The year continues where it left off with a plunging oil price causing all sorts of economic tensions for oil producers and benefits for oil importers (although materialising more gradually). Terrorist attacks in Paris connected to the Islamic State conflict in Syria and Iraq caused shock and revulsion around the World.
At last, the ECB is to commence its own 60 billion Euros per month quantitative easing programme to stimulate the Eurozone from its deflationary spiral. The programme is due to run from March 2015 until September 2016 and involves bond purchases of Eurozone sovereign and corporate debt to BBB status.
Global stock markets rallied on the news and it helped temper the news of the Greek election result with an anti-austerity Syriza and Independent Greeks coalition government taking office.
How long before further economic tensions in the Eurozone with weak demand and deflation threats spook nervous investors?
The US, China and even the UK are still growing depending on which measures and metrics are used to calculate GDP to reflect the prosperity claimed. In China President Xi and Premier Li are setting China to a “new normal” rather than a property and investment led economy they wish to create “mass entrepreneurship and innovation” to avoid a hard landing ( Giles, FT,2015).
The US is battling Saudi Arabia over shale oil production and at the same time mauling the Russian and Iranian economies over political agendas in the Middle East. The oil battle will have its effect on the US jobs markets. However, it should help US consumers and businesses generally.
In the UK research from Oxford University suggests that many of the jobs created in the UK recovery during this coalition government term have been in low skill jobs and another FT article highlights the rise of 2nd jobs (O’Connor, FT, 2015). This resonates with the FT View article, “technology does not possess a divine right” (FT, 2015). Other publications, like the Guardian, have run similar articles as these themes gather force in the C.21st.
The UK will feel the effects of lower oil revenues, especially Scotland, in conjunction with investment insecurity over political jitters caused by tax variances from the UK Treasury under the post-referendum settlement.
The Little Deal Clincher has had a tumultuous start to 2015 also. I have dislocated my acromio-clavicular joint (grade 3) after falling off my bicycle on Shandwick Pl. on Edinburgh’s new and slippery tramlines. I narrowly missed being crushed by a bus.
There are now 60 cyclists pursuing a class action against the council for accidents on the new tram route (McCann, Scotsman, 2015). I have written myself to the council to highlight my accident and met with the PI solicitors.
I shall return to this theme of –“Has Labour Had Its Chips”- in a future blog as it’s linked to the global trends on inequality, technological trends, elites and globalisation. How does prosperity get spread to more without penalising the (deserving) winners and who they are or should be?
Thus, enjoy the articles referenced below and excuse the brevity due to my painful shoulder. I remain long equities with a cash reserve yet remain extremely vigilant over fiscal policy, debt/deflation and geo-political tensions.
LDC
References and Further Reading-
Giles, C; (2015), “Davos 2015: China to avoid hard landing with ‘entrepreneurship’, FT Ltd 2015, London UK. Website accessed: 27th January 2015.
http://www.ft.com/cms/s/0/f62c92e0-a19b-11e4-bd03-00144feab7de.html?siteedition=uk#slide0
O’Connor, S; (2015), “UK economy shows shift to low-skilled jobs,research finds”, FT Ltd 2015, London UK. Website accessed: 27th January 2015.
http://www.ft.com/cms/s/0/6a8544ae-9d9e-11e4-8ea3-00144feabdc0.html#axzz3PeaCsF9Q
O’Connor, S; (2015), “Rise in second jobs makes UK a nation of grafters”, FT Ltd 2015, London UK. Website accessed: 27th January 2015.
http://www.ft.com/cms/s/0/e32e13b2-a32b-11e4-bbef-00144feab7de.html?siteedition=uk#axzz3PeaCsF9Q
FT View, (2015), Technology does not possess a divine right. Silicon Valley needs to engage with democratic governments”. FT Ltd 2015, London UK. Website accessed: 27th January 2015.
http://www.ft.com/cms/s/0/fbc38d4c-a2f6-11e4-ac1c-00144feab7de.html?siteedition=uk#axzz3Q9dSgy5n
McCann, D (2015), “Edinburgh faces £1m tram payout to injured cyclists”, Scotsman Publication, 2015. Website accessed 27th January 2015:
http://www.scotsman.com/news/transport/edinburgh-faces-1m-tram-payout-to-injured-cyclists-1-2650601
*Shakespeare, William; “Hamlet”, ( Ed. Philip Weller); Hamlet Navigator. Shakespeare Navigators, n.d.
Website accessed 25th January 2015.