Category Archive: 5) Global Macro

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Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China?

2020-01-30

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2020-01-30

China Share of World Exports, 2000-2018
Everyone expecting a quick resolution to the epidemic and a rapid return to pre-epidemic conditions would be well-served by looking beyond first-order effects. While the media naturally focuses on the immediate effects of the coronavirus epidemic, the possible second-order effects receive little attention: first order, every action has a consequence. Second order, every consequence has its own consequence.

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With No Second Half Rebound, Confirming The Squeeze

2020-01-29

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2020-01-29

Germany ZEW Financial Market Survey, 2006-2019
It’s a palpable impatience. Having learned absolutely nothing from the most recent German example, there’s this pervasive belief that if the economy hasn’t fallen apart by now it must be going the other way. The right way. Those are the only two options for mainstream analysis (which means it isn’t analysis).

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Charity: how effective is giving? | The Economist

2020-01-28

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Today’s super-rich are putting record sums into tackling the world’s most pressing problems. But how altruistic is this golden age of charitable giving? Read more here: https://econ.st/3aHRmjc Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Today’s super-wealthy are richer than ever. And they’re giving away their billions like never before. Philanthropists are putting …

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Tentative Stabilization

2020-01-28

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2020-01-28

Implied Volatility Measures, 2018-2019
Risk-off continues in Asia, but moves have been less dramatic. European market jittery but stable. Implied rates now pricing in a full Fed cut by September. The UK will announce its decision on Huawei’s access to the country’s 5G network.

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Charles Hugh Smith on the Emerging Repo Crisis

2020-01-28

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Charles Hugh Smith on the Emerging Repo Crisis http://financialrepressionauthority.com/2020/01/27/the-roundtable-insight-charles-hugh-smith-on-the-emerging-repo-crisis/

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Sharp Sell-Off on Virus Concerns

2020-01-27

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2020-01-27

Oil and Gold Divergence, 2017-2019
Global stocks lower on virus fears, yen appreciates, and yield curves flatten. Oil prices continue to fall while gold rises. Italian assets outperform on favorable election results for ruling coalition. German IFO survey disappoints, trimming nascent green shoots.

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EM Preview for the Week Ahead

2020-01-27

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2020-01-27

The spread of the coronavirus continues and is likely to weigh on risk assets and EM.  Most markets in Emerging Asia are closed for all or part of this week due to the Lunar New Year holiday.  China has extended the holiday until February 2 as it struggles to contain the virus. 

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The Future of What’s Called “Capitalism”

2020-01-25

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2020-01-25

The psychotic instability will resolve itself when the illusory officially sanctioned "capitalism" implodes. Whatever definition of capitalism you use, the current system isn't it so let's call it "capitalism" in quotes to indicate it's called "capitalism" but isn't actually classical capitalism.

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Virus and Trade Tensions

2020-01-24

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2020-01-24

Implied Volatility Measures, 2019-2020
Asian markets hit by a further outbreak of the coronavirus. US steps up trade rhetoric against EU and pushes back against UK digital tax plan. AUD stronger on solid Australian jobs report and pricing out of RBA easing. CAD weaker on dovish BOC communication yesterday.

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The Big And Small of Leading Japan

2020-01-23

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2020-01-23

Japan Trade & Production, 2016-2019
In the middle of 2018, Japan, they said, was riding so high. Gliding along on the tidal wave of globally synchronized growth, Haruhiko’s courage and more so patience had finally delivered the long-promised recovery. The Japanese economy had healed to a point that its central bank officials believed it time to wean the thing off decades of monetary “stimulus.”

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How an obsession with home ownership can ruin the economy | The Economist

2020-01-22

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Many dream of owning their own home, and thanks to huge financial incentives in the rich world many have been able to so. But government policies to encourage home ownership were a huge mistake. Read more here: https://econ.st/2v6sHo6 Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy For more from Economist Films visit: http://films.economist.com/ …

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Calling Things by Their Real Names

2020-01-22

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2020-01-22

One does not need money to convey one's thoughts, but what money does allow is the drowning out of speech of those without money by those with a lot of money. In last week's explanation of why the Federal Reserve is evil, I invoked the principle of calling things by their real names, a concept that drew an insightful commentary from longtime correspondent Chad D.:

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Dollar Mixed as Risk-Off Impulses Spread from Virus

2020-01-21

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2020-01-21

Reports that Wuhan coronavirus continues to spread hurt risk appetite overnight. US President Trump and French president Macron agreed to take a step back from the digital tax dispute. The dollar is taking a breather today; after last week’s huge US data dump, releases this week are fairly light. The UK reported firm jobs data for November; BOJ kept policy steady, as expected.

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China Enters 2020 Still (Intent On) Managing Its Decline

2020-01-21

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2020-01-21

China Industrial Production, 1998-2019
Chinese Industrial Production accelerated further in December 2019, rising 6.9% year-over-year according to today’s estimates from China’s National Bureau of Statistics (NBS). That was a full percentage point above consensus. IP had bottomed out right in August at a record low 4.4%, and then, just as this wave of renewed optimism swept the world, it has rebounded alongside it.

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EM Preview for the Week Ahead

2020-01-20

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2020-01-20

Market sentiment on EM remains positive after the Phase One trade deal was signed.  Data out of China is also supportive for EM.  Key forward-looking data this week are Taiwan export orders and Korea trade data for the first 20 days of January.  The global liquidity story also remains beneficial for risk, with the ECB, Norges Bank, BOC, and BOJ all set to maintain steady rates this week.

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Germany, Maybe Europe: No Signs Of The Bottom

2020-01-19

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2020-01-19

Europe Industrial Production, 2007-2019
For anyone thinking the global economy is turning around, it’s not the kind of thing you want to hear. Germany has been Ground Zero for this globally synchronized downturn. That’s where it began, meaning first showed up, all the way back at the start of 2018. Ever since, the German economy has been pulling Europe down into the economic abyss along with it, being ahead of the curve in signaling what was to come for the whole rest of the global...

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Inside Iran: what’s next? | The Economist

2020-01-18

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When Iran’s military forces mistakenly shot down a Ukrainian passenger jet it sparked widespread protests around the country. Iran’s leaders face being overwhelmed by a crisis they created—how will they respond? Read more here: https://econ.st/30whzMT Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy Iran’s leaders are facing unprecedented pressure from abroad and at …

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Inflation, But Only At The Morgue

2020-01-18

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2020-01-18

Mortality Rates Divided by age group, 1999-2017
Why is everyone so angry? How can socialism possibly be on such a rise, particularly among younger people around the world? Why are Americans suddenly dying off? According to one study, two-thirds of millennials are convinced they are doing worse when compared to their parents’ generation. Sixty-two percent say they are living paycheck to paycheck, with no savings and no way to get any (though they also tend to “overspend” when compared to other...

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De-dollarization By Default Is Not What You Might Think

2020-01-17

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2020-01-17

CPMI Correspondent Banking Data, 2011-2018
Last month, a group of central bank governors from across the South Pacific region gathered in Australia to move forward the idea of a KYC utility. If you haven’t heard of KYC, or know your customer, it is a growing legal requirement that is being, and has been, imposed on banks all over the world. Spurred by anti-money laundering efforts undertaken first by the European Union, more and more governments are forcing global banks to take part.

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Dollar Soft Ahead of Retail Sales Data

2020-01-17

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2020-01-17

There were no surprises in the US-China Phase One trade deal. The dollar is drifting lower ahead of the key retail sales data; there are other minor US data out today. Bank of England credit survey showed demand for loans fell in Q4. Turkey cut its one-week repo rate by 75 bps to 11.25%; South Africa is expected to keep rates steady at 6.5%.

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