Tag Archive: newsletter

Two Intertwined Dynamics Are Transforming the Economy: Technology and Financialization

2019-05-22

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2019-05-22

If you want to understand how the economy is being transformed, look at the intersection of Big Tech, financialization and the central state. The two dynamics transforming the economy--technology and financialization--are intertwined yet widely viewed as unrelated. Critics and proponents of each largely ignore the other dynamic: critics of institutionalized fraud and other manifestations of financialization implicitly assume the economy will return...

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FX Daily, May 21: Equities Find Some Traction while the Dollar Firms

2019-05-21

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2019-05-21

Overview:  Equities are paring some of their recent losses.  The MSCI Asia Pacific Index is posting its first back-to-back gain in a month, led by a more than 1% rally in China.  Heightened prospects for an Australian rate cut in a few weeks helped extend the run in the local equity market to a new record high.  European bourses are higher, with the Dow Jones Stoxx 600 rising around 0.3% in the morning session.

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China’s Nuclear Option to Sell US Treasurys, Report 19 May

2019-05-21

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2019-05-21

Gold and Silver Price
There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds—well over $1 trillion—and crash the Treasury bond market. Since the interest rate is inverse to the bond price, a crash of the price would be a skyrocket of the rate. The US government would face spiraling costs of servicing its debt, and quickly collapse into bankruptcy.

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Swiss give clear ‘yes’ to corporate tax reform

2019-05-21

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2019-05-21

Swiss voters largely accepted on Sunday a reform of the corporate tax system that will scrap preferential treatment for multinational firms. The result also means a financial boost for the country's ailing pension system. Two years after voters rejected a similar idea to overhaul corporate tax rules, the issue – this time linked controversially to pensions – received a clear thumbs-up.

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Cool Video: End of Tariff Truce Spurs Over Correction

2019-05-21

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2019-05-21

The S&P 500 recorded a key reversal on May 1, and the end of the tariff truce ensured follow-through selling.  With today's early losses, it is off nearly 3.5% this month.   In my brief chat with Stuart Varney at Fox Business, I suggest that the stretched technical condition left the market vulnerable to a "buy in May and go away"  scenario. 

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Japan’s Surprise Positive Is A Huge Minus

2019-05-21

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2019-05-21

Japan Real GDP, 2008-2019
Preliminary estimates show that Japanese GDP surprised to the upside by a significant amount. According to Japan’s Cabinet Office, Real GDP expanded by 0.5% (seasonally-adjusted) in the first quarter of 2019 from the last quarter of 2018. That’s an annual rate of +2.1%. Most analysts had been expecting around a 0.2% contraction, which would’ve been the third quarterly minus out of the last five.

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FX Daily, May 20: Politics Overshadows Economics Today, but Japan’s Economy Unexpectedly Expanded in Q1

2019-05-20

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2019-05-20

Encouraged by the election results, investors bid up Indian and Australian currencies and equities. Japan offered a pleasant surprise by reporting the world's third-largest economy expanded in Q1. Most other equity markets in Asia fell, and European stocks have the week with small losses.

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FX Weekly Preview: The Week Ahead featuring the Battle for 7.0

2019-05-20

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2019-05-20

The strategic objective is to integrate China into the world economy. The liberal international solution was trade, investment flows, and cultural exchanges. The rise of nationalism and China's own willingness to flaunt the international rules are defeating the strategy.

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Verschwörung gegen Schweiz: Was macht SNB?

2019-05-20

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2019-05-20

„Verschwörung gegen die Schweiz?“ „Rekord-Wette von Spekulanten gegen Schweizer Franken.“ „Zur Zeit läuft die bisher grösste Währungs-Wette gegen den Schweizer Franken.“ So jüngst in Blick und Handelszeitung. Von 4 Milliarden Franken Short-Positionen gegen den Franken an der Börse in Chicago ist da die Rede.

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Swiss workers open to the idea of raising retirement age

2019-05-20

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2019-05-20

Employees Switzerland, an organisation representing Swiss workers, is resigned to the idea of raising the retirement age, according to Swiss broadcaster RTS. Speaking to the newspaper NZZ am Sonntag, Stefan Studer, director of the association, said raising the retirement age is inevitable because of the financial difficulties facing Switzerland’s state pension system, known as the first pillar.

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The Normalization and Institutionalization of Fraud

2019-05-20

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2019-05-20

% of IPOs with negative earnings, 1980-2018
Normalizing and institutionalizing fraud undermines the foundations of the economy and the financial system. I am indebted to Manoj Samanta (twitter: @flation_debate) for the insightful concept the commoditization of fraud. The first step in the commoditization of fraud is to normalize fraud as Business as Usual (BAU) to the point that it's no longer viewed as "wrong," destructive or an aberration of evil-doers but as an accepted way to maximize...

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Downward Mobility Matters More Than Liberal-Conservative Labels

2019-05-19

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2019-05-19

Workers Share of National Income 1994-2020
The real heresy here is the American economy is now rigged for downward mobility. In the conventional narrative, one's economic class is overshadowed by one's political belief structure: liberal, conservative, libertarian, etc. In terms of economic class, the conventional narrative divides people into their ideological beliefs about economic ideologies: free market capitalism, socialism, etc.

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Switzerland blacklisted by ILO

2019-05-19

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2019-05-19

Employees who are active in trade unions are not sufficiently protected from being sacked in Switzerland, according to the International Labour Organization (ILO). The Geneva-based body has added Switzerland to a blacklist – just before a centenary conference in the Swiss city. The list comprises 40 countries that violate ILO conventions. Together with Greece and Belarus, Switzerland is the only European country to feature.

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Global Doves Expire: Fed Pause Fizzles (US Retail Sales)

2019-05-18

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2019-05-18

Retail Sales, NSA 2010-2019
Before the stock market’s slide beginning in early October, for most people they heard the economy was booming, the labor market was unbelievably good, an inflationary breakout just over the horizon. Jay Powell did as much as anyone to foster this belief, chief caretaker to the narrative. He and his fellow central bankers couldn’t use the word “strong” enough.

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Government performs fighter jet U-turn

2019-05-18

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2019-05-18

The Federal Council has changed its approach to buying new combat aircraft and anti-aircraft missiles. Swiss voters will now be able to have a say only on the fighter jets, on which the government wants to spend no more than CHF6 billion ($5.95 billion). It has asked the defence ministry to present a planning decision no later than the beginning of September.

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FX Daily, May 17: China Questions US Sincerity

2019-05-17

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2019-05-17

Since the presidential tweets on May 3, the US had the initiative in the negotiations with China, but today, China has pushed back. It is cool to the idea promoted by the US that trade talks will resume shortly. Now it may take the Trump-Xi meeting at the end of next month to restart talks. This, coupled with US sanctions on Huawei banning imports from it and sales to it, threatens to disrupt business and this took a toll on Chinese, Taiwanese and...

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Swiss Labour Force Survey in 1st quarter 2019: 0.8percent increase in number of employed persons; unemployment rate based on ILO definition at 4.9percent

2019-05-17

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2019-05-17

Unemployed According to ILO, Q1 2014-Q1 2019
16.05.2019 - The number of employed persons in Switzerland rose by 0.8% between the 1st quarter 2018 and the 1st quarter 2019. During the same period, the unemployment rate as defined by the International Labour Organisation (ILO) declined from 5.2% to 4.9%. The EU's unemployment rate decreased from 7.4% to 6.8%. These are some of the results from the Swiss Labour Force Survey (SLFS).

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Core sovereign bond yields – update

2019-05-17

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2019-05-17

10-Year Yield, 2016-2019
We are adjusting downward our year-end targets for the 10-year US Treasury and Bund yields.Taking hold of two important changes to our central macroeconomic scenarios, we are adjusting downward our year-end target for the 10-year US Treasury yield from 3.0% to 2.8% and the Bund yield from 0.5% to 0.3%. 

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Older unemployed to get more help from government

2019-05-17

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2019-05-17

The government has announced measures to help Swiss-based workers have better access to the job market. Plans to help older people out of a job are also outlined. The measures, outlined on Wednesday by interior minister Alain Berset and justice minister Karin Keller-Sutter, are part of efforts to adapt to an ageing workforce and to new rules forcing employers to give priority to Swiss-based workers.

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FX Daily, May 16: US Struggles to Strike a Less Strident Tone

2019-05-16

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2019-05-16

Overview: Retail sales and industrial production disappointed in both the US and China prior to the end of the tariff truce, declared by the US in a series of presidential tweets on May 5.  The reaction function of the US to the drop in equities was to play down tensions on three fronts.  First, a US team is expected to return to Beijing in the coming weeks. 

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