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Revised US GDP figures show economy shrinking - (www.theguardian.com) US economy now one quarter away from a recession, but analysts are confident that growth will bounce back on strong consumer spending. The US economy contracted for the first time in three years in early 2014 after a much worse performance than originally feared. Washington's commerce department said the world's biggest economy shrank at an annual rate of 1% during the first quarter – a period marked by an unusually harsh winter in some of the more populous states. Wall Street had been braced for the revised data to come in below the first estimate of 0.1% annualised growth between January and March but was surprised by the extent of the decline. Analysts are confident that growth will bounce back in the second quarter and pointed to the underlying strength of consumer spending during the period when the economy was contracting.
US money slump flashes warnings as economy contracts - (www.telegraph.co.uk) The US seems caught in a Japan-style trap, endlessly masking the effect by stealing a little extra growth from the future with artificial stimulus. “We think there is more to this than just weather. Our leading indicators were already weakening late last year,” said Lakshman Achuthan, from the Economic Cycle Research Institute (ECRI). “We may get a snap-back in the second quarter but I don’t see us reaching escape velocity. The economy is below stall-speed, according to the Fed’s own model,” he said.
Here's The Real Reason Why Americans Aren't Buying Homes - (www.businessinsider.com) Activity in the U.S. housing market has slowed to a level that even Fed chair Janet Yellen has said she's concerned about the recovery. This comes even as mortgage rates have been declining, and lending standards have been easing. A lot of attention has been paid to the demand-side of the story. Specifically, there's concern that Americans don't want to buy homes, perhaps because they're not optimistic about the economy, or they're worried about the security of the jobs. But an increasing number of economists are saying housing supply is the real problem, not homebuyer demand. "This entire housing recovery since 2008 has not been driven by more demand but by less supply," wrote Deutsche Bank's Torsten Slok in a note to clients.
Concern Grows Over Financial Impact of a Possible BNP Penalty - (online.wsj.com) U.S. authorities are pushing BNP Paribas SA BNP.FR -2.98% to pay more than $10 billion to end a criminal probe into allegations the bank evaded U.S. sanctions, according to people familiar with the negotiations, a sign of increasing pressure the government is putting on large financial firms it suspects of wrongdoing. A settlement of $10 billion or more, along with the guilty plea prosecutors are also seeking, would eclipse the punishment inflicted on other banks for similar conduct. To date, the most severe penalty on a bank suspected of sanctions violations or money laundering has been a $1.9 billion settlement with HSBC Holdings HSBA.LN +0.21%PLC, which included an admission of wrongdoing but not a guilty plea. The amount sought by the government would approach the largest penalty the U.S. has levied on a single bank: the $13 billion deal J.P. Morgan Chase & Co. struck last year to resolve a civil probe into its handling of mortgage securities, which it admitted misrepresenting to investors.
IMF warns Japan may need more forceful reforms to avoid sinking back into deflation - Business Live - (www.theguardian.com) Japan's in focus today, as the International Monetary Fund warns that Tokyo may need to operate an "aggressive monetary policy" for longer than planned, to avoid sinking back into a low-inflationary mire. In the eurozone, we'll be watching reaction to reports that BNP Paribasis being pushed to pay a $10bn fine by US authorities for breaching sanctions rules. And in the UK, another clutch of surveys have found that the British economy continues to recovery. The CBI reckons economic prospects are at their brightest for a decade - and the British Chamber of Commerce has hiked its growth forecast for this year. Japan's in focus today, as the International Monetary Fund warns that Tokyo may need to operate an "aggressive monetary policy" for longer than planned, to avoid sinking back into a low-inflationary mire. Full details and reaction to follow.... In the eurozone, we'll be watching reaction to reports that BNP Paribasis being pushed to pay a $10bn fine by US authorities for breaching sanctions rules. And in the UK, another clutch of surveys have found that the British economy continues to recovery. The CBI reckons economic prospects are at their brightest for a decade - and the British Chamber of Commerce has hiked its growth forecast for this year.
China's Ready to Rumble - (www.bloomberg.com)
As Asia frets over China, warmer welcome likely for Japan PM's push - (www.reuters.com)
As Asia frets over China, warmer welcome likely for Japan PM's push - (www.reuters.com)
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