A lot has changed in the past two weeks, as a wave of stimulus has broken over all three of the world’s major trading blocs. In the US, the Federal Reserve has promised – needed or not – to lower interest rates 250 basis points over two years, starting with 50 in September. Meanwhile, China has embarked on a mixture of monetary and fiscal ease which appears to exceed 2% of GDP, as they have finally fired all cannon to pull their economy out of a debt deflation. Finally, the Saudi’s have thrown a lifeline to Europe, as they promised to end voluntary cuts and return supply to the market even if prices fall. Combined with a weakening dollar, due to Fed cuts, Europe should see significantly lower energy costs – which will help industry competitiveness and allow them to cut rates further. Bottom line, things are looking up for the long-delayed start of a global manufacturing upturn that should sustain growth for the next year – at least.
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