“Let's stop criticizing our banks!”

More than ten years after the subprime mortgage crisis, all the light has not been shed, and yet the idea of ​​the guilt of the banks has taken hold firmly in people's minds. They are even blamed for the double fault, since after playing with fire and triggering the crisis, they allegedly asked for help from the States. This unanimous condemnation, the result of incomplete analyzes, is a heavy component of the bank bashing that has raged since then and unfortunately works against our interests. We are indeed at a critical moment when Europe, faced with the domination of American finance and the dollar, must develop its own financial capacities. The development of a strong pan-European financial sector is therefore essential if we particularly want to foster the emergence of future European gafas. 
If it is vain to hope for the complete disappearance of this bank bashing and, one might say, of the bashing market whose roots plunge both in history and in ignor…

United States: a colossus with feet of clay

The prospect of a recession is moving away across the Atlantic. But the economy only survives thanks to consumers. Donald Trump has been repeating for over a year and a half that China has more to lose than the United States in a trade war. For the moment, the facts prove him right. The IMF predicts that Chinese growth will fall to 6.1% in 2019 and 5.9% in 2020. Unheard of for several decades. Conversely, the American economy has shown remarkable resilience: the OECD predicts 2.3% growth this year and 2% next year.
 
Donald Trump has been repeating for over a year and a half that China has more to lose than the United States in a trade war

The prospect of a recession across the Atlantic is fading, while the country is already experiencing the longest upward cycle in its history: 125 months.

The country of Uncle Sam nevertheless has the appearance of a colossus with feet of clay. Customs taxes on 500 billion dollars of Chinese imports disrupt the production chain of its companies and weigh on their margins. The manufacturing sector is the most affected: at 48.3 points in October, the ISM index reflected a contraction in activity for the third month in a row.

Industrial production also fell 1.1% (year on year) that month. The ISM for services has also dropped since the start of the year, but remained at 54.7 points in October.

The private sector certainly seems to be stabilizing. But Christian Parisot and Jean-Louis Mourier, economists at Aurel BGC, do not anticipate a sharp rebound in business investment. 

This engine is moribund because of the uncertainties linked to the Sino-American conflict, among others: it only represented 27.8% of GDP in mid-2019, against 28.7% at the end of 2017. It is a low since 2012.

For its part, foreign trade contributes negatively to the country's growth. Fortunately, public spending supported the GDP growth of 1.9% (annualized) in the third quarter, by 0.4 percentage points.


However, Aurel BGC economists do not expect it to progress significantly, given the 4.6% public deficit recorded over the fiscal year (ended in September).

The American economy today thus rests almost exclusively on the shoulders of consumers. Retail sales pleasantly surprised, advancing 0.3% (over a month) in October.

The real estate market is doing well: 1.31 million housing starts took place last month and 1.46 million building permits were granted. This historically high level is supported by the supply of cheap credit favored by the three key rate cuts made by the Federal Reserve since July.

The low unemployment rate (3.6% in October), the rise in average hourly wages (+ 3% in October over a year) and Wall Street records also offer an environment conducive to consumption.

In fact, Oddo BHF economists Bruno Cavalier and Fabien Bossy point out that the indicators measuring household confidence (Michigan indexes, the Conference Board index, etc.) remain at a level above their 15-year average.

However, this dependence on consumer morale is problematic: new concerns (politics, employment, etc.) risk slowing spending. Yet they account for more than two-thirds of Uncle Sam's GDP.