Tag Archives: 5) Global Macro

All the status quo “fixes” only hasten the collapse of the status quo. That economic, social and political conflict is accelerating is self-evident. What’s open to debate are the core drivers of conflict / disorder /unraveling. Here’s the core self-reinforcing dynamic in my view: 1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with...

EM FX has rallied sharply in recent weeks, helped by growing optimism that we’ve seen the worst of the US-China trade war Given our more constructive outlook on EM, we believe MSCI EM FX should eventually test the 1657.50 high from July We see continued divergences within the asset class Our 1-rated (strongest fundamentals) grouping for Q4 2019 consists of TWD, THB, PHP, CNY, and KRW Our 5-rated (weakest fundamentals) grouping for Q4 2019 consists of ZAR, TRY, LKR,...

Press reports suggest that the mood in Beijing is pessimistic after President Trump pushed back against tariff rollbacks Fed Chair Powell met with President Trump and Treasury Secretary Mnuchin yesterday Hungary is expected to keep rates steady; the deadline to form a government in Israel is fast approaching RBA released dovish minutes from its November policy meeting The dollar is mostly firmer against the majors as markets await fresh drivers. Kiwi and Stockie are...

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets? When is “Not-QE” QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham Lincoln famously recounted in 1862: ‘If I should call a sheep’s tail a leg, how many legs would it have?’ ‘No, only four; for my calling the tail a leg would not...

EM FX was mostly weaker last week due to doubts about a Phase One trade deal between the US and China. Those talks continue this week and while we expect a deal to be struck, there is likely to be a lot of last minute posturing that will likely keep markets volatile over the short-run. In the meantime, investors need to beware of idiosyncratic country risk within EM.   AMERICAS Chile reports Q3 GDP Tuesday, with growth expected at 3.3% y/y vs. 1.9% in Q2. Still, this...

The stock market’s dichotomy grows ever wider. On the one side, record high prices which are being set by the expectations of a trade deal plus renewed worldwide “stimulus.” Sure, officials everywhere were late to see the downturn coming, but they’ve since woken up and went to work. On the other side, though, there’s not nearly the same level confidence. Earnings are derived from several factors but chiefly the economic climate in which companies operate....

With year-end upon us, we review some of the key risks to EM assets and how we think they progress from here. In short, the two most significant downside risks would be a decisive improvement in Elizabeth Warren’s polling figures and an upset in the US-China trade negotiations. We expect a stronger dollar and higher yields in the near-term but with the upside for both capped, leaving us with a modestly favourable risk-taking environment. In terms of risk...

It’s not too difficult to predict a political rebellion against the machinery of soaring wealth and income inequality. The one constant across the media-political spectrum is an unblinking focus on the stock market as a barometer of the national economy: every major media outlet from the New York Times to Fox News prominently displays stock market action, and TV news anchors’ expressions reflect the media’s emotional promotion of the market as the end all to be all:...

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase. “Sociopath” is a word we now encounter regularly in the mainstream media, but what does it mean? Here is a list of 16 traits, many of which are visible in lionized corporate and political leaders and entrepreneurs. One key trait is a lack of moral responsibility or conscience; the sociopath...

There’s a couple of different ways that Unit Labor Costs can rise. Or even surge. The first is the good way, the one we all want to see because it is consistent with the idea of an economy that is actually booming. If workers have become truly scarce as macro forces sustain actual growth such that all labor market slack is absorbed, then businesses have to compete for them bidding up the price of marginal labor. This is, of course, the exact scenario we’ve been...