Tag Archives: 5) Global Macro

Everyone expecting a quick resolution to the epidemic and a rapid return to pre-epidemic conditions would be well-served by looking beyond first-order effects. While the media naturally focuses on the immediate effects of the coronavirus epidemic, the possible second-order effects receive little attention: first order, every action has a consequence. Second order, every consequence has its own consequence. So the media’s focus is the first-order consequences: the...

Risk-off continues in Asia, but moves have been less dramatic European market jittery but stable Implied rates now pricing in a full Fed cut by September The UK will announce its decision on Huawei’s access to the country’s 5G network The dollar is slightly stronger against most major currencies, so DXY continues on its very gradual grind higher. The index is up 1.6% since the start of the year. Of note, the Australian dollar is down 0.3% reaching at 3-month low at...

Global stocks lower on virus fears, yen appreciates, and yield curves flatten Oil prices continue to fall while gold rises Italian assets outperform on favorable election results for ruling coalition German IFO survey disappoints, trimming nascent green shoots The dollar is mixed against DM and broadly stronger against EM. On the former, the yen is outperforming (+0.4%), heading to the sixth day of consecutive appreciation, now back below the ¥109.0 level. AUD and...

The spread of the coronavirus continues and is likely to weigh on risk assets and EM.  Most markets in Emerging Asia are closed for all or part of this week due to the Lunar New Year holiday.  China has extended the holiday until February 2 as it struggles to contain the virus.  The Asian region is just starting to recover from the global trade tensions, and now it must cope with what is likely to be a sharp drop-off in tourism.  Policymakers in the region may have...

The psychotic instability will resolve itself when the illusory officially sanctioned “capitalism” implodes. Whatever definition of capitalism you use, the current system isn’t it so let’s call it “capitalism” in quotes to indicate it’s called “capitalism” but isn’t actually classical capitalism. Try a few conventional definitions on for size: Capitalism allocates capital to its most productive uses. Does the current system actually do this? You must be joking....

Asian markets hit by a further outbreak of the coronavirus US steps up trade rhetoric against EU and pushes back against UK digital tax plan AUD stronger on solid Australian jobs report and pricing out of RBA easing CAD weaker on dovish BOC communication yesterday Norges Bank and Bank Indonesia keep rates on hold, as expected ECB meeting concludes shortly, markets await kickoff of strategic review The dollar is mixed against major currencies but mostly stronger...

One does not need money to convey one’s thoughts, but what money does allow is the drowning out of speech of those without money by those with a lot of money. In last week’s explanation of why the Federal Reserve is evil, I invoked the principle of calling things by their real names, a concept that drew an insightful commentary from longtime correspondent Chad D.: Thank you, Charles, for calling out the Fed for their evil ways. We have to properly name things before...

Reports that Wuhan coronavirus continues to spread hurt risk appetite overnight US President Trump and French president Macron agreed to take a step back from the digital tax dispute The dollar is taking a breather today; after last week’s huge US data dump, releases this week are fairly light The UK reported firm jobs data for November; BOJ kept policy steady, as expected  Moody’s downgraded Hong Kong by a notch to Aa3 with stable outlook; data out of Asia suggest...

Market sentiment on EM remains positive after the Phase One trade deal was signed. Data out of China is also supportive for EM. Key forward-looking data this week are Taiwan export orders and Korea trade data for the first 20 days of January. The global liquidity story also remains beneficial for risk, with the ECB, Norges Bank, BOC, and BOJ all set to maintain steady rates this week. AMERICAS Mexico reports mid-January CPI Thursday, which is expected to rise 3.16%...

There were no surprises in the US-China Phase One trade deal The dollar is drifting lower ahead of the key retail sales data; there are other minor US data out today Bank of England credit survey showed demand for loans fell in Q4 Turkey cut its one-week repo rate by 75 bps to 11.25%; South Africa is expected to keep rates steady at 6.5% Japan reported November core machine orders and December PPI; China’s credit numbers for December showed no big change in lending...