Citi's Global and US Economic Forecasts - what the risks are

In late February,Citigroup issued its global economic outlook.It cut its global expansion forecast from 2.7% to 2.5%.Global prospects are worsening further,with deterioration across advanced economies alongside previous weakness in the emerging markets,Citi's research note said.Britain's upcoming vote on whether to leave the eurozone is a key extra near term global risk that would hurt both the UK and EU economies;while more policy easing from the European Central Bank and Bank of Japan will provide only limited stimulus.*
On 15 April,Citi released its US forecast.Our US outlook has little potential to be surprised on the upside,but the risks are very evident on the downside,said William Lee,head of North American Economics.Risk is from looming uncertainty as to when the Fed will make rate hikes,as well as many important political events here and abroad scheduled in the next few months.Recently reviewed and incoming data imply GDP will grow by 0.9% in Q1 and 1.7% for the year.
Despite such tepid growth prospects,we project a slow decline in the unemployment rate to 4.6% by end-2016,and 4.5% by end-2017.We continue to believe there will be only one rate increase this year-likely in September-unless developments stir financial markets and/or dampen further growth prospects.In that event,December or a later meeting would be a more likely date for an increase,Mr.Lee noted.*
Citigroup (C)

Stocks Crater on Greece Fears

The S&P 500 Index fell 43.85 on Monday,down 2.09%,on worries that Greece might leave the Euro-zone,or might at least cause unfortunate ripple effects throughout the global economy.The country is expected to miss a Tuesday debt payment of 1.84 billion dollars to the IMF.Technically,that would not be a default,since the IMF payment does not have the status of a bond coupon payment,for instance.Still,it is plenty bad for the stock market,as is the unknown endpoint of Greece's tortured negotiations with its creditors,and the Sunday referendum basically on whether Greece should abandon the euro for its old currency,the drachma.
The run on Greek banks could become contagious,spreading to Spain,Portugal and even Italy.If that happens,the US economy,with its close ties to Europe,could suffer as well.
The market was shaken by S&P's opinion that the probability of the so-called Grexit is 50%,and a commercial default is inevitable within six months.Greece's credit rating was also lowered by S&P to CCC-.
Investors sought refuge in gold,which rose 0.52%,while Treasury bonds were basically flat and utility stocks fell less than the broader market.*
Utilities Select Sector SPDR ETF (XLU),Market Vectors Gold Miners ETF (GDX),SPDR Gold Trust (GLD),iShares 7-10 Year Treasury Bond ETF (IEF)

Working To Improve:GM Banks On New Intros

All segments of General Motors saw a sales increase in Q1 except GM Europe,where sales fell off a cliff by 19.8% in the midst of a Euro-zone recession.Overall,it was a successful quarter for the fabled carmaker,beating Wall Street expectations on both profit and revenue growth.The company has a 15.1% share of the Chinese market,but has to share that revenue with the local joint venture partners required by the Chinese authorities.The U.S. government still owns about a third of GM,which it acquired during the financial crisis in order to save the corporation and its UAW jobs. Chief Financial Officer Dan Ammann said we're working every day to improve the profitability.We're having great success with new introductions.We have 20 or more new launches around the world this year,and that's what's gonna drive sales.We're working hard on both the revenue and cost-cutting side of the business.We're working to do everything we can within the constraints of the European situation.We've taken a lot of action on the cost side in Europe in the past few years-not just the past few quarters,Mr.Ammann pointed out. General Motors(GM)

Jay Jordan Named To "Masters of the Market"

John W. "Jay" Jordan II has been named to CNBC's "Masters of the Market" list on the channel's "Squawk Box" program.Mr.Jordan is Chairman and Managing Principal of The Jordan Company,a private equity firm that buys and builds businesses in the mid-cap range of 200 million-2 billion dollars.
Mr.Jordan said of the Euro debt crisis and the Chinese banking crisis that these things could turn around on a dime.We're very,very cautious about the future.We have historically focused on great businesses with great managers.
It is frightening.We could be the next Greece down the road.We try to have a global perspective,being invested in 68 operations in 30 countries.We are primarily U.S.-based.
The European Central Bank's got to print some euros and save the Euro-zone.We have got to control spending.At some point,the one-percenters have got to contribute more to the pie.
Mr.Jordan is also the Chairman of the Notre Dame University Investment Committee.We at Notre Dame are long term thinkers,looking out 15-20 years.We move into the asset classes we feel are most robust about 10 years out:energy,water,food and agriculture,Mr.Jordan revealed.

Advantage View:High Risk and Havens

Not every analyst was swayed by the easy cheer so prevalent on the trading floors in recent days.The news out of Europe clearly is driving the market,said Jeremy Zirin,Chief Equity Strategist at UBS Financial Services.I think the market will continue to be driven by the news flow out of Europe.We're actually not that inexpensive.The rally that we've seen has really evaporated some of that cheapness.
I expect S&P 1100-1250 range-bound conditions.I think the risk-reward after the rally is to the downside.You want to have a more cautious disposition:staples,utilities,telcos,and tech with its high cash balances and emerging markets exposure.
The catalyst for a breakout would have to be a resolution in Europe and a resumption of strong U.S. growth.It seems unlikely given the uncertainty of our own fiscal policy-let alone Europe.The outlook is increasingly uncertain.Some multinationals are starting to see one of the problems is business uncertainty and market uncertainty.It's very difficult to make multi-year investments in capital goods or in labor when you can't be sure of the landscape.
On the surface,this earnings season looks similar to the past 6-8 quarters.What's really different is,forward-looking estimates are being cut at a dizzying rate.Below the surface,it's deteriorating,Mr.Zirin cogently observed.

MF Global:2011 Prospects For Investors

John Brady,Senior Vice-President at MF Global,says you're seeing capital go out of bond funds and into stock funds.He really thinks it's been about a repositioning trade,a rotation trade,getting cash off the balance sheet and back into the market.
The refinancing schedule for Spain and Italy really picks up next year.Investors want to be very concerned then about what takes place in the Euro-zone.
Perhaps inflation and monetary policy in China will affect the market in 2011,increasing global market volatility.
Mr.Brady still thinks it's gonna be a slow,long recovery in the employment market.
MF Global is a brokerage offering customized solutions,providing its clients global access to more than 70 securities and futures exchanges,as well as OTC markets.It has offices worldwide,from New York to London and Dubai.
MF Global Holdings Ltd(MF)