The most importatnt news of the last week 12.7.2021
ECB has new inflation target
On Thursday the European Central Bank revised its inflation target. Current president of bank Christine Lagarde said that the new inflation target is “clear and easy to communicate.”The ECB actually works to gain an inflation level of “below, but close to, 2%.” The more exact term is „"2% per year in the medium level". On July 22 is planned first regular monetary policy meeting of the Governing Council applying this brand new strategy.
Porsche will create hypercar company
The well-known car concern Volkswagen will sell a majority stake in its prestigious French brand Bugatti to the company Rimac. Porsche and Croatian electric car manufacturer Rimac together agreed to establish a joint venture that includes Volkswagen’s Bugatti brand, which was announced in Dubrovnik. Regarding to CNBC, Rimac should acquire a 55% stake in the joint venture and Porsche will hold a 45% stake in the company. Shares of Bugatti will be transferred from Volkswagen.
Performance of 5 years for Volkswagen (Source: Investing.com)
US stocks fell
Thursday was critical for US stocks. Due to uncertainty about the pace of revitalization of the US economy, stocks in the United States have fallen from highs. The increase in the number of new applications for unemployment benefits also brought uncertainty, and the spreading delta variant also adds to the concerns. The most significant decline was recorded by shares of small companies and transport companies.
Chinese debt is growing
Currently, China's debt-to-GDP ratio has climbed to 290%, the debt being relatively the same as in the US and the EU. From the past since 2006, debt has climbed to almost 145% of GDP. One of the main economic catalysts for growth in the case of China has been debt growth in recent years. During the corona crisis, it was impossible for the country to get its debt under control, but today there is new effort to control the state to borrow as little as possible.
Sources: Reuters, Investing, CNBC
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