{"id":1073,"date":"2012-07-16T07:00:00","date_gmt":"2012-07-16T07:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/07\/16\/united-states-down-we-go\/"},"modified":"2012-07-16T07:00:00","modified_gmt":"2012-07-16T07:00:00","slug":"united-states-down-we-go","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/united-states-down-we-go\/","title":{"rendered":"United States \u2013 Down we go!"},"content":{"rendered":"<p style=\"text-align: justify;\"><span lang=\"EN-GB\"><\/span>GDP growth in 2012 should be 2.1%, with downside risks in H2 2012. In 2013-14, we expect GDP growth of around 1.7%&#8230;\u2026.<span lang=\"EN-GB\">&nbsp;<\/span><span lang=\"en-GB\"> <\/span><\/p>\n<p>  <!--more-->  <\/p>\n<ul> <\/ul>\n<hr \/>\n<p> <span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: 10pt;\"> Sign up for our free newsletter to receive weekly news from BONDWorld<br \/><a href=\"index.php?option=com_acymailing&amp;view=user&amp;Itemid=107\"><strong>Click  here to register for your free copy<\/strong><\/a><\/span> <span style=\"font-size: 10pt;\"><a href=\"index.php?option=com_acymailing&amp;view=user&amp;Itemid=1023\"><strong>&nbsp;<\/strong><\/a><\/span><\/span>  <\/p>\n<hr \/>\n<p style=\"text-align: justify;\"><span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: 10pt;\"><strong>For professional investors and advisers only<\/strong><\/span><\/span><\/p>\n<hr \/>\n<p> <span lang=\"EN-GB\"><\/span> <\/p>\n<div style=\"text-align: justify;\">The  focal point of our outlook is harsher fiscal tightening, offset only in  part by further monetary stimulus. Core inflation should decline in H2  2012, due to weak demand and to the limited pricing power of businesses.  The FOMC is expected to introduce new monetary stimulus by its  September meeting, outweighing only in part the restrictive effects of  US fiscal policy and slower global demand.<\/div>\n<div style=\"text-align: justify;\">&#8211;  The US recovery is losing steam, affected by both domestic and global  factors. The year 2012 should be followed by an extended period of weak  growth, tied to the expected fiscal consolidation and to a local and  global economic situation that is still feeling the impact of excessive  debt levels. In 2012 GDP growth is forecast at 2.1%, before slowing to  1.7% in the 2013-14 period.<\/div>\n<div style=\"text-align: justify;\">&#8211;  The risks weighing on our US forecast are very broad, and slightly  skewed to the upside for 2013. The main element of uncertainty is the  evolution of fiscal policy, especially unpredictable ahead of the  elections in the autumn. Current legislation includes \u201cautomatic\u201d  tightening measures worth around 600 billion dollars (4% of GDP) for  fiscal year 2013: if enforced, they would trigger a contraction already  as of 2013. What\u2019s more, in November 2012 the statutory debt limit  should again be reached.<\/div>\n<div style=\"text-align: justify;\">&#8211;  Our scenario includes a last-minute agreement in Congress that will  block most of the measures, but not all of them, resulting in enhanced  fiscal tightening, worth at least 200 billion dollars in 2013. The  elections should result in a split government, generally associated with  legislative deadlock.<\/div>\n<div style=\"text-align: justify;\">&#8211;  The Fed has pushed back in time the expiration of its portfolio  maturity extension programme, with the reinvestment of agency and MBS  coupons and principal until the end of 2012. The FOMC\u2019s bias remains  interventionist. In case of a further slowdown in growth and the labour  market\u2019s failure to reabsorb slack, the FOMC is ready to introduce new  stimulus through a further increase in balance sheet assets. In light of  existing risks to growth, and of data on the employment trend, we  assign a probability of close to 70% to the announcement of QE3 worth  around 400-600 billion by the end of September, with a substantial share  of MBS purchases.<\/div>\n<div style=\"text-align: justify;\">&#8211;  In light of the minutes of its June meeting, the FOMC will probably  push back (at least to mid- 2015) the expected date of its first  interest rate hike. Between August and September it could also announce  credit easing actions, may be through programs aimed at prompting more  lending in specific markets.<\/div>\n<div>\n<div style=\"text-align: justify;\">In  conclusion, in light of generally weak monthly economic data, both at  the domestic and international levels, we continue to expect the  announcement, by the September meeting, of a securities purchase package  to include MBSs. The minutes let on that in addition to a new  securities purchase package, the Fed may introduce other new measures at  the next meetings:<\/div>\n<div style=\"text-align: justify;\">1)  postponement, at least until mid-2015, of the initial interest rate  hike, and 2) opening of credit easing programmes to reap more  significant and widespread effects on credit conditions.<\/div>\n<div style=\"text-align: justify;\"><strong><br \/><\/strong><\/div>\n<\/p><\/div>\n<div style=\"text-align: justify;\"><strong>Fiscal policy: tightening started in late 2011<\/strong><br \/>The  uncertainty surrounding 2013 fiscal policy is dominating the US  scenario, while the emergency light on the economy has lit up again.  Under existing legislation, tax rises and spending cuts totalling around  USD 600Bn would be implemented in the 2013 tax year. For the calendar  year, restrictive measures would be worth USD 770Bn (5.1% of GDP).<\/div>\n<div style=\"text-align: justify;\">In  the absence of a political agreement blocking all or at least some of  the measures, the US economy would be in recession in early 2013. In our  central scenario, an eleventh-hour agreement will be found that  postpones many of the automatic measures. We forecast that growth will  slow in 2013. Restrictive fiscal policies are also likely to continue in  the following years, curbing US GDP growth by somewhere in the region  of 2% over the long term.<\/div>\n<div style=\"text-align: justify;\">According  to the Bipartisan Policy Center, Congress leaders are discussing an  agreement that could allow them to postpone all the restrictive measures  envisaged by current legislation until March 2013. The agreement would  also include an expenditure bill to finance the US Treasury until March.  This agreement would mean that all tax and spending decisions could  again be postponed until after the inauguration of the new president and  the new Congress. In the event of such an agreement, we think that  there would be further fiscal tightening in 2013, but it would be more  limited than that incorporated in our current scenario (around USD  200Bn), partly because the restrictive measures would only apply for  half the calendar year. Projected growth could therefore rise to 1.9%  for 2013, from our current forecast of 1.7%, but restrictive measures  would then be greater in 2014. At the moment however, there is no  indication of a solution to the impasse taking place before the  elections.<\/div>\n<p style=\"text-align: justify;\"><span style=\"font-family: arial,helvetica,sans-serif;\"><strong> <\/strong><\/span><\/p>\n<hr \/>\n<p> <span style=\"font-family: arial,helvetica,sans-serif;\"><strong> <\/strong><\/span> <\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"font-family: arial,helvetica,sans-serif;\">Appendix<br \/>An<\/span>alyst Certification<\/strong><br \/>The  financial analysts who prepared this report, and whose names and roles  appear on the first page, certify that: (1) The views expressed on  companies mentioned herein accurately reflect independent, fair and  balanced personal views; (2) No direct or indirect compensation has been  or will be received in exchange for any views expressed. Specific  disclosures: The analysts who prepared this report do not receive  bonuses, salaries, or any other form of compensation that is based upon  specific investment banking transactions.<\/p>\n<p><strong>Important Disclosures<\/strong><br \/>This  research has been prepared by Intesa Sanpaolo S.p.A. and distributed by  Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the  London Stock Exchange) and Banca IMI Securities Corp (a member of the  NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for  the contents of this report. Please also note that Intesa Sanpaolo  S.p.A. reserves the right to issue this document to its own clients.  Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo  Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both  authorised by the Banca d&#8217;Italia, are both regulated by the Financial  Services Authority in the conduct of designated investment business in  the UK and by the SEC for the conduct of US business.<br \/>Opinions and  estimates in this research are as at the date of this material and are  subject to change without notice to the recipient. Information and  opinions have been obtained from sources believed to be reliable, but no  representation or warranty is made as to their accuracy or correctness.  Past performance is not a guarantee of future results. The investments  and strategies discussed in this research may not be suitable for all  investors. If you are in any doubt you should consult your investment  advisor. <br \/>This report has been prepared solely for information  purposes and is not intended as an offer or solicitation with respect to  the purchase or sale of any financial products. It should not be  regarded as a substitute for the exercise of the recipient\u2019s own  judgement.<br \/>No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities  accept any liability whatsoever for any direct, consequential or  indirect loss arising from any use of material contained in this report.  <br \/>This document may only be reproduced or published together with the  name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo  S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management  Policy for managing effectively the conflicts of interest which might  affect the impartiality of all investment research which is held out, or  where it is reasonable for the user to rely on the research, as being  an impartial assessment of the value or prospects of its subject matter.  A copy of this Policy is available to the recipient of this research  upon making a written request to the Compliance Officer, Intesa Sanpaolo  S.p.A., 90 Queen Street, London EC4N 1SA.<br \/>Intesa Sanpaolo S.p.A. has  formalised a set of principles and procedures for dealing with  conflicts of interest (\u201cResearch Policy\u201d). The Research Policy is  clearly explained in the relevant section of Banca IMI\u2019s web site  (www.bancaimi.com).<br \/>Member companies of the Intesa Sanpaolo Group, or  their directors and\/or representatives and\/or employees and\/or members  of their households, may have a long or short position in any securities  mentioned at any time, and may make a purchase and\/or sale, or offer to  make a purchase and\/or sale, of any of the securities from time to time  in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and  circulates research to Qualified Institutional Investors in the USA only  through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167  New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This  document is intended for distribution only to professional investors as  defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a  printed document and\/or in electronic form. Person and residents in the  UK: This document is not for distribution in the United Kingdom to  persons who would be defined as private customers under rules of the  FSA.<br \/>US persons: This document is intended for distribution in the  United States only to Qualified Institutional Investors as defined in  Rule 144a of the Securities Act of 1933. US Customers wishing to effect a  transaction should do so only by contacting a representative at Banca  IMI Securities Corp. in the US (see contact details above). <br \/><strong><br \/>Valuation Methodology<\/strong><br \/>Trading  Ideas are based on the market\u2019s expectations, investors\u2019 positioning  and technical, quantitative or qualitative aspects. They take into  account the key macro and market events and to what extent they have  already been discounted in yields and\/or market spreads. They are also  based on events which are expected to affect the market trend in terms  of yields and\/or spreads in the short-medium term. The Trading Ideas may  refer to both cash and derivative instruments and indicate a precise  target or yield range or a yield spread between different market curves  or different maturities on the same curve. The relative valuations may  be in terms of yield, asset swap spreads or benchmark spreads.<br \/><strong><br \/>Coverage Policy And Frequency Of Research Reports<\/strong><br \/>Intesa  Sanpaolo S.p.A. trading ideas are made in both a very short time  horizon (the current day or subsequent days) or in a horizon ranging  from one week to three months, in conjunction with any exceptional event  that affects the issuer\u2019s operations. In the case of a short note, we  advise investors to refer to the most recent report published by Intesa  Sanpaolo S.p.A\u2019s Research Department for a full analysis of valuation  methodology, earnings assumptions and risks. Research is available on  IMI\u2019s web site (www.bancaimi.com) or by contacting your sales  representative.<\/p>\n<p>Source: BONDWorld &#8211; Intesa Sanpaolo \u2013 Research Department<\/p>\n","protected":false},"excerpt":{"rendered":"<p>GDP growth in 2012 should be 2.1%, with downside risks in H2 2012. In 2013-14, we expect GDP growth of around 1.7%&#8230;\u2026.&nbsp;<\/p>\n","protected":false},"author":2,"featured_media":3463,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[22],"tags":[],"class_list":["post-1073","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-makrooekonomische-daten"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1073"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1073\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3463"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}