BA 561 Summary of Assigned Readings & Media Content

The articles that were assigned summarized the current global landscape, the major
players or regions that have a large contribution to global output or growth, the
potential pitfalls or concerns to the growth story and finally how businesses are
making decisions in the face of these macroeconomic developments.

In a capitalistic system, one of the barometers for the success is GDP growth and
Countries work hard to ensure that it continues to grow. On a simplistic level, GDP
takes into account consumer spending, investment and the difference between
exports and imports. So keeping an eye on key metrics like consumer spending,
retail, housing starts or business re-investment plans, and finally trade deals can
provide insight. The articles that were assigned pointed to a situation where globally
political leaders and bankers alike are facing high debt and low investment
throughout the economy. One hypothesis could be that consumers are not spending
and businesses are not re-investing in their businesses, both of which put spiralling
pressure on prices in a deflationary direction. Finally, there could be a real concern if
the public starts to believe that central bankers and their policies are proving less
effective at controlling inflation, increasing investment or spurring growth.

On a more granular macroeconomic level the readings focused on China,

globalization and policy response suggestions. First, china is trying to manage a soft
landing moving the economy from one reliant on heavy corporate capital
investment and exports based to a consumer based economy. This could be tricky
while still maintaining a fixed currency to prop up exports and ensuring large swaths
of capital dont leave the country as they have in the past couple of years.

Second, trade has lagged behind and now is being further hampered by fears of
globalization. The BREXIT vote leads to uncertainty for those trading relationships.
The heart of issue could revolve around an argument that globalization hasnt
reignited trade growth but all of the social aspects of globalization have been
prevalent. Recommendations from advisors such as the WEO include advising
policymakers to take a coordinated front, even at the G20 level, to reverse the
further slowdown in global growth.

With such large uncertainty on a macroeconomic level, the machine that we call the
global economy continues to operate. Even though some believe central bankers
may not have control, as witnessed after their first unsuccessful attempt to lift
interest rates, Business must continue to operate and find ways to return a profit to
their shareholders. Analyzing the top 50 companies that Bloomberg recommended
keeping an eye on, I noticed there were some themes. Businesses could be put into
two broad categories, businesses that rely on consumer spending and businesses
that rely on capital investment. By looking at how certain businesses are
succeeding and relating that a macroeconomic category, we as businessmen can
better understand hotspots or bright spots in the economy and understand where
growth is occurring. Policy makers can also take notice so that they can further
nurture that growth.
BA 561 Summary of Assigned Readings & Media Content

I couldnt help but develop some frameworks around the WEO outlook and how to
interpret the myriad of macroeconomic news that is out there. First it seems that
there are policymakers or political leaders that set the rules around the global
markets. Then there are tools that they assign themselves or to central bankers.
And finally there is the circular economy itself that operates within the rules set out
by policymakers and tends to react to changes to the levers that are pulled from the
fiscal or monetary toolbox. This helped me understand that the way in which India is
focusing on cleaning up its tax system, will help it provide better goods and services
to its constituents. It would also help in establishing a stronger legal framework to
support businesses, potentially drawing in greater foreign investment. The
additional taxes collected could also be better used to re-invest into the Country on
capital projects to improve infrastructure or technology needed for the workforce.

Fiscal & Monetary

Tools
Fed Funds Rate
Reserve
Requirements
QE / Bond Buying
Govt. Spending

Policies / Laws / Rules