The World's Greatest Money Maker: Warren Buffett - BBC Documentary

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What IHS predicts for global economy in 2011

I said I wouldn't post this year anymore but I received an interesting report today so I decided to share with you. This report is from International Business Times.

What IHS predicts for global economy in 2011

By IB Times

Contrary to the prevailing view, the U.S. economy will gain growth momentum in the year ahead, while GDP will grow stronger in Europe and Japan, research firm IHS Global Insight has said in its forecast for 2011. The report, written by IHS Chief Economist Nariman Behravesh and IHS Global Insight Economist Sara Johnson, also says that though emerging markets growth will slow down, their growth will still be three times faster than that of the developed world.

The following are the main forecasts by IHS:

More stimulus will push unemployment below 9 pct in US

The U.S. recovery will pick up steam as the year progresses. In 2011, the U.S. economy is likely to be firing on more cylinders. Housing investment will begin to recover and the United States will enjoy export-led growth. Additional fiscal stimulus will add 0.6 percent to growth in 2011 and push the unemployment rate below 9 percent by year's end.

Europe, Japan growth to be stronger

Europe and Japan will also see slightly stronger GDP growth in the second half of 2011. The pace of growth in Europe is slowing, mostly because of fiscal tightening and jitters about sovereign debt. Stronger exports and improved consumer spending (especially in Germany) will help by mid-year.

China, Brazil growth will diminish markedly

Emerging markets will slow, but continue to grow three times faster than the developed world. Among the big emerging markets, China and Brazil will see the most pronounced slowing trends (as fiscal and monetary tightening is used to cool these economies), while growth in India and Russia will not suffer much (if at all).

Rates will stay unchanged in G-7, rise in BRICs

Interest rates will remain on hold in the G-7, but keep rising in the BRICs. The Federal Reserve, European Central Bank, Bank of England, and Bank of Japan are all going to keep policy rates on hold through most of 2011. In contrast, central banks in many of the large emerging markets and a few developed countries (e.g., Australia and Norway) will likely continue raising interest rates in 2011.

European economies will go for more fiscal tightening

Fiscal policy will become tighter in many large economies. Most countries in Europe will be tightening fiscal policy—some of their own accord and some under duress (e.g., Greece, Ireland, Portugal, and Spain).

Commodities' rollercoaster ride to go on

Commodity prices will move up gradually. The rollercoaster ride of commodity prices could continue. By the end of 2011, most commodity prices will be 5–10% higher than today. Factors other than demand growth (e.g., inventories, excess capacity, exchange rates, and speculative activity) will influence the extent of increases.

Inflation to remain inconsequential in developed economies

Inflation will not be a problem in the developed economies, but will rise in many emerging markets. Consumer price inflation in the advanced economies will average around 1.4% in 2011, compared with 5.5% in the developing world. Strong growth and fixed or managed exchange rates will contribute to upward price pressures.

Trade imbalances to stay the course

Global imbalances will neither worsen nor improve by much. The U.S. current-account deficit is likely to stabilize around $500 billion. A weaker dollar and strong emerging markets’ growth will help exports, but rising oil prices will raise import costs. Current-account surpluses of China and the Eurozone will hold steady for awhile.

Dollar will rise

The dollar will slide against most currencies, with the possible exception of the euro. A two-speed world and still-large global imbalances will have a predictable impact on exchange rates—downward pressure for the ―"crawling" economy currencies and upward pressures for the ―"galloping"economy currencies.

Last post of the year

Today I was thinking about something to write in here but I didn't have anything in mind so I decided to write the last post of the year so I will be able to take a time for me and allowing me to be able to start a new year with fresh, smart and more advanced ideas.

If I'd be able to define this year with one word it would be initiative due to the voluntary work as a teacher, the initiative to live just by myself, the initiative to create this blog and the initiative to study to take the certificate CPA-20, those would be some of the things that I did to try to turn myself a better person. Although I didn't get an internship as I'd like to, I'm with the kinda feeling that I gave the best of myself during the tasks I had to do and that's why I believe that future still hold a nice story to me.

I want to thank for all the visitors on this blog. I got excited when I receive about 300 page views on just one week when I started to write in here.

I would like to wish for all of you (known and unknown) a very nice Christmas and a faboulous 2011 full of success. 

This is the wishes from a dreamer but a daring person!

See you in 2011.

Treasury bond prices sank for the second day on Wednesday

Teasury bond prices sank for the second day on Wednesday due to the deal to extend tax cuts enacted during George W. Bush presidency, according to Reuters. I wrote on August 23 on 'Increase on capital taxation for 2011' that in 2011 those benefits of tax cuts would expire because the american debt should climb to 13,7 billion dollar or 65% of GDP in the end of 2010. So, raising tax would control that deficit. But the current economic scenario says that is better to keep the tax cuts to generate a stimulus to the economic growth but can increase a fear of inflation, affecting directly on teasury bonds because the market believes that it can mean an increase in interest rates. So today the dollar rose againt a basket major currencies due to that perceptions about the american economy and pushing up the gold price. You can see on the chart below that investors are running to conservative assets such as gold and the price of 10 year bond interest rate is moderately getting higer because investors require more return in that kind of asset.

Debt crisis around European Countries

Today I was reading a market signals sovereign risk report released by Moody's. The report related that Portugal and Spain default probabilities had climb to a record as Ireland's bailout failed to mollify the capital market. So, I thought that would be interesting to cut and copy a graph from that report:

According to Moody's, CDS-Implied EDF measures use CDS spreads to accurately determine an entity's default risk. You can find out more at the website.

What we do in life (present) echoes in eternity (future)

This is the first time I post something related to my personal interests. I'm starting this post with this music because now I can enjoy myself a little bit (I'm on vacation). Here is a big, magnificent, splendid work from Antonín Leopold Dvořák that I appreciate a lot. It's a combination of energy and calmness at the same time as we hear the movements and by the way,  I listen to this concert almost everyday!

However, this is just a plus. The main subject of this post is related to a  meeting I had with the course director to talk about the classes and the progress of the course because I'm the class representative of my class.

At that time, students were complaining about early readings for class that the teacher was demanding. They believed that it was not necessary and that the teacher should not force that kind of reading. So he started to ask questions during the class about the previous readings and nobody was able to answer it and consequently asking them to leave the class.

As a class representative, I told the problem to the director and he very was skeptical about it, I could see his face expressing anger and intolerance. He told me that the readings were part of the learning agreement we signed when we enter college and he drew on the blackboard a graph explaining how important is to keep reading and what were the probabilites to success following that step. That graph was derived from a study which I forgot the authors but that graph I would never forget so I would like to share this with you:

He told me that people will just be able to be on the top of a big organization if they study a lot to develop their conceptual skills. Those positions require a lot of reading to be able to have an eficient discussion, follow tendencies and think strategically. He also said that at that time we will responsible to give the gidelines to the company's future, that's why the directors need a lot ot conceptual skills.

At the end of the meeting he gave me an advice: "Marcel, try to pass that message to your class and don't worry about the results. We can distingish early on who will or won't succeed."