Tag Archives: newsletter

ECB President Draghi made clear at yesterday's press conference that new risks have materialized and the central bank's job to reach its mandate is far from over. Current efforts may not suffice to achieve its legal prescribed mandate. Monetary policy will be reviewed and reassessed at the next meeting in March, when new staff forecasts will also be available. In his opening remarks, Draghi cited the "slightly expansionary" fiscal policy, "reflecting in particular measures in support of...

 (from my colleague Dr. Win Thin) 1) Malaysia’s central bank kept rates steady at 3.25%, as expected, but cut bank reserve ratios from 4% to 3.5%2) S&P downgraded Poland one notch to BBB+ with negative outlook3) Brazil’s central bank did a complete about-face and left rates steady at 14.25%4) Mexico may tweak its FX auction program again when it is extended this month5) Argentine officials met with IMF chief Lagarde at the World Economic Forum in Davos In the EM equity space, Russia...

Like a car ignition that finally catches after several attempts, the global markets are building on the recovery seen in North America yesterday.   Asian stocks rallied, with the Nikkei leading the way with a 5.9% rally.  More modest 1.25% gains in Shanghai Composite allowed Chinese stocks to finish the week with small gains.  Australian, Korean, and Thai shares have also finished higher on the week.  European bourses are higher, and the Dow Jones Stoxx 600 is up 2.5%.  Not only is it...

There have been two important reforms announced, one in the EU and other in the IMF, that many investors may have missed due to the carnage in the markets.  While the economic challenges that Europe faces remain potent, the refugee problem appears more pressing.  Tomorrow the flash January PMIs from the eurozone are expected to slip a little, but the composite will likely remain near the multi-year high matched in December.  This suggests growth is steady.  The EU prides itself on its...

ECB President Draghi has sent the euro back down into the lower end of the recent range as he gave a strong signal that additional action could be delivered as early as March, the next meeting.  The euro had approached the upper end of its range yesterday and now is slipping through $1.08. Draghi embraced and defended the ECB's action but clearly and unequivocally opened the door wide for more action. By indicating that rates will remain at current low level of lower is a signal that the...

The Asian equity markets failed to retain the early gains that had at least partially been fueled by the US equities recouping half of their losses.  The MSCI Asia-Pacific Index lost about 1.7% and finished at new 3.5 year lows.    European markets are posting minor gains, with the Dow Jones Stoxx 600 up about 0.25% after hitting 15-month lows yesterday.  The gap created by yesterday's lower opening has not been entered.  This is also true of several national bourses, including Germany's...

I had the privilege today to appear on Canada's Business News Network. It is a great source for information on the Canadian economy and markets.  I was interviewed by Michael Hainsworth.   We discuss the Bank of Canada's decision not to cut rates today, which seemed highly discounted in the interest rate and derivatives markets.   The market seems to have simply pushed the rate cut expectation out to the spring, by which time the Liberal government is expected to present its budget.  ...

This Great Graphic, composed on Bloomberg, shows two-time series.  The white line is the premium the US government pays to borrow over the Canadian government for two years.  The yellow line the US dollar against the Canadian dollar.   Even though it appears to be a good fit, our eyes can be deceived, and Bloomberg automatically aligns the scales to show the best bit.  However, here the fit is very good.   We ran some correlations to probe the robustness of the fit.  Over the last 60...

The World Economic Forum is underway in Davos.  The global capital markets are off to one of their worst years ever,  the threat of terrorism hangs over us, like the Sword of Damocles, GDP growth, except in a few countries, is not keeping pace with population growth.   As  2500 rich, powerful, and famous (mostly) men meet in the Swiss resort, one cannot help but wonder if Ayn Rand's Atlas is shrugging?    The movers and shakers have ensconced themselves during this, particularly turbulent...

The market meltdown is extending into the third consecutive week.  Once again, the attempt to stabilize has failed, and bottom pickers have been punished.   It is easy to line up poor news developments, including IMF cutting world growth on the same day that the IEA warns of an extended glut in the oil market, the world's largest mining company projecting further declines in iron ore prices and poor earnings from one of the largest oil companies.  At the same time, some keen observers,...