With so much going on in the world with Greece, El-Nino, the Women's Soccer World Cup and the global liquidity glut from money printing, I was keen to try and understand which macro trends had a greater weighting versus the others, how to sort the trees from the woods.
"The opportunities for trade growth (with the TPP) were exciting for most industries."
Tareq Muhmood, Managing Director, Global Diversified Industries, Global Banking | ANZ
Four big themes emerged:
How much will the slowdown impact domestic demand in China? The US consumer has their wallet open again but it was clear the consumer in China is playing an increasingly global role in determining confidence in the future. There are challenges for China of course, however the country is still growing. Indeed, its present growth rate represents the whole Indonesian economy being 'added' to the Chinese economy every year. So that put a floor under the concerns.
Companies with large earnings in other currencies are now suffering when translating their foreign currency revenue back to USD. I'm no economist but the consensus was the USD will continue to strengthen over the coming couple of years. Some treasurers were considering hedging future foreign currency earnings to protect and provide stability to future earnings. Others were comfortable living with the FX exposure.
Despite the political charades, there was optimism the TPP will proceed. The opportunities for trade growth were exciting for most industries. The next few months will be critical, as this will be the most significant 'trade deal' in close to two decades.
One client I met with is being cyber-attacked 100 million times a month. One hundred million times. They recognised it was not possible to fully protect all their systems. The focus was on ensuring they could protect the 'crown jewels' of data and intellectual property. This was complemented by the ever growing need for data to run businesses, and to identify capacity and efficiency opportunities. Meanwhile, real-time data and 'data situation rooms' are a growing reality and the technology available for this is truly breathtaking.
Underlying these views, I was struck by the positive outlook I encountered in the US and how dynamic the environment was – perhaps surprising given the global uncertainties.
What concerns do you have over the coming months? Share any thoughts below.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
08 May 2015
13 Apr 2015