PrÃsentation JBaer 20avr

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Published on October 17, 2007

Author: Flemel

Source: authorstream.com

Economic outlook: Cyclical uncertainty, a challenge for market confidence ahead:  Economic outlook: Cyclical uncertainty, a challenge for market confidence ahead Presentation by Janwillem C. Acket Group Chief Economist Geneva, 20 April 2007 Current cyclical status of major economies suggests an overall rather robust economic environment ahead :  = stronger growth dynamics - status April 2007 = weaker growth dynamics - status April 2007 Current cyclical status of major economies suggests an overall rather robust economic environment ahead U.S. economy is in for a weak H1 2007: In fact the sought for “soft landing” is currently materializing:  U.S. economy is in for a weak H1 2007: In fact the sought for “soft landing” is currently materializing Greenspan‘s recent remarks of a high U.S. recession risk in perspective – a challenge for market sentiment:  Greenspan‘s recent remarks of a high U.S. recession risk in perspective – a challenge for market sentiment So far, new U.S. home sales bear the brunt of the recent subprime mortgage blues in H1 2007:  So far, new U.S. home sales bear the brunt of the recent subprime mortgage blues in H1 2007 No U.S. credit crunch: Loan tightening pronounced in real estate, but not for the overall business sectors:  No U.S. credit crunch: Loan tightening pronounced in real estate, but not for the overall business sectors Rising affordability will cushion the downturn of U.S. housing activity, but rather later than sooner in 2007:  Rising affordability will cushion the downturn of U.S. housing activity, but rather later than sooner in 2007 U.S. Federal Reserve’s monetary restriction needs to be upheld in 2007 – barring a market liquidity collapse:  U.S. Federal Reserve’s monetary restriction needs to be upheld in 2007 – barring a market liquidity collapse Broad money supply still continues to stimulate growth, outpacing monetary restriction :  Broad money supply still continues to stimulate growth, outpacing monetary restriction * USA, Eurozone, Japan, U.K., Canada, China, Switzerland Short-term interest rates Key central bank target rates, in %:  Short-term interest rates Key central bank target rates, in % Even though a deceleration is to materialize, the global growth outlook into 2007 remains benign:  Even though a deceleration is to materialize, the global growth outlook into 2007 remains benign Supplement:  Supplement U.S. Fed policy remains rather accommodative:  U.S. Fed policy remains rather accommodative U.S. GDP‘s „soft landing“ materializing in Q4 06 by a weak housing sector and a strong inventory correction :  U.S. GDP‘s „soft landing“ materializing in Q4 06 by a weak housing sector and a strong inventory correction U.S.: Private inventory correction in Q4 06 reflected in weak durable goods orders in early 2007:  U.S.: Private inventory correction in Q4 06 reflected in weak durable goods orders in early 2007 Subprime mortgages account for less than 10% of all outstanding mortgages, so delinquency is limited:  Subprime mortgages account for less than 10% of all outstanding mortgages, so delinquency is limited U.S. mortgage delinquency rates 1.0 1.5 2.0 2.5 3.0 3.5 4.0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 9 10 11 12 13 14 15 All residential (l.s.) Subprime (r.s.) % % U.S. consumer continues to benefit from substantial income and jobs growth:  U.S. consumer continues to benefit from substantial income and jobs growth U.S. labor market remains healthy and continues to support consumption :  U.S. labor market remains healthy and continues to support consumption Japan: A global growth driver, where consumers are awakening again with their demand potential:  Japan: A global growth driver, where consumers are awakening again with their demand potential U.K.: Cruising ahead at a new cyclical high point:  U.K.: Cruising ahead at a new cyclical high point Eurozone: Some slowdown ahead, but much less than anticipated in late 2006:  Eurozone: Some slowdown ahead, but much less than anticipated in late 2006 Eurozone: Strongly perceived business momentum rather a consequence e.g. of a competitive Germany:  Eurozone: Strongly perceived business momentum rather a consequence e.g. of a competitive Germany Switzerland: Cyclical acceleration expected in H2 2007 :  Switzerland: Cyclical acceleration expected in H2 2007 Swiss growth perspectives Real GDP and components, in %:  Swiss growth perspectives Real GDP and components, in % Growth perspectives for advanced economies Real GDP growth, in %:  Growth perspectives for advanced economies Real GDP growth, in % Growth perspectives of emerging economies Real GDP growth, in %:  Growth perspectives of emerging economies Real GDP growth, in % Commodity prices and world trade Year-on-year change, in %:  Commodity prices and world trade Year-on-year change, in % Inflation Year-on-year change of consumer prices, in %:  Inflation Year-on-year change of consumer prices, in % Long-term interest rates 10-year government bond yield, in %:  Long-term interest rates 10-year government bond yield, in % Exchange rates:  Exchange rates Weak Swiss franc reflects attractiveness as funding currency and not sound fundamentals:  Weak Swiss franc reflects attractiveness as funding currency and not sound fundamentals Disclaimer:  Disclaimer

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