Richard Cayne Meyer comments that Negotiators from the US Senate and House of Representatives have agreed on a spending deal worth $1trn which reduces the risk of another government shutdown, at least until October.
The broad spending deal, which is the first the US government has agreed since 2009, details how the country’s budget will be spent and marks another move in the return to regular budgeting by Washington. This is very helpful indicator to the markets says Richard Cayne at Meyer International in Bangkok Thailand.
It follows a 16-day government shutdown in October last year after a standoff between Republicans and Democrats – who control the House and Senate respectively – led to legislation appropriating funds for fiscal year 2014 not being enacted.
The new deal updates the US’ spending priorities after several years of “continuing resolutions” have kept the government functioning but prevented funds from being reallocated.
Richard Cayne remarks that the global economy is at a “turning point”, the World Bank has said, as it forecasts stronger growth for 2014. In its annual report on the world economy, the bank said richer countries appeared to be “finally turning a corner” after the financial crisis.
That is expected to support stronger growth in developing economies.
However it warned growth prospects “remained vulnerable” to the impact of the withdrawal of economic stimulus measures in the US. The US Federal Reserve has already begun to wind down its monthly bond-buying programme, previously set at $85bn (£52bn) a month.
Richard Cayne explains that there is concern this could push up global interest rates, which could affect the flow of money in and out of developing countries and lead to more volatile international financial markets.
European shares hit fresh 5-1/2 year highs on Wednesday, buoyed by strong data and a brighter outlook for the global economy, as well as by easing regulatory concerns about euro zone banks.
Financial stocks provided the biggest boost to the FTSEurofirst 300 index after the European Central Bank said lenders will not be required to adjust sovereign debt portfolios they hold to maturity to reflect current market values.
The biggest gainers, such as Societe Generale and B P Milano, have large exposure to sovereign bonds in the region.
The sector is already up 9.3% this year. It received a boost this week when banking regulators agreed to ease regulation of balance sheets to try to avoid crimping financing for the world’s economy. This is very positive notes Richard Cayne Meyer
“Euro zone banks had good news from Basel at the beginning of the week, and it looks like regulators are lessening the regulatory burden on the banking sector,” Gerard Lane, equity strategist at Shore Capital, said.
Richard Cayne at Meyer International also remarked thatfund investors poured money into bond portfolios and cash while selling equities in the first full week of 2014, in contrast to the apparent start of the ‘great rotation’ at the beginning of last year.
According to fund flow data provider EPFR Global, bond funds captured a net $5.2bn of new money during the week ending 9 January, while equity funds were hit with a collective redemption of $427m. Money market funds took almost $23bn.
Within the fixed-income space, European bond funds benefited from their largest inflows since late April 2013 while US bond funds took the most money since the middle of November. Furthermore, emerging markets local currency bond funds broke a 14-week outflow streak to capture new money.
Richard Cayne also notes that Global demand for energy will grow at a slower pace over the next two decades, a report from the oil giant BP predicts.
BP’s Energy Outlook says energy demand will rise by 41% between now and 2035 – less than the 55% growth seen over the past 23 years. It said increased fuel efficiency in developed economies was behind the predicted slowdown. Though demand from emerging economies is expected to continue to rise strongly.
Richard Cayne Meyer originally from Montreal, Quebec Canada currently resides in Bangkok Thailand and runs the Meyer Group of Companies. Prior to which he was residing in Tokyo Japan for over 15 years and is currently CEO of Asia Wealth Group Holdings Ltd a London, UK Stock Exchange listed Financial Holdings Company. Richard Cayne has been involved in the wealth management space in Tokyo Japan and has assisted many High Net worth Japanese families create innovative international tax and wealth management planning solutions. http://www.isdx.com/Asia Wealth Group