Category Archive: Global Macro

Emerging Markets: Preview of the Week Ahead

EM ended last week on a soft note, as Fed tightening expectations ratcheted up.The December Fed funds futures contract has an implied yield of 0.5%,the highest since June 2. Note that on June 3, US rates plunged after the May jobs shocker (+38k). If...

Emerging Markets: What has Changed

Reserve Bank of India Deputy Governor Patel has been named to succeed Governor Rajan. Political risk is back in South Africa. The Colombian government and the FARC rebels have reached a final peace agreement. S&P cut the outlook on Mexico’s BBB+...

China’s Great Divide: A New Cultural Revolution?

In Asia, it's generally seen as unpatriotic to criticize one's country in public, even if you disagree with its direction and leadership. The cultural norm is to maintain the "face" of one's country by hiding its ills from outsiders. This reticence is...

What Are the Odds that the 2020-2022 Olympics Will Be Cancelled?

In the modern era (1896-present), the Olympics have only been cancelled in wartime: 1916 (World War I), 1940 and 1944 (World War II). But world war is not the only circumstance that could derail the Olympics; a global crisis in energy, finance or...

Emerging Markets: Preview of the Week Ahead

EM ended last week on a soft note.Fed tightening expectations were buffeted first by hawkish Dudley comments and then by the more balanced FOMC minutes. On net, the markets adjusted the odds for tightening by year-end a little higher from the previous...

The Dos Santos Succession Saga

Arguably one of the easier calls for us to make after 37 years in power was that President dos Santos would find ways of affording himself another 5 years in. Like any ‘effective’ leader, Mr. Santos made sure the final deal to do just that was stitched...

Emerging Markets: What has Changed

China unveiled a second equity link that will allow foreign investors to buy local stocks with fewer restrictions. Saudi Arabia will allow qualified foreign investors to subscribe to local IPOs starting this January. South Africa’s two main opposition...

Norway: Towards Stagflation

We have all heard the incredible stories of housing riches in commodity producing hotspots such as Western Australia and Canada. People have become millionaires simply by leveraging up and holding on to properties. These are the beneficiaries of a...

What the Fed Hasn’t Fixed (and Actually Made Worse)

The Fed has not only failed to fix what's broken in the U.S. economy--it has actively mad those problems worse. The Federal Reserve claims its monetary interventions saved America from economic ruin in 2009, and have bolstered growth ever since. Don't...

It’s Time to Abolish the DEA and America’s “War on Drugs” Gulag

It's difficult to pick the most destructive of America's many senseless, futile and tragically needless wars, but the "War on Drugs" is near the top of the list.Prohibition of mind-altering substances has not just failed--it has failed spectacularly,...

Stupid is What Stupid Does – Secular Stagnation Redux

Which country, the United States or Japan, have had the fastest GDP growth rate since the financial crisis? Due to Japan’s bad reputation as a stagnant, debt ridden, central bank dependent, demographic basket case the question appears superfluous. The...

The Odds of a Global Food Crisis Are Rising

Given the current abundance of food globally, confidence in permanent food surpluses and low grain prices is high. Few worry that the present abundance of food could be temporary. But the global food supply is more fragile than we might think, despite...

Why Wages Have Stagnated–and Will Continue to Stagnate

Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / "recovery." The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for...

Emerging Markets: Preview of the Week Ahead

EM FX ended the week on a soft note, despite the weaker than expected US retail sales report. Official concern about strong exchange rates is beginning to emerge. First it was Korea, then on Friday it was Brazil as acting President Temer said his...

Emerging Markets: What has Changed

S&P upgraded Korea a notch to AA with a stable outlook. Voters passed the constitutional referendum in Thailand by a wide margin. The IMF and Egypt have reached a staff-level agreement on a 3-year $12 bln. loan program. Argentina’s central bank will...

Emerging Markets: Preview of the Week Ahead

EM ended last week on a firm note, despite the stronger than expected July jobs report. As we suspected, one strong US data point is not yet enough to derail the dovish Fed outlook. With the RBA and BOE cutting last week and the RBNZ expected to cut...

Emerging Markets: What has Changed

India’s upper house approved the creation of a Good and Services Tax (GST). The Polish government softened its stance on the proposed Swiss franc loan conversion plan. Support for South Africa’s ruling African. National Congress (ANC) appears to have...

Emerging Markets: Preview of the Week Ahead

EM ended last week on a firm note, helped by the weaker than expected US Q2 GDP report as well as the small bounce in oil. With the RBA and BOE expected to ease this week, the global liquidity backdrop remains favorable for EM and “risk.” US jobs...

Emerging Markets: Week Ahead Preview

EM ended the week on a soft note, as the dollar reasserted broad-based strength against most currencies. The FOMC meeting this week could see the Fed push back against the market’s dovish take on policy, in which case EM would be likely to remain under...

Emerging Markets: What has Changed

The New York Times reported that the US is preparing to seize $1 bln in assets tied to 1MDB. S&P downgraded Turkey a notch to BB with a negative outlook, citing political uncertainty. Turkish President Erdogan declared a three-month state of...
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