Daily FNArena News - FYI

The Fed is banking on US inflation eventually falling due to economic weakness, but Morgan Stanley warns it may take longer than hoped. There are also implications for Australia.

March quarter GDP data was weak and the restrictive level of interest rates at present makes a recession likely in New Zealand.

The world is preparing for an European rate hike as the US Treasury secretary makes a mercy dash to Europe.

GaveKal’s risk appetite indicator has turned down once more, indicating liquidity is being withdrawn by investors. This should encourage downward pressure on inflation by itself.

While it has revised lower its earnings expectations for the US market Standard & Poor’s continues to see most sectors lifting earnings this year, with growth stocks preferred.

Danske Bank suggests the ongoing financial crisis and the emergence of inflationary pressures is likely to have an impact on foreign exchange markets going forward.

As the Fed becomes more hawkish, is there a risk that runaway inflation forces central banks across the globe to suddenly start hiking aggressively?

Weekly musings from your editor. Three taxi drivers told me this week they are buying banking stocks “for the longer term”. Are there any conclusions we can draw from this?

Consensus at a gathering of hedge fund managers is that the credit crunch will continue and probably get worse.

There will be no immediate oil price relief from increased Saudi production, leaving the Fed with a difficult rate decision on Wednesday.