Global Business After LIBOR: Special Episode

LIBOR is an interest rate index that’s been used across financial products for decades, but is now slowly being phased out and will likely cease to exist after 2021. Given that LIBOR is used so widely for everything from loans to derivatives to securitizations, what impact will this move have on businesses across the globe—and what should they be doing now to prepare?

Special guest: David Watson, Managing Director and Head of the Libor Transition program for JPMorgan Chase Commercial Banking.

The Stock Market Isn’t Worried About Recession Chatter

At just 2 percent below this summer’s record high, the stock market is bullish and appears unfazed by the looming Brexit deadline and other uncertainties, both international and domestic. Also this week: the Fed’s approach to future trouble, the economic impact of the General Motors Co. strike and the latest in US-China trade negotiations.

Industrial Slowdown Doesn’t Mean the Sky Is Falling

Last week’s gloomy manufacturing report from the Institute of Supply Management sent ripples of anxiety through the financial markets. But these reactions would feel more appropriate in the old days, when purchasing managers’ reports were seen as important signals of economic health. Today’s stalled industrial sector is most likely the result of weak activity in the energy sector and Boeing’s slowed 737 MAX 8 production. In other words, weak industrial trends are worth keeping an eye on, but they aren’t the whole economy.

What the Job Market Tells Us About the Economy

With all eyes on the latest jobs report, there’s some concern about why hiring has slowed so much since last year. But now that the US is close to full employment, the economy is beginning to transition from recovery mode to steady state. At this stage in the business cycle, metrics such as layoffs and worker pay provide a more accurate measure of the state of the economy than the pace of new hiring.

Not Your Parents’ Oil Shock

The September 14 attack on Saudi oil facilities briefly raised fears of a crippling oil shock like the 1973 OPEC embargo. These reactions, however, don’t reflect the current environment, considering most countries now have a lot more oil sitting in strategic reserves. The US is also the largest oil producer in the world, and despite the slump in new development, crude output recently topped 12 million barrels per day. In other words, one region’s shock is another region’s opportunity.

More Bond Market Surprises

Apocalyptic economic forecasts took a bit of a bruising as long-term Treasury bond yields surged last Friday. This may be another sign that sovereign bond yields have become disconnected from reality due to years of asset purchasing from central banks. Also this week: Why the Federal Reserve is expected to cut interest rates again.

Good Signs on the Economic Horizon

There was a lot of encouraging news last week for the US economy—car sales in August were better than expected, jobless claims held low, consumer spending remained strong and the stock market bounced back to a near-record high. With US-China trade talks resuming and the chances of a no-deal Brexit growing more slim, recessionary worries appear to be just that: worries.       

A Labor Day Look at the Labor Market

Labor Day 2019 saw the US economy in a strong position. Official unemployment is at lifetime lows and the steady pace of jobless claims in every state—despite worries about trade wars—indicates that trade disruptions aren’t visible in the pulse of US economic activity. Also this week: a look back at the economic impacts of major hurricanes.

What New Tariffs Mean - and Don’t Mean - for the Economy

President Trump announced plans to add another $58 billion of tariffs on top of the $63 billion already in place—a move that rattled the markets and intensified worries at the Fed. Unlike earlier tariffs, which were effectively neutralized by Chinese currency depreciation, this round could be borne by American businesses and consumers. Also this week: exploring the factors behind the slowdown in capital expenditures (hint: they’re not related to trade).

Gauging QE’s Yield Curve Legacy

There’s been a lot of market chatter about the inverted Treasury yield curve—a phenomenon that has preceded nearly every recession. But it’s important to remember how quantitative easing (QE) continues to affect the bond market and possibly reconsider if sovereign yields are the best measure of true “risk free” interest rates. Also, why low oil prices may be a bigger deal than current trade frictions.