Tag Archives: Featured

There are few industries that offer a picture glass window to see numerous macroeconomic forces as steel does.   Excess capacity, trade policy, and the yuan all intersect when looking at the steel industry.   Moreover, it also shed light on why the drop of energy and other commodity prices, such as iron ore, have not bolstered the steel industry, let alone the general economy, as many expected.   At the heart of the problem is that globally there is greater capacity to produce steel than...

After another soggy Asian session, European markets have begun on a firm note, and US shares are trading broadly higher in Europe as well.  Led by the beleaguered financial shares, and healthcare, the Dow Jones Stoxx 600 is up 2%.  Similarly, the peripheral bonds, including Portugal (though not Greece) are seeing a reprieve from the recent selling.  Spanish and Italian 10-year benchmark bonds are off 5-6 bp while the Portuguese yield is off 10 bp.  The yield on JGBS, bunds, gilts and...

Portugal's 10-year bond yield has almost 120 bp this year.  It is one of the few eurozone members that still pay to borrow two-year money.   There are two set of drivers.  One set is country specific.  These may matter only to current or prospective investors.  The other set of considerations may have broader applicability.  This means that even those without direct exposure may want to take note of developments in Portugal.   There are a few country-specific considerations that are...

Investors and policymakers continue to wrestle with the economic impact of the dollar's rise.  The Federal Reserve has argued that the dollar's appreciation acts as a headwind on exports and dampens imported inflation.  At the same time, despite the dollar's appreciation and the fall in oil prices, core inflation rose steadily last year. Core CPI rose from 1.6% at the end of 2014 to 2.1% at the end of 2015.  The core PCE deflator lagged, but the after bottoming last July below 1.26%, it...

After a meltdown in Asia, the global capital markets are stabilizing in Europe.   The US S&P managed to recoup about half of its losses before the close yesterday, but this gave not comfort to Japanese investors.  The yen's strength and ongoing concerns about banks' exposure to energy companies took the down 5.4% and pushed the 10-year JGB yield into negative territory for the first time.   The Dow Jones Stoxx 600 is off 0.25% near midday in London.  Telecoms and consumer staples are...

Last Thursday, January 28, there was a flash crash on the price chart for silver. Here is a graph of the price action. The Price of Silver, Jan 28 (All times GMT) If you read more about it, you will see that there was an irregularity around the silver fix. At the time, the spot price was around $14.40. The fix was set at $13.58. This is a major deviation. Many silver bugs are up in arms about how unfair the new silver fix is. That’s nothing new. They were up in arms about the old one. The...

Last Thursday, January 28, there was a flash crash on the price chart for silver. Here is a graph of the price action. The Price of Silver, Jan 28 (All times GMT) If you read more about it, you will see that there was an irregularity around the silver fix. At the time, the spot price was around $14.40. The fix was set at $13.58. This is a major deviation. Many silver bugs are up in arms about how unfair the new silver fix is. That’s nothing new. They were up in arms about the old one. The...

In many ways, the world has turned upside down.   It is not just central banks that have set policy rates below zero, but the entire German curve out through eight years have negative yields.  Japan, which has the largest debt burden relative to GDP,  has negative yields out through nine years.   The Swiss curve is negative through 15 years.     It is not just core countries either.  Ireland, which holds national elections in a couple of weeks, has negative yields out four years.   Spain,...

  (co-authored with Matt Dabrowski) The great British geographer Halford Mackinder invented the term “geopolitics” over 100 years ago. He painted a grand vision of international relations that revolved around one fear: dominance of what he called the “Heartland” of Eurasia. Mackinder believed the road to dominance ran through Eastern Europe. His ideas have remained influential ever since, for as long as the West has concerned itself about the impact of Eurasia on world affairs. For...

EM assets for the most part fared well last week, and positive sentiment should carry over into this week.  China reported January foreign reserves over the weekend, and they fell less than expected to $3.231 bln.  China markets are closed this week for the New Year holiday.  While there should be little risk of negative headlines from the mainland, markets should watch how CNH trades in the offshore markets that are open. Oil prices should also be regarded as an important factor behind...