Haley Araki Owen Chen Richard Cheng Peter Shao The Recession is Over.
Post on 29-Dec-2015
215 Views
Preview:
Transcript
2009 2010
DJIA 6,547 points 10,000+ points
GDP -6.5% 3.6%
Capacity Utilization
69.5% 73.6%
Retail Sales $344 billion $364.6 billion
New Home Sales 337,000 411,000
Building Permits 523,000 685,000
Summary
• The recovery is clearly gaining traction as shown by the indicators above, which are just a representation of the myriad of indicators demonstrating positive trends.
PIIGSPIIGS
• PIIGS - Portugal, Italy, Ireland, Greece, Spain • Greece’s debt to GDP ratio is at 115%• Germany’s debt to GDP ratio is at 69%• Insurance premiums have increased eight-fold since ‘08
Credit-default swaps linked to Greek government bonds have surged torecord highs, signaling investors perceive them to be the world’s riskiest debt.
Ten-Year Bond Yield Spreads Ten-Year Bond Yield Spreads
Greek 10 year rate up to 9.76%
Greek 10 year rate up to 9.76%
Spread to German Bunds also rises to over 400 basis points
Spread to German Bunds also rises to over 400 basis points
• In late April 2010, the 10-year Greek bond yield rose 164 basis points to nearly 12 percent.
• The spread exceeded 900 basis points over the German bond yield.
Value of the EuroValue of the Euro
• Fears of possible Fears of possible default push Euro down default push Euro down 20% since 200820% since 2008
• However, the European However, the European Commission forecasts a Commission forecasts a comeback after the comeback after the bailoutbailout
$/ €
Future of the EuroFuture of the Euro• May 7 - ECB and IMF approved a $1 trillion bailoutMay 7 - ECB and IMF approved a $1 trillion bailout
• Euro shot up by $0.015 in one day after bailout Euro shot up by $0.015 in one day after bailout announcementannouncement
• Over time, as fears of default subside, the strength of the Over time, as fears of default subside, the strength of the Euro should increase, bolstering US exports to EuropeEuro should increase, bolstering US exports to Europe
Euro Demand
Euro Supply
$/€
quantity
€/$
Dollar Supply
Dollar Demand
quantity
• Most US economic indicators are showing positive trends
• The recovery is gaining traction• The European debt crisis is causing volatility in
global markets due to uncertainty• However, the bailout is likely to fix the problem.
The Euro is expected to recover• US economic growth is unlikely to be
significantly impacted• The US economy will most likely transition to an
expansionary phase by 2011
Conclusion
top related