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June 2016 marks the two-year anniversary of the beginning of the free fall in oil prices when the value of the commodity depreciated by more than three-quarters of its 2014 price before rebounding at the start of the year. Such a precipitous drop in prices has occurred largely because of the Organization of Petroleum Exporting Countries (OPEC) and U.S.
Up until the end of 2015, the four most influential central banks of the world had all implemented accommodative monetary policies in response to the 2008 financial crisis. Together, the Federal Reserve (Fed), the Bank of Japan (BOJ), the European Central Bank (ECB) and the People's Bank of China (PBOC) have employed quantitative easing (QE) tools, such as bond-buying programs and negative rate policies (NIRP), in an effort to revive their economies.
From the summer of 2014 to the start of 2016, the price of crude oil dove 70%, receiving an even bigger blow than it did during the financial crisis. In 2016, however, after dropping below $30, oil prices have started to make a comeback.
Ever since the Federal Open Market Committee (FOMC) decided to raise the federal funds rate by 25 basis points in December of 2015, the first rise in interest rates in almost a decade, there has been much discussion regarding future rate growth and the effect on the financial markets and economy.
With interest rates at historically low levels, the unprecedented trend of America's largest companies hoarding cash raises questions. The rating agency, Moody's Corporation (NYSE: MCO), estimates that a total of $1.7 trillion in cash and cash equivalents was held by non-financial U.S. companies in 2015.
Since Britain's June 23, 2016 referendum to leave the European Union, the pound sterling has slid 12% against the U.S. dollar to a 31-year low as of July 24, 2016. The Brexit decision and a falling pound sterling are expected to make waves in merger-and-acquisition (M&A) activity, potentially boosting the number of deals in the near term while severely hurting the industry in the long run.
Unlike cities and counties, state governments cannot declare bankruptcy. In January 2016, this issue came to the forefront of political discussion as President Obama suggested making an overleveraged Puerto Rico eligible for a bankruptcy-like process. While this suggestion was quickly shut down by Republicans in Congress, many experts believe that allowing states to declare bankruptcy might encourage fiscal sustainability.
Since the financial crisis of 2008, the major world powers have implemented accommodative monetary policies, which have included tools such as quantitative easing (QE) and zero to negative interest rate policies (ZIRP and NIRP, respectively).
Britain's decision to leave the European Union (EU) has raised concerns that some of the remaining eurozone nations, particularly those with skyrocketing debt and slowing growth, may decide to leave the currency bloc as well.
After seven years of increasingly looser monetary policy with little economic growth to show for it, the European Central Bank's (ECB) efficacy is publicly under attack. On June 8, 2016, Deutsche Bank AG (NYSE: DB) warned that the ECB's policies risk destroying the European monetary union, known as the eurozone.