Category Archive: 5) Global Macro

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Emerging Markets: Week Ahead Preview

2017-05-29

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2017-05-29

EM FX closed last week on a mixed note, with markets struggling to find a compelling investment theme. The US jobs data this week could provide some more clarity on Fed policy. We still think markets are still underestimating political risk in the big EM countries, including Brazil (Moody’s outlook moved to negative), Mexico (election in state of Mexico), South Africa (ANC debates Zuma’s fate), and Turkey (ongoing crackdown on opposition).

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Suddenly Impatient Sentiment

2017-05-28

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2017-05-28

Fed Fifth District Survey Of Manufacturing, January 2014 - May 2017
Two more manufacturing surveys suggest sharp deceleration in momentum, or, more specifically, the momentum of sentiment (if there is such a thing). The Federal Reserve’s 5th District Survey of Manufacturing (Richmond branch) dropped to barely positive, calculated to be just 1.0 in May following 20.0 in April and 22.0 in March.

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RMR: Exclusive Interview with Charles Hugh Smith (05/27/2017)

2017-05-27

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“V” welcomes back Charles for an in-depth discussion regarding Charles’s blogs: TINA’s Legacy: Free Money, Bread and Circuses and Collapse, How Higher Education Became an Obscenely Profitable Racket That Enriches the Few at the Expense of the Many (Student Debt-Serfs) and Want to Understand Rising Wealth Inequality? Look at Debt and Interest. Charles’s website: http://www.oftwominds.com/ …

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Emerging Markets: What has Changed

2017-05-27

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2017-05-27

Moody's downgraded China's rating from Aa3 to A1 with stable outlook. Reports suggest that the PBOC has informed local banks that it is changing the way it sets the daily fix. Moody's downgraded Hong Kong’s rating to Aa2 from Aa1 with stable outlook. Philippine President Duterte declared martial law on Mindanao island. Egypt's central bank unexpectedly hiked rates by 200 bp. S&P moved the outlook on Bolivia’s BB rating from stable to negative....

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Global Asset Allocation Update

2017-05-27

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2017-05-27

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are, however, changes within the asset classes. We are reducing the equity allocation and raising the allocation to REITs. 

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After a terrorist attack: a survivor’s view on how to move forward

2017-05-26

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In 2011, Bjorn Ihler survived a horrific terrorist attack in Norway. Since then he’s worked as a peace activist and dedicated his life to countering terrorism. He offers his perspective after the bombing in Manchester. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 22 people died in the Manchester attack on May 22nd …

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State of Denial: The Economy No Longer Works As It Did in the Past

2017-05-26

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2017-05-26

U.S. Productivity Growth, 1980 - 2017
If there is one reality that is denied or obscured by the Status Quo, it is that the economy no longer works as it did in the past. This is the fundamental economic context of our current slide into political-social disintegration.

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Less Than Nothing

2017-05-25

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2017-05-25

Eurodollar Futures Dimensions, 2005 - 2007
As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs.

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Commodity and Oil Prices: Staying Suck

2017-05-24

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2017-05-24

U.S. Industrial Production, 2006-2017
The rebound in commodity prices is not difficult to understand, perhaps even sympathize with. With everything so depressed early last year, if it turned out to be no big deal in the end then there was a killing to be made. That’s what markets are supposed to do, entice those with liquidity to buy when there is blood in the streets. And if those speculators turn out to be wrong, then we are all much the wiser for their pain.

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Bi-Weekly Economic Review

2017-05-23

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2017-05-23

The economic data releases since the last update were generally upbeat but markets are forward looking and the future apparently isn’t to their liking. Of course, it is hard to tell sometimes whether bonds, the dollar and stocks are responding to the real economy or the one people hope Donald Trump can deliver when he isn’t busy contradicting his communications staff.

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How to survive an earthquake through clever engineering

2017-05-22

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When earthquakes strike, the most dangerous aspect is not the shaking ground, but the risk posed by falling debris. So how do you make a structure earthquake-resistant? Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 More than a million people have died in earthquakes in the past two decades. But earthquakes don’t pose …

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Emerging Markets: Preview of the Week Ahead

2017-05-22

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2017-05-22

EM FX ended last week on a firm note, shrugging off political risk that consumed markets earlier in the week. With US rates remaining low, the dollar remains under pressure against the majors, and so EM FX is likely to benefit also. Yet we warn investors not to jump back into EM countries that are inherently riskier, such as Brazil, South Africa, and Turkey. We continue to favor Asia in the current environment.

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Trying To Reconcile Accounts; China

2017-05-21

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2017-05-21

China Fixed Asset Investment, April 2013 - April 2017
Chinese economic data for April 2017 has been uniformly disappointing. External trade numbers resembled too much commodity prices, leaving an emphasis on them rather than actual economic forces. The latest figures for the Big 3, Industrial Production, Retail Sales, and Fixed Asset Investment, unfortunately also remained true to the pattern.

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Emerging Markets: What Has Changed

2017-05-20

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2017-05-20

Stock Markets Emerging Markets, May 17
China’s government approved the creation of a bond link between Hong Kong and the mainland. S&P upgraded Indonesia one notch to investment grade BBB- with stable. Fitch revised the outlook on Vietnam’s BB- rating from stable to positive. Egypt will announce a package of social spending soon. Moody's changed the outlook on Poland's A2 rating from negative to stable.

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Reasonable Retail (Therefore Consumer) Expectations

2017-05-20

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2017-05-20

Transitory Retail Sales, January 2013 - May 2017
Retail sales estimates are not adjusted for inflation, but even so whenever they get down toward the 3% growth level you can be sure there is serious economic trouble. The 6-month average for overall retail sales dropped below 3% in March 2001, the month that marked the start of the official dot-com recession (though that is not the official name for the cyclical peak, it probably should be).

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Hopefully Not Another Three Years

2017-05-19

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2017-05-19

The Still-Shrinking 'Recovery'
The stock market has its earnings season, the regular quarterly reports of all the companies that have publicly traded stocks. In economic accounts, there is something similar though it only happens once a year. It is benchmark revision season, and it has been brought to a few important accounts already. Given that this is a backward looking exercise, that this season is likely to produce more downward revisions shouldn’t be surprising.

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China Inflation Now, Too

2017-05-18

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2017-05-18

China Producer Price Index, April 2007 - May 2017
We can add China to the list of locations where the near euphoria about inflation rates is rapidly falling apart. This is an important blow, as the Chinese economy has been counted on to lead the world out of this slump if through nothing other than its own sheer recklessness. “Stimulus” was all the rage one year ago, and for a time it seemed to be producing all the right effects. This was “reflation”, after all.

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A potential cure for HIV | The Economist

2017-05-18

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Scientists have developed a therapeutic vaccine for HIV which has the potential to create a functional cure for the disease. Here’s how it works. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Have doctors found a cure for HIV? Since 1981 the AIDS epidemic has killed around 35 million people. Up until now …

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President Trump trips up

2017-05-17

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President Trump is about to embark on his first foreign trip. Our cartoonist KAL gives his take on how he’s been preparing for it. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Daily Watch: mind-stretching short films throughout the working week. For more from Economist Films visit: http://films.economist.com/ Check out The Economist’s full …

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Lackluster Trade, China April Edition

2017-05-17

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2017-05-17

China’s trade statistics for April 2017 uniformly disappointed. They only did so, however, because expectations are being calibrated as if the current economy is actually different. It is instead merely swinging between bouts of contraction and low-grade growth, but so low-grade it really doesn’t qualify as growth.

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