Entries by Milton Ezrati

    Equities: A "China Syndrome" Sequel? Not Quite

    August 24, 2015 10:12 AM by Milton Ezrati

    The sell-off in U.S. stocks in response to reports of a weakening Chinese economy shows that investor emotions have gotten ahead of reality.

    The U.S. equity market's recent selloff seems to have its roots in an exaggerated, indeed panicked, response to negative news out of China. A recent Economic Insights on the Lord Abbett website explains in detail why such interpretations are erroneous. The equity rout in China, though severe, is an entirely unsurprising response to the market's previous and unsustainable run-up during the previous year.

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    China's Devaluation Calculation

    August 11, 2015 4:38 PM by Milton Ezrati

    Beijing is betting that lowering the value of the yuan will help its faltering export sector. But the move may not immediately produce the desired economic boost.

    In a move to shore up its flagging export sector, China lowered the yuan’s value against the U.S. dollar by 1.9% on August 11, the biggest such move in nearly 20 years. This action, which essentially is a devaluation of the Chinese currency, sent the U.S. dollar and other currencies sharply higher in response.

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    Stocks: A Stark Reminder of Global Risk

    July 18, 2014 2:25 PM by Milton Ezrati

    Fresh news of geopolitical turmoil spurred selling on July 17. How might markets behave in the aftermath?

    U.S. equity investors appear to have disregarded a growing number of geopolitical threats as they bid major indexes higher in 2014. But the shock of a downed Malaysian airliner in Ukraine, coupled with news of an incursion by Israeli ground forces into Gaza, spurred widespread selling in U.S. stocks on July 17. 

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    U.S. Economy: The Muddle Gets Deeper

    June 25, 2014 2:31 PM by Milton Ezrati

    While a far larger-than-expected decline in revised first-quarter GDP does not signal recession, it does point to continued subpar growth.  

    Though a downward revision in first-quarter U.S. gross domestic product (GDP) was widely expected, the actual change reported by the Commerce Department on June 25 was more severe—and troubling for that reason alone. Instead of the previous estimate of a 1.0% annualized rate of decline in real GDP reported on May 29, the revised data revealed a 2.9% decrease. Economists surveyed by Bloomberg projected a 1.8% drop.

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    Oil Spillover: Could the Iraq Conflict Dampen U.S. Growth?

    June 16, 2014 4:05 PM by Milton Ezrati

    Expectations of stronger second-quarter growth may have to be trimmed if gasoline prices rise sharply.  

    Given the deepening conflict in Iraq, it is remarkable that oil prices have not risen higher than the $107 per barrel (Bloomberg data) reached on June 16.  Whichever side has the advantage-—the government of Prime Minister Nouri al-Maliki, or the insurgency led by the Islamic State of Iraq and Syria (ISIS)—or whether the United States or Iran, cooperatively or unilaterally, intervene in the conflict, the prospect of ongoing fighting and chaos threatens to keep some or all of Iraq's ample oil supplies off the market. 

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