Tag Archives: 5) Global Macro

Technology, like natural selection, has no goal. When it comes to the impact of automation (robots, AI, etc.) on jobs, there are two schools of thought: one holds that technology has always created more and better jobs than it destroys, and this will continue to be the case. The other holds that the current wave of automation will destroy far more jobs than it creates, but the solution is to tax the robots and use these revenues to distribute the wealth to everyone...

We think the Fed has signaled that the bar to another cut is high.  Unless the US data weakens considerably, we see rates on hold for now and this means the liquidity story for EM has worsened.  Elsewhere, US-China trade talks appear to be going nowhere.  With no end in sight to the trade war, we remain negative on EM. Korea reports trade data for the first 20 days of September Monday.  Between the US-China trade war and Korea-Japan tensions over exports of strategic...

As expected, the Fed cut rates by 25 bp; the dollar firmed after the decision but has since given back some gains During the North American session, there will be a fair amount of US data BOE is expected to keep rates steady; UK reported August retail sales SNB and BOJ kept rates steady, as expected; Norges Bank unexpectedly hiked 25 bp Brazil cut rates 50 bp to 5.5%; Indonesia cut rates 25 bp to 5.25%; Taiwan kept rates steady at 1.375%; SARB is expected to remain...

A corrupt Orthodoxy devoid of new ideas, an Orthodoxy devoted to maintaining the wealth, status and power of insiders regardless of cost, is a brittle, fragile, unstable system. When the ruling Elites sense their control of the populace is waning, they seek to regain full control via the imposition of a strict Orthodoxy, enforced by an Inquisition. We are living in just such an era. Everywhere we turn, a New Orthodoxy reigns. Dissent is blasphemy, and any narratives...

The “everything bubble” is not permanent. All eyes are again on the Federal Reserve, as everyone understands that the Fed is the market— the stock market, the bond market, the art market, the housing market, etc. All markets have been driven higher by one force: central bank money creation and distribution to the financial sector of financiers and corporations, the richest of the rich. What few seem to grasp (because they’re paid not to?) is the Fed is powerless over...

Oil prices have spiked after the weekend attack on Saudi oil facilities.  Will it impact the Fed tomorrow?  No.  We compare the current (but still unfolding) situation to past oil shocks from the 1970s and discuss the policy responses taken. RECENT DEVELOPMENTS The weekend bombing of Saudi oil facilities continues to reverberate.  The drone strike removed about 5% of global supplies from the market, leading Brent oil to spike to $72 per barrel Monday before falling...

Before the Great “Recession” ended the business cycle as we once knew it, there was a widely accepted concept known as stall speed. In the US, if GDP growth decelerated down to around 2% it suggested the system had reached a danger zone of sorts. In a such a weakened state, one good push, or shock, could send the economy plunging into recession. Any economy which might slow down into a weakened state for whatever reasons becomes susceptible. What might be a minor,...

Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances. It was reported last week that Maersk and MPC would “temporarily suspend” their sailings on one of the biggest routes between Europe and Asia. Weakening...

The weekend bombing of Saudi oil facilities continue to reverberate across global markets The currencies of the oil producing nations are likely to outperform near-term US rates continue to adjust ahead of the FOMC UK Prime Minister Johnson is in Luxembourg today to meet with EC President Juncker China reported weak August IP and retail sales . The dollar is mixed against the majors as markets continue to digest the attack on Saudi oil facilities.  Yen and Loonie are...

What was “possible” yesterday is now a low-cost proven capability, and the consequences are far from predictable. Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly. The obvious goal is to placate global markets fearful of an energy disruption that could tip a precarious global economy into recession. The real impact isn’t on...