisis.

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