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Near one-in-three chance of U.S. recession in next two years

There is nearly a one-in-three chance of a U.S. recession in the next two years, according to a Reuters poll of economists who cited concerns about an already-old business cycle, as well as rising interest rates and barriers to trade. The latest poll of over 100 economists taken May 16-24 showed U.S. economic growth was forecast to average 2.8 percent in 2018, its fastest pace in three years, fuelled by the biggest tax overhaul since the 1980s. But as has been in the case in a series of monthly polls, ...

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Fed’s Powell Says Central Banks Can’t Take Independence for Granted

An erosion of public trust in institutions could threaten the independence of central banks and requires greater transparency and accountability from policy makers following the 2008 financial crisis, Fed Chairman Jerome Powell said Friday. Mr. Powell said low levels of trust in government institutions have created a “challenging moment” for central banking. “In this environment, central banks cannot take our measure of independence for granted,” he said in remarks prepared for a speech. Mr. Powell, who became Fed chairman in February, was set to deliver the remarks in Stockholm on ...

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EU may not enforce its rules on Italy, but financial markets will

EU officials will probably not do much to enforce their borrowing rules on Italy’s new government, but they are hoping they won’t have to because financial markets will do the job for them. A new government is expected to take office in Italy next week, a coalition of the anti-establishment 5-Star Movement and far-right League, who have jointly promised a bonanza of tax cuts and spending increases that would burst through the EU’s limits on borrowing by member states. Slovak Finance Minister Peter Kazimir on Thursday called the policy mix ...

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German Ifo Business Gauge Halts Slide in Sign of Stabilization

German business confidence halted a five-month slide as companies took stock after a temporary slowdown in Europe’s largest economy at the start of the year. The Ifo institute’s gauge of business climate held at 102.2 in May, with indexes measuring current conditions and expectations little changed. Economists predicted a drop to 102 from an original April reading of 102.1. The euro pared some of its losses after the report. The single currency traded at $1.1702 at 10:18 a.m. Frankfurt time, still down 0.2 percent. Germany’s most-watched sentiment survey signals the ...

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Euro partners warn new Italy government against “suicide mission”

Italy’s partners in the euro lined up in Brussels on Thursday to urge the new government in Rome to stick to EU budget rules or risk following Greece into financial calamity that would hurt the whole of Europe. Arriving for a meeting of euro zone finance ministers, the hawkish Slovak representative went so far as to warn that Italy under its new eurosceptic, anti-austerity coalition risks casting itself adrift from the common currency in a manner that would do severe damage across the bloc. “I sincerely hope that the new ...

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China-Russia economic cooperation enters new era

Chinese Vice President Wang Qishan arrived in Russia to start his first foreign visit after taking office, during which he is scheduled to attend the 22nd St. Petersburg International Economic Forum (SPIEF) and meet with Russian leaders to discuss bilateral ties and issues of common concern. As interactions between China and Russia are becoming increasingly frequent and fruitful, the two countries will certainly continue to gain momentum in strengthening bilateral ties, which paves the way for upgrading their trade and economic cooperation, experts said. STRONGER COMPREHENSIVE STRATEGIC PARTNERSHIP On account ...

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U.K. Economy Barely Grows as Households Rein in Spending

U.K. consumer spending lost momentum in the first quarter and companies cut investment after severe weather swept the country. Household spending rose just 0.2 percent, the weakest performance in more than three years, and business investment declined 0.2 percent as snowstorms kept shoppers at home and hit construction projects. Economic growth was left unrevised at 0.1 percent, the figures Friday showed, and the Office for National Statistics continued to maintain that the weather had little impact on the quarter on balance. However, that assessment was challenged this week by Bank ...

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Outflows from Italy funds hit record high – BAML

Italy-only equity funds suffered record outflows in the week to May 23, equivalent to 6 percent of total investments in such funds, Bank of America Merrill Lynch (BAML) said on Friday, as investors eyed the prospect of a eurosceptic government. The heavy redemptions, which totalled $380 million, according to data from the bank and fund flows research house EPFR Global, reflected investor concerns about Italy’s radical government, currently taking shape. The right-wing League and anti-establishment 5-Star Movement have agreed a coalition, triggering jitters about a fiscal spending splurge and a ...

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Business Investment Rebounds in April, But Overall Durable Goods Orders Fall

A proxy for business investment rose a solid rate last month, but overall durable goods orders fell in April due to a decline in aircraft demand. Orders for durable goods — products designed to last at least three years, such as computers and machinery — declined 1.7% from the prior month to a seasonally adjusted $248.5 billion in April, the Commerce Department said Friday. The decline was led by a 29% decrease in the volatile civilian-aircraft segment. An important proxy for business investment fared much better. New orders for nondefense ...

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Turkey’s Economy Czars Said to Plan London Investors Meet

Turkey’s top economic stewards will see foreign investors in London later this month to talk about policy trajectory after Wednesday’s emergency rate hike. Deputy Prime Minister Mehmet Simsek and central bank Governor Murat Cetinkaya will travel to London May 28 to meet with investors, including money managers, the following day, according to a person familiar with the plans. Earlier, the two will meet leaders of Turkish businesses and financial institutions in Istanbul, the person said, asking not to be named because the plan wasn’t yet public. The meeting was planned ...

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Japan’s factory output seen rising for third straight month in April – Reuters poll

Japan’s industrial production was expected to rise for a third straight month in April thanks to brisk export demand, a Reuters poll found on Friday, a positive sign after the economy contracted in the first quarter. Factory output was expected to have risen by 1.2 percent in April from the previous month, the poll of 17 economists showed, following gains of 1.4 percent in March and 2.0 percent in February. “We expect industrial production grew in April led by transport equipment and general-purpose, production and business-oriented machinery on the back ...

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Americans’ Confidence in the Economy Slips Narrowly in May

U.S. households became less confident about the economy in May, continuing to ease from a 14-year high seen earlier this year. The University of Michigan on Friday said its consumer sentiment index was 98.0 in May, down slightly from an initial 98.8 reading for the month. Economists surveyed by The Wall Street Journal had expected a final reading of 98.8 for May, unchanged from April. The index has bounced around in a tight eight-point range since late 2016, with small month-to-month movements that don’t indicate an emerging trend, said Richard ...

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EU agrees new capital rules, large banks secure easier terms

European Union finance ministers reached an agreement on Friday on reforming bank capital rules, a major step towards boosting the bloc’s financial stability and a stepping stone towards a deal on a backstop for its bank-rescue fund in June. The accord came after 18 months of heated debate among the 28 EU governments on how to apply new global bank capital rules that overhauled financial regulations after the 2007-2009 global crisis. “The Council (of EU finance ministers) has agreed a general approach on the banking package,” Vladislav Goranov, the finance ...

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Prime Minister: China is the key trade partner in Asia

Prime Minister Saulius Skvernelis has met with Minister of Agriculture and Rural Affairs of China Han Changfu and has discussed further cooperation in the field of foreign trade in agricultural and food products. The Prime Minister has stressed that China is a key trade partner in Asia, that Lithuania is particularly glad about growing economic cooperation, and that more and more Lithuanian products find their place on China’s market. ‘The Action Plan that was signed by the Ministries of Agriculture of China and Lithuania last year provides a solid basis ...

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As Gasoline Nears $3 a Gallon, U.S. Economy Likely to Motor On

Consumer spending in the U.S. is probably well-equipped to ride out near-$3 gasoline that’s made for the costliest driving in four years, though an extended and more pronounced increase could prove more challenging for the economy. The price of regular-grade fuel has climbed 47 cents a gallon, or 19 percent, since the start of 2018, according to motoring group AAA. Pricier seasonal fuel blends and increased summer demand as families go on vacation have pushed the cost of gasoline to its highest since 2014. Nonetheless, the movement in prices from ...

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