InvestMacro

by JustForex

Fears of an impending recession are growing in the United States. Goldman Sachs predicts that a significant narrowing of the gap between the number of vacancies in the labor market and the number of workers is a sign of the beginning of the recession. The US Federal Reserve will have the difficult task of tightening its monetary policy enough to reduce inflation without causing an economic slowdown in the United States. Despite all the assurances from the Fed officials that they can tighten monetary policy and reduce inflation without destroying the economy (economists call it a “soft landing”), this idea raises many skeptics, including former US Treasury Secretary Larry Summers. He believes that the recession is now the most likely outcome for the US economy soon. But it is worth noting that this will not happen tomorrow or next week. The deviation is significant. Analytical houses predict the beginning of a recession in the US in the next 1-2 years.

As the stock market closed yesterday, the Dow Jones index (US30) decreased by 0.11%, the S&P 500 index (US500) lost 0.02%, and NASDAQ Technology Index (US100) fell by 0.14%.

Bank of America reported second-quarter results that exceeded analysts’ expectations. Revenue growth was driven by strong trade growth and increased lending. Shares of BAC gained more than 3%.

The World Bank lowered its 2022 global GDP growth forecast to 3.2% from 4.1%.

The US convenes an unscheduled meeting with the heads of several states: France, Germany, Great Britain, Canada, Italy, Poland, and Romania as part of Russia’s offensive on Ukraine. The NATO Secretary-General, the presidents of the European Commission, and the European Council will also take part.

Major European indices were not traded yesterday. Incumbent French President Emmanuel Macron has said that France does not need Russian gas and has called for sanctions against Russia’s energy sector. The question is, is France really that serious, or does Macron want to raise his rating in this way before the decisive round of the presidential election?

Foreign investments in Russian real estate have fallen to a record high – in the first three months of 2022, their share of investments in commercial real estate was only 1.8%, and at the end of the year, it will be close to zero.

Oil is rising in price for the fourth day in a row as disruptions in Libya exacerbate the situation with supplies from Russia. The 70,000 bpd El-Fil oil field was shut down on April 16 after protests demanding the resignation of Prime Minister Abdul Hamid Dbeiba. Oil production in Russia continued to decline in April, down 7.5% in the first half of the month compared to March.

Last week, EU governments said the EU leadership was preparing proposals to ban Russian oil, although diplomats said Germany did not actively support the embargo. The International Energy Agency has warned that about 3 million barrels per day of Russian oil could be halted from May due to sanctions or buyers who voluntarily reject Russian cargoes.

Gold resumes gains despite the tighter monetary policy of the US Federal Reserve. Gold has inversely correlated with government bond yields, which rise as monetary policy tightens, leading to lower precious metals prices. But at the moment, the gold market shows the outperformance of the gold miners’ equity sector both over the price of gold and the broader equity market. This picture indicates a stable demand for gold and positively impacts the continuation of the uptrend in gold.

Japan’s Nikkei 225 (JP225) decreased by 1.08% yesterday, and Hong Kong’s Hang Seng (HK50) and Australia’s S&P/ASX 200 (AU200) were not trading yesterday. The Chinese Central Bank cut the reserve requirement ratio for most commercial banks by 0.25%, freeing up to 530 billion yuan of liquidity. The reserve requirement ratio will be reduced by 0.5% for small rural and urban commercial banks. This is a positive signal for Asian stock markets. The International Monetary Fund will consider quick financial assistance for debt-laden Sri Lanka. The IMF will help replenish financial reserves and raise financing to pay for basic fuel, food, and medicine imports. Sri Lanka’s devastating financial crisis has erupted as the effects of COVID-19 have exacerbated poor public financial management and rising fuel prices eroded foreign exchange reserves.

Main market quotes:

S&P 500 (F) (US500) 4,391.69 -0.90 (-0.02%)

Dow Jones (US30) 34,411.69 -39.54 (-0.11%)

DAX (DE40) 14,163.85 +87.41 (+0.62%)

FTSE 100 (UK100) 7,616.38 +35.58 (+0.47%)

USD Index 100.80 +0.48 (+0.48%)

• – Australia RBA Meeting Minutes (m/m) at 04:30 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – Switzerland SNB Chairman Thomas Jordan Speaks at 19:30 (GMT+3).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By Lukman Otunuga Senior Research Analyst, ForexTime

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By Victor Matheson, College of the Holy Cross 

After New York lawmakers blew past the deadline to approve the state budget, they finally came to an agreement on April 9, 2022, that included a US$850 million subsidy for a new stadium in Buffalo for the NFL’s Bills.

As a sports economist who has studied stadium deals for over two decades, I am not exaggerating when I write that the New York Legislature has managed to craft one of the worst stadium deals in recent memory – a remarkable feat considering the high bar set by other misguided state and local governments across the country.

Study after study has shown that stadiums are terrible public investments. The taxpayers financing them rarely want to pay for them. So why are governments willing to subsidize them?

A return to the bad old days

There were many things to dislike about the Bills stadium project. At $850 million, it is the largest taxpayer handout for a new stadium in U.S. history even before additional subsidies such as annual maintenance costs, property tax exemptions and tax exemptions for municipal bond interest are considered. These factors could easily drive the total government price tag well over $1 billion.

With taxpayers footing over 60% of the $1.4 billion price tag, it also runs counter to the trend of the past decade toward lower levels of public funding for stadium construction.

State and local governments on average had covered roughly two-thirds of stadium construction costs during the first wave of the modern stadium boom that began in 1991. During the Great Recession, however, government leaders found it politically unpalatable to hand over hundreds of millions of dollars to billionaire owners as they were laying off teachers and firefighters.

Over the past decade, my ongoing research has shown that public subsidies have fallen to only one-third of building costs, on average. In fact, the most recent Super Bowl was played in the entirely privately financed SoFi Stadium in Los Angeles.

The Bills deal evokes the bad old days.

Stadium subsidies in general are terrible public policy, and this arrangement is no exception.

The Bills and their owners, Terry and Kim Pegula, don’t need a handout. With a net worth of $5.8 billion, Terry Pegula ranks as the ninth-richest owner in the NFL. The generous revenue-sharing structure of the NFL means that even playing in one of the league’s smallest markets, the Bills have earned over $300 million in operating income since the Pegulas purchased the team for $1.4 billion just seven years ago. And since then, the value of the Bills has risen by another $900 million. The Pegulas have earned enough on their investment in just seven years to pay for the entirety of a new stadium on their own.

But the only thing better for a team owner than a new stadium is a new stadium that someone else pays for. Indeed, the new stadium is likely to further drive up the value of the Bills far more than the $350 million the Pegulas are contributing to the stadium’s construction costs.

Stadiums make poor neighbors

These taxpayer-funded deals are often pitched as an investment in the local economy, but two decades of academic research on the topic have conclusively shown that stadiums and franchises have little or no impact on local economies. The Bills are not likely to be an exception.

For one, most of the customers at a sports venue are residents of the metro area who would simply spend money elsewhere in the local economy in the absence of the team. Second, stadiums often make poor neighbors. NFL venues, like the Bills’ current home, Highmark Stadium, are huge facilities that are rarely used: The Bills play eight home games each year in the regular season. This creates little incentive for investing in the surrounding neighborhoods.

And don’t think that NFL stadiums typically host a multitude of other events. Over its 50 years of existence, aside from a pair of annual high school football games and a few miscellaneous competitions, Highmark Stadium has hosted a grand total of 30 major concerts, three college football games and two large hockey games. And Buffalo’s venue is not out of the ordinary for any large, outdoor stadium.

Rather than creating a dense area of housing, retail establishments and restaurants, Highmark Stadium instead sits alone as an island of concrete in a sea of parking lots.

The threat of relocation

The stadium project is deeply unpopular, with one survey finding that 55% of New Yorkers are opposed to the plan, versus only 22% in favor of it.

So why did it get included in the state budget?

For one, stadiums are a perfect example of the classic special-interest problem. For a handful of passionate fans in Buffalo, a new stadium may determine which candidate gets their vote. But for the rest of the state, a small increase in their tax burden is unwelcome but not problematic enough to compel a voter to switch sides.

Teams have also gotten smart about minimizing transparency, which is bad for public policy but good for team owners. The Bills stadium proposal was added to the state budget and dropped on unsuspecting taxpayers just days before a final vote was scheduled in the Legislature. With such a short timeline, it was impossible for lawmakers to fully analyze the issue, and there was little time for public interest groups to mobilize against the handouts.

The Pegulas were essentially able to extort New York taxpayers by threatening to relocate the team if they didn’t pay up. Buffalo is only the 49th-largest metro area in the U.S. At least half a dozen cities across the U.S. without NFL franchises are both richer and at least twice as populous, including San Diego, St. Louis, Portland and Austin, not to mention the possibility of a franchise in London.

With their current lease expiring in 2023, the team had already indicated that the 2022 season could have been its last in Buffalo.

This threat was a slap in the face of loyal Bills fans who have supported the team for over 60 years through subzero temperatures, lake-effect snow, four straight Super Bowl losses in the 1990s and more losing seasons than winning ones.

The NFL has long kept the number of teams lower than the number of cities that could profitably support a franchise. So as long as owners are willing to use the threat of relocation, I don’t believe any city’s fans – and any state’s taxpayers – are safe.

About the Author:

Victor Matheson, Professor of Economics and Accounting, College of the Holy Cross

This article is republished from The Conversation under a Creative Commons license. Read the original article.