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Poor Performance Of European Economy And Higher I R

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Low growth 'a reality' in Europe

By Ralph Atkins

Published: May 6 2006 03:00 | Last updated: May 6 2006 03:00

Low economic growth in Europe "is perhaps a situation with which we have to live", Otmar Issing, the European Central Bank's chief economist, warned yesterday. But he told a Frankfurt "ECB watchers" conference that Europe's weak performance did not mean the ECB should relax its inflation goal. The bank aims to keep eurozone inflation "below but close" to 2 per cent.

Might be a buying opportunity for the US$ with GDP outpacing EU by almost double and balance of payments estimated to decline due to powerhouse growth and incomes?


US budget deficit set to shrink

The US government is burdened with a massive budget deficit
A surging economy and the ensuing rise in federal tax revenues could cut the US budget deficit this year, according to the Congressional Budget Office.
It said the deficit for the year to 1 October could be as low as $300bn (£162bn), well below an earlier White House's estimate of $423bn.
The office said a "robust growth in revenues" was responsible.

What is keeping the pound as the world's most powerful currency?


British Pound - The British pound ends the week higher against both the US dollar and the Euro. It is not often that we see economics trump politics, but the Queen’s currency continued to gain ground despite poor results from yesterday’s local elections and a major cabinet reshuffling. It seems that Blair is trying to make a desperate move to revive his popularity after the Labour Party lost control of 18 local authorities while the Torries gained 317 extra councilors. Clearly, he is trying to avoid being forced to step down at all costs. Whether or not the cabinet reshuffling will do the trick remains to be seen, but even members of his own party are now calling for his resignation. In the week ahead, the most anticipated event will be the Bank of England’s Quarterly Inflation report due on Wednesday. As we have mentioned this past week, the market expects the central bank to notch higher their inflation forecasts, which would put them one step further away from lowering their interest rates again.

If the fundamentals are not in place what usually happens?

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The US economy is in good shape. I try to avoid making short term predictions, but with employment high and interest rates at historically low levels things look reasonable to me. There are worries, though, and it is quite possible that some of the slower effects of interest rate rises and high energy prices are yet to be felt. However in many instances – most notably the housing related stocks – it seems likely that these issues are already priced in.
What is far more important is that the US economy continues to demonstrate the characteristics it has shown for so long. It is resilient and dynamic, has low taxes as an incentive to work hard, and good productivity growth which encourages economic growth without inflation. In short the US remains a great place to do business, and as a result it is well suited to a style of investment that is rare today: old fashioned buy-and-hold stockpicking.

Fundamentals seem to point to a stronger dollar unless someone is up to something? A currency coup d' etat a la Sorros but on a massive scale?

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$ massively oversold especially against Cable.

Agree with your above comments that the USA Economy is in fairly robust health (Compare that to us in the uk :o )

Good chance of a $ recovery (Hope so anyway :ph34r: )

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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