Aurelia Butler

“We believe the new Treasury Secretary, Scott Bessent, plans to pursue a policy mix – which we call Bessenomics – that boosts economic growth and stabilizes the public debt-to-GDP ratio,” BCA Research said in a special report that sought to explore potential policies that Bessent may opt to implement.The policy mix, dubbed ‘Bessenomics,’ is expected to be built on three key pillars: currency depreciation instead of high import tariffs, fiscal policy calibration, and increased U.S. oil supply to deflate crude prices.Bessent may push for dollar depreciation rather than tariffs to boost U.S. manufacturing competitiveness and create industrial jobs. This approach, according to BCA, could avoid the potential destabilizing effects of tariffs on markets and the economy.Bessent may also strike a deal with the Federal Reserve to reduce interest rates substantially, provided the government and Congress cut fiscal spending. This combination of tighter fiscal and easier monetary policy has historically led to currency weakness.To prevent inflation expectations from rising and bond yields from spiking, Bessent’s strategy, BCA hypothesizes, could include cutting fiscal spending and lowering oil prices. These measures, along with “proper macro communication and our credibility, will be sufficient to bring down bond yields despite dollar weakness,” the report speculates. More

PALO ALTO, California (Reuters) -A joint venture between U.S. electric pickup and SUV maker Rivian (NASDAQ:RIVN) and Volkswagen (ETR:VOWG_p) is in talks with other automakers about supplying their software and electrical architecture, a senior Rivian executive said on Thursday.The German automaker agreed in November to invest $5.8 billion in the joint venture, which will integrate advanced electrical infrastructure and Rivian’s software technology for both companies’ future electric vehicles.While a joint venture will give Rivian higher volumes to negotiate better supplier deals and reduce costs, seen as critical amid a slowdown in EV demand, Volkswagen and potentially other traditional automakers will get quick and easy access to technology and software they have struggled to build for years.”I’d say that many other OEMs are knocking on our door,” Rivian Chief Software (ETR:SOWGn) Officer Wassym Bensaid said in an interview, referring to Original Equipment Manufacturers, a phrase used to describe vehicle makers.Bensaid, who is also co-CEO of the joint venture, declined to provide names of the interested automakers and details on what stage the talks were at. Rivian’s architecture requires fewer electronic control units and significantly less wiring, reducing vehicle weight and simplifying manufacturing. The technology is core to building cars with software that could be updated over the air like a smartphone – what the industry calls “software-defined vehicles”, an area where established automakers are still running behind.”There is demand,” said Bensaid, adding that the priority until 2027 was to roll out the R2, Rivian’s smaller, less-expensive SUV and to integrate the technology in other Volkswagen brands. “Obviously other OEMs are talking to us and we’re trying to figure out how to support that in the future.””Any other OEM who wants to make a leap from a technology standpoint, the joint venture today becomes one of the key partners with whom they can make that collaboration,” he said. The venture is likely to become the platform of choice in the Western world apart from Tesla (NASDAQ:TSLA), Canaccord Genuity analysts said in a note. The joint venture also helps alleviate “a significant chunk of the capital concern” for Rivian, the analysts said. More

“President Trump did not impose tariffs on day one. Instead, he issued a presidential memorandum entitled ‘America First Trade Policy,'” Barclays said in a note. “Investors should read the memorandum as a blueprint for what to expect next on tariffs.”The memorandum directs certain departments and agencies to review and issue reports by April 1, 2025. These reports, the analysts believe, are likely to serve as the catalysts for new tariff proposals or adjustments to current tariffs. In further support of the Apr. 1 as key date to watch, the analysts believe the timeline also provides ample time for the Senate to confirm key positions, including Howard Lutnick as Commerce Secretary and Jamieson Greer as US Trade Representative. These two roles need to be filled before the Trump administration begins to alter tariff policy, the analysts added.Following the reports due on Apr. 1, changes to tariff policy could be announced, likely taking effect 30-to 60-days later, Barclays said.  The presidential memo suggests that various tariffs could be on the table including a universal tariff and tariffs targeting China, Mexico, and Canada.Trump has, however, already threatened to impose 25% tariffs on Mexico and Canada starting Feb 1, and up to 100% tariffs on China over TikTok, but Barclays believes the timeline proposed in the memorandum carries more weight rather than these “off-the-cuff remarks.”The memorandum also calls for investigations into the causes of the U.S.’s annual trade deficits in goods and recommendations for remedies, which could include “a global supplemental tariff or other policies.”This suggests that “countries and sectors most vulnerable to targeted tariffs could be those with the largest trade deficits in goods with the US,” Barclays said. More

Each of these factors contributes to the broader economic landscape, necessitating attention from policymakers.Weak household consumption remains a central concern for the German economy. High inflation and rising living costs have significantly impacted household purchasing power, leading to reduced consumer confidence. As households tighten their budgets, the overall consumption levels decline, which further stifles economic growth. Investing.com — This environment not only affects retail and service sectors but also dampens investment sentiment, creating a cycle that limits recovery.In addition, Germany’s export performance has weakened relative to the global demand landscape. While the country has historically been a dominant player in international trade, recent data indicates a lag in its export growth compared to other nations. Factors such as supply chain disruptions, rising production costs, and shifting consumer preferences have contributed to this decline. As competitor countries capitalize on new opportunities, Germany must address its export strategies to remain competitive in a rapidly changing global market.Lastly, the issue of low potential growth looms large over Germany’s economic horizon. Structural obstacles, including an aging population and insufficient workforce growth, have hindered productivity advancements. This stagnation in potential growth limits the economy’s capacity to expand and innovate, ultimately impacting long-term sustainability. Without reforms to enhance productivity and attract talent, Germany risks falling behind its peers in Europe and the global economy. More

While historically common (1960s) and adopted by some nations (e.g., Poland), Germany’s current economic situation presents obstacles.Germany’s sluggish economic growth is a key obstacle. The country is projected to grow at an average rate of just 0.5% annually in the coming years, far below the levels required to accommodate a substantial increase in defense expenditure without impacting other sectors. Historically, faster economic growth allowed Germany and other nations to manage high defense spending more effectively, as rising GDP inherently increases government revenue. Without accelerating economic growth, Germany would need two decades to gradually increase defense spending to 4% of GDP, a timeline that is politically and strategically impractical, Commerzbank added.Reducing spending in other areas of the federal budget offers a partial solution, but the scope for such savings is limited. To close the gap through budgetary cuts alone, Germany would need to reduce federal civilian spending by nearly 20% over four years. Potential savings from social spending cuts and government efficiency improvements would be insufficient to fully fund increased defense spending. While reallocating funds from climate initiatives, such as through more efficient carbon pricing, could generate savings, this would likely face significant political opposition.Financing the defense increase through debt is another option, but it raises legal and economic concerns. Such an approach would nearly double Germany’s budget deficit from 2% to 4% of GDP, violating European debt rules and the constitutional debt brake. The current reliance on shadow funds to finance core state tasks like defense is unsustainable in the long term, emphasizing the need for these expenditures to be integrated into the regular budget.Germany’s rising risk premiums on government bonds further complicate debt-based financing. As noted by Commerzbank, weak economic growth has already led to noticeable increases in financing costs for government bonds. To ensure sustainable debt levels, structural reforms are crucial to boost economic growth and tax revenue. Increasing productivity and investing in growth sectors can reduce the burden on public finances and improve the country’s ability to fund higher defense spending. More

Argentina achieved a record $18.9 billion trade surplus in 2024, according to official data released on Monday, which largely coincided with libertarian President Javier Milei’s first full year in office, reflecting the impact of his economic policies.Milei’s administration inherited spiraling inflation, depleted international reserves, and extensive economic imbalances that led to a very high probability of a credit event, according to Moody’s. “Decisive fiscal adjustment, alongside measures to halt monetary financing were put in place and have proven effective in addressing imbalances,” it said. Argentina’s financial markets have been buoyant due to Milei’s tough “zero deficit” policies, cooling inflation and the government’s commitment to meet its debt obligations.Moody’s upgraded Argentina’s credit rating for the first time in five years, following a downgrade in 2020 as disrupted debt restructuring talks amid the global pandemic increased the country’s risk of slipping into default.Argentina’s outlook has also been revised to “positive” from “stable” on Friday, as the government continues to make progress on its macroeconomic stabilization program. More

The East-African country has been struggling with heavy debt and looking for new financing lines since last year due to nationwide protests against proposed tax increases. Domestic financing costs have started to decline amid a monetary easing cycle and this could continue if the Kenyan government effectively manages its fiscal consolidation, opening doors for external funding options, the report said.”Given low inflation and a stable exchange rate, there is potential for further reductions in domestic borrowing costs as past monetary policy rate cuts pass through to lower long-term borrowing costs,” Moody’s said. The agency added that a new International Monetary Fund program would enhance Kenya’s external financing while other multilateral creditors such as the World Bank will continue to be significant financing sources, even without the IMF funding.The agency affirmed Kenya’s local and foreign-currency long-term issuer ratings at “Caa1”, citing still elevated credit risks driven by very weak debt affordability and high gross financing needs relative to funding options. More