{"id":147,"date":"2011-03-18T16:14:39","date_gmt":"2011-03-18T20:14:39","guid":{"rendered":"http:\/\/www.sdaconseil.com\/blog\/?p=147"},"modified":"2011-03-30T10:08:14","modified_gmt":"2011-03-30T14:08:14","slug":"cfo-1st-quarter-more-warning-lights-on-the-dashboard","status":"publish","type":"post","link":"https:\/\/sdaconseil.com\/?p=147","title":{"rendered":"CFO – 1st Quarter: More warning lights on the dashboard!"},"content":{"rendered":"

<\/a>\"\"<\/a><\/a><\/p>\n

Despite the recent encouraging developments in the USA, few of the fundamental structural gaps have actually narrowed around the world.\u00a0 In\u00a0 fact more warning lights have started to flash around us.\u00a0 It reminds me of what the dashboard looked like before the 1997 financial\u00a0crisis:\u00a0 An unusual fragility in the system.<\/p>\n

Positive pop from QE II<\/strong><\/p>\n

The first quarter of 2011 has confirmed the initial promise of QE II from the Fed:\u00a0 The $60 billion program translated into\u00a0$3 trillion of gain in stock market valuation, pulling away the American economy from the slippery tract of deflation.\u00a0 Even the unemployment rate has managed to dip below 9%.\u00a0\u00a0 Indeed, the American economy has seemed to gain traction.\u00a0\u00a0 The excess liquidity has pushed up the inflation rate here and there, notably in emerging markets, but not anywhere close (yet) to a critical level.\u00a0<\/p>\n

But medium term concerns remain<\/strong><\/p>\n

In the USA, the heavy weight deleveraging has been postponed, for good fiscal reason. But Congress has yet to find substance in a coherent program to reduce budget deficits and the national debt in the medium term.\u00a0 Dollar watchers will be scrutinizing the end of QE II, scheduled in June.\u00a0 Surviving the end of QE II should prove the hard test for the American economy in 2011. In the meantime raging deficits at state and municipal levels are biting into basic services.\u00a0\u00a0 And a fight between public unions and bond holders, over deficits in municipal pension fund has just been ignited.<\/p>\n

Slow deployment in Europe<\/strong><\/p>\n

In Europe, the dangers of sovereign defaults across the continent have been at the center of a cat and mouse game between banks, governments and the financial market.\u00a0 The latter has been particularly edgy with Ireland and Portugal, and to a lesser extent, Spain, but most bought the arguments from politicians about the birth of a new deal for the Euro. \u00a0Much is expected from a new Euro package marked for the end of March.\u00a0 The second quarter will surely\u00a0test the resolve of the players.\u00a0 In the meantime, the US dollar and the Euro are playing yo-yo against each other, whenever the markets shift focus to a perceived weakness on one side or the other.<\/p>\n

Faith in China<\/strong><\/p>\n

Despite a string of capital requirement measures for Chinese banks, inflation is stubbornly cracking the 5% level.\u00a0 This is good news and bad news.\u00a0 On the\u00a0negative side, food inflation is a headache for authorities, as it traditionally\u00a0brings social disruptions.\u00a0 Wage inflation, on the other hand, is likely to act as\u00a0the transmitter between the export side\u00a0of the economy\u00a0to the domestic consumption side.\u00a0 \u00a0Higher wages will slow exports, but boost consumption, thereby leading to a more balanced economy.\u00a0 Now that China has captured the number one spot as the largest manufacturing nation on earth, thus ending the 110-year long reign of the Americans, the rest of the world is hoping the Chinese consumer will catch up.\u00a0 But as ever, we will watch the show in China\u00a0on a tightrope:\u00a0 Too much inflation or not, or too much heating in real estate or not, or\u00a0too much bad debt in the system or not.\u00a0<\/p>\n

A spark in the Arab world<\/strong><\/p>\n

Like it or not, a spark was ignited in the Arab world.\u00a0 It is hard to tell where it is going to end, but it is not going to die soon and for good.\u00a0 The upheavals just showed us how hot the \u00a0temperature was in the cauldron. Putting back the lid will not remove the pressures.\u00a0 Again diplomacy, military actions and the oil markets will oddly coexist for a while.\u00a0 But I suspect that fringe groups, liberal and extremists, are likely to take advantage of a tepid reaction from the West, caught off guard, unable to articulate acceptable alternatives to the Arab peoples. \u00a0<\/p>\n

Japan takes another hit<\/strong><\/p>\n

Regrettably nature struck again in Japan, further testing the hardened resilience and courage of a nation.\u00a0 It reminds us that natural and man-made disruptions will not be the exceptions in this decade.\u00a0 The number of climate disasters (as registered by the insurance industry) reached 950 in 2010, up from an annual average of 285 in the 1980s, and 450 in 1990s.\u00a0 Natural disasters, pandemics, terrorist acts and mini economic crises will dot and shake the landscape from time to time.\u00a0<\/p>\n

Flashing lights.<\/p>\n

\u00a0Andr\u00e9 Du Sault.<\/p>\n","protected":false},"excerpt":{"rendered":"

Despite the recent encouraging developments in the USA, few of the fundamental structural gaps have actually narrowed around the world.\u00a0 In\u00a0 fact more warning lights have started to flash around us.\u00a0 It reminds me of what the dashboard looked like before the 1997 financial\u00a0crisis:\u00a0 An unusual fragility in the system. Positive pop from QE II […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,8],"tags":[53,47,42,54],"_links":{"self":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/147"}],"collection":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=147"}],"version-history":[{"count":4,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/147\/revisions"}],"predecessor-version":[{"id":155,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/147\/revisions\/155"}],"wp:attachment":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}