Global Macro

55

The pros and cons of MMT

Authored by Michael Every via Rabobank. Mmm…MT For those who haven’t noticed, there has been a lot of discussion about Modern Monetary Theory (MMT) in the press of late. Clearly MMT, which has actually been around for decades, is currently a hot topic at the highest levels. However, even a cursory glance above shows that it is

16

Nobel Prize laureate: World Economy a population “pyramid scheme”

By Leith van Onselen Nobel laureate, Steven Chu, has warned that the global economy is on an unsustainable footing, reliant on an ever-increasing population which he described as a population “pyramid” or “ponzi” scheme. From Forbes: “The world needs a new model of how to generate a rising standard of living that’s not dependent on

9

What is “secular stagnation”

Via Capital Economics: A recent paper by Larry Summers and Lukasz Rachel has been doing the rounds among economists and has revived debate in financial markets about “secular stagnation”. But what is “secular stagnation”, and what might it mean for economic growth, monetary policy and asset prices? One problem is that there are competing definitions

25

Saxobank: MMT cometh

Via Steen Jakobsen at Saxobank: Last night’s FOMC meeting made it official: the Fed has thrown in the towel, and central banks are committed to defying the business cycle. But where does this leave us in terms of positioning for 2019, 2020 and beyond? If you are familiar with my research over the last 20 years,

5

Does a US/China trade deal fix everything?

Via Capital Economics: We seem to be moving towards an agreement between the US and China on trade. What would this mean for the global economy? The finer points of the deal are still unclear, but it is likely to involve Beijing agreeing to increase its imports from the US in several areas (soy, oil,

43

More evidence immigration suppresses wages

By Leith van Onselen As revealed in the above BBC News video and the below article from The Guardian, UK companies are experiencing a labour ‘supply shock’ from lower immigration, which has forced them to lift wages: Growing skills shortages in the UK jobs market are starting to drive up wages, according to a survey,

10

Chartfest 23-24 February 2019

  AUSTRALIA   5 Eyes Part Time Employment   Australia CPI Housing Wealth and Consumption Residential Rents NSW & Vic, wages & unemployment   Australian coal export destinations   Australian Commodity Exports   Australian House Prices   Australian Housing Finance   Australian Renewable Energy   Australian Services & Manufacturing   Australian Short Term Arrivals  

12

Why the Australian slowdown is much worse than the global one

There is one big difference between the global and local slowdowns right now. It is that while much of the world is entering an industrial recession with services economies holding up, Australia is the complete opposite. The US is seeing an industrial slowdown with services booming: Same in Europe exemplified by Germany: Same in China

7

IMF drops growth forecasts again

by Chris Becker As the world’s elite – besides Donald Trump who is holed up in his McMansion – descend upon Davos for the World Economic Forum, the IMF is out with an update to its growth forecasts. The timing could have been a bit better given the release of the Chinese 4Q GDP print

1

Credit Suisse: Is momentum investing valid?

Via Damien Boey of Credit Suisse: Momentum investing is based on the idea that tomorrow’s winners and losers will resemble yesterday’s winners and losers on average, whether on 12-month total return, or 3-month earnings revision bases. We find that macro factors can predict when momentum factors are likely to work well, although there are also

4

Vancouver pushes Canadian house prices lower

By Leith van Onselen The Teranet-National Bank House Price Index for December has been released, which reported a third consecutive monthly decline in home values: The Teranet–National Bank National Composite House Price IndexTM for December was down 0.3% from the previous month. It was the third consecutive monthly retreat. The component indexes were down for seven

23

Japan shows the world how to age gracefully

By Leith van Onselen After spending a decade worrying about the rise of Japan, economists (and population boosters) in Australia have frequently labelled Japan an ‘economic basket case’ due to its ageing (and falling) population and its slow growth in headline GDP. I have frequently challenged this argument, citing: 1. Japan’s enviously low unemployment rate,

5

Trump to rejoin TPP?

By Leith van Onselen After vigorously opposing the Trans-Pacific Partnership (TPP) in the lead-up to the 2016 Presidential Election, the Trump Administration appears to be having second thoughts. From The AFR: Donald Trump has backed a fresh drive by the United States to re-engage with Australia and Asia on trade deals such as the Trans-Pacific

6

Why is the market obsessed with quantitative tightening?

Via Damien Boey as Credit Suisse: In recent articles, we have talked about the tail risks from central bank balance sheet reduction globally. Overnight, we have seen central bankers wax and wane in their positions:   After suggesting recently that balance sheet reduction need not be on “auto-pilot”, Fed Chair Powell has come back saying that

0

World Bank cuts growth forecasts

by Chris Becker Following on from the dreadful German industrial production print overnight, there’s more signs that the global growth machine is sputtering. The World Bank is out with it’s latest growth forecasts, and have slashed away, with advanced economies to drop to 2%: Global growth is expected to slow to 2.9 percent in 2019.

14

Blame Brexit on the Euro

by Chris Becker At the end of March this year, or in less than 90 days, the UK is set to leave the European Union. The EU and UK’s Prime Minister Theresa May have struck a deal, but it needs to be voted on in Parliament before such a deal is ratified. The exit from

1

Moody’s: bonds need to rally for stocks to stabilize

From Moodys: The world is now incapable of shouldering a 10-year Treasury yield above 3%. A remedial decline by the U.S.’ benchmark interest rates will be critical to rejuvenating global business activity and stabilizing financial markets. Otherwise, the corporate earnings outlook might deteriorate by enough to sink the market value of U.S. common stock by

19

Global debt reaches new record highs: IMF

by Chris Becker Just in time for the New Year crash, here comes some stellar news from the IMF (my emphasis added): Global debt has reached an all-time high of $184 trillion in nominal terms, the equivalent of 225 percent of GDP in 2017. On average, the world’s debt now exceeds $86,000 in per capita terms,

44

It’s all about Apple as it blames China

by Chris Becker Looks like we’re reliving the GFC all over again with interconnectedness so high that global currency and stock markets are going to crash because some single Chinese youths are not buying as many iPhones as they should. Apple announced a near 10% reduction in its forward guidance, releasing this report: While we

86

Australian dollar crashing

by Chris Becker Some epic volatility in the FX market at the moment with Yen moving both Aussie and USD around: This is very troubling indeed, with the lack of liquidity as key levels are taken out really showing how volatile and dangerous the FX world really is – and why most traders don’t hold

1

The future does not belong to emerging markets

Via Capital Economics: The conventional view of the long-term prospects for the global economy can be summarised as: EMs good, DMs bad. Like most things, however, we suspect that the conventional view is likely to be wrong. Last week we published our first Long Term Global Economic Outlook, which sets out forecasts for the major

1

How “late cycle” is the global economy?

Via FTAlphaville: With roughly six months to go until the US expansion becomes the longest on record, there has been growing concern that the global economy more broadly is running on late-cycle fumes. Lofty valuations, soaring profit margins, a flattening yield curve and a Federal Reserve tightening in the face of (admittedly muted) inflationary pressures