Tag Archives: 5) Global Macro

Risk assets such as EM got a big boost last week, as tail risks from a hard Brexit and the US-China trade war have clearly ebbed. Still, the initial lack of details on the Phase One deal as well as uncertainty regarding the next phases have left the markets a bit jittery and nervous. Hopefully, this week may bring some further clarity and the good news is that the December 15 tariffs have been canceled.  AMERICAS Brazil COPOM minutes will be released Tuesday. It cut...

It was all fun and games enriching the super-wealthy but now the karmic cost of the Fed’s manipulation and propaganda is about to come due. A “market” that needs $1 trillion in panic-money-printing by the Fed to stave off a karmic-overdue implosion is not a market: a legitimate market enables price discovery. What is price discovery? The decisions and actions of buyers and sellers set the price of everything: assets, goods, services, risk and the price of borrowing...

The biggest tail risks impacting markets this year have cleared up; risk assets are rallying, while safe haven assets are selling off During the North American session, US November retail sales will be reported Russia central bank cut rates 25 bp to 6.25%, as expected Bank of Japan released a mixed Q4 Tankan report The dollar is broadly lower against the majors as tail risk evaporates.  Nokkie and sterling are outperforming, while Aussie and yen are...

Once the contagion starts spreading, loose money won’t put the fires out. As the nation’s political and economic leaders struggled to contain the 2008 financial meltdown, President George W. Bush famously summed the situation up: “If money doesn’t loosen up, this sucker will go down.” Eleven years into the loose money recovery, this sucker is finally going down for reasons that have little to do with tight money and everything to do with the inconvenient fact...

The higher up the wealth-power pyramid the observer is, the more prone they are to a magical-thinking belief that the empire is forever, even as it is crumbling around them. How great nations and empires arise, mature, decay and collapse has long been of interest for a self-evident reason: if we can discern a template or process, we can predict when the great nations and empires of today will slide into the dustbin of history. One of the justly famous attempts to...

EM has had a good month so far as market optimism on a Phase One trade deal remains high.Yet November trade data due out this week should show that until that deal is finalized, the outlook for EM remains weak. Deadline for the next round of US tariffs is December 15 and so talks this week are crucial. Lastly, three major EM central banks are expected to cut rates this week, underscoring the downside risks to growth. AMERICAS Mexico reports November CPI Monday,...

And how do we pay for these spiraling out of control costs? By borrowing more, of course. If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I’ve often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power. But neither of these dynamics fully describes the relentless upward spiral...

Not only will events outrun Plan B, they’ll also outrun Plans C and D. We all know what Plan B is: our pre-planned response to the emergence of risk. Plan B is for risks that can be anticipated, regular but unpredictable events such tornadoes, earthquakes, hurricanes, etc. In the human sphere, risks that can be anticipated include temporary loss of a job, stock market down turns, recession, disruption of energy supplies, etc. Hidden in most Plan B’s are a host of...

The dollar has taken a hit from the weaker than expected data Monday Tariff man is back The US economy remains solid in Q4 but there are some worrying signs for the November jobs data Friday The political pressure on Turkey from the US could increase soon; South Africa’s Q3 GDP came in well below expectations at -0.6% q/q and 0.1% y/y Japan JGB auction went poorly on supply concerns ahead of planned fiscal stimulus; RBA kept rates steady at 0.75% but the outlook was...

Over the weekend, China reported stronger than expected November PMI readings while Korea reported weaker than expected November trade data.  While the China data is welcome, we put more weight on Korea trade numbers, which typically serve as a good bellwether for the entire region.  Press reports suggest the Phase One trade deal has stalled due to Hong Kong legislation passed by the US Congress.  Until a deal is wrapped up, we remain cautious on EM.  AMERICAS Chile...