Readers and investors will know that the MB Fund’s prevailing narrative for 2018 was “reverse decoupling”. That is, that global synchronised growth would slump quickly into US leadership and a growing EM crisis around a rising USD and slowing China. This, in turn, would club commodities lower and contain US inflation and bond yields boosting
The Australian is very hopeful indeed: With the US and China set to resume trade talks, investors are expected to anticipate a breakthrough, pushing shares, commodities and the Aussie dollar higher before talks on Wednesday and Thursday. There could be some profit-taking by mid-week amid fears that the talks might not prevent tit-for-tat tariffs on
From Damien Boey at Credit Suisse: Panic! Our global strategy team have highlighted that our proprietary global risk appetite index is now in oversold, or panic territory. Risky assets have underperformed safe assets over the past six months to the point where they may be starting to look interesting from a contrarian point of view.
From Bloomie: China will dispatch Vice Commerce Minister Wang Shouwen to the U.S. for low-level trade talks in late August, the first official exchanges since earlier negotiations broke down two months ago. The Chinese delegation led by Wang will meet with an American group led by David Malpass, under secretary for international affairs at the
By Leith van Onselen Over the weekend, the poster boy for the globalist ‘Fake Left’, Greg Jericho, penned a spurious article in The Guardian spruiking Phil Lowe’s debunked immigration propaganda and claiming that Australia’s mass immigration ‘Big Australia’ policy was not contributing to weaker wages growth: Low wages growth, congestion, poor schooling, crime – pretty
Vai Damien Booey at Credit Suisse: Europe goes “cold Turkey” We have just published an article explaining why we are concerned about contagion risks from Turkey (attached). We argue that Europe is going “cold Turkey” in two respects: 1. The ECB has warned us about banks’ EUR exposure to Turkey. 2. The ECB still plans to go ahead with
DXY is off to the races as EUR finally breaks on the reality of clapped out European growth: Here’s why: AUD broke to two year lows versus DMs: But soared against collapsing EMs: AUD market positioning is pushing towards more rarefied bearish territory at -55k contracts: Gold held up remarkably well. Don’t expect it to
by Chris Becker Last night saw the Bank of England (BOE) raise its benchmark interest rates to 0.75%, the highest since the bowels of the GFC in 2009. This puts it in august territory with the Federal Reserve, which revealed at the latest FOMC meeting that a September rate rise is also in order, plus the
By LF Economics The US sociologist and criminologist Edwin Hardin Sutherland is widely considered the founder of white-collar criminology, and was mentored by a protégé of the well-known economist and sociologist Thorstein Veblen. Although there was considerable effort on the part of journalists dedicated to investigating the crimes of the rich and powerful during the
By Leith van Onselen In May, the International Monetary Fund (IMF) released a new “cutting-edge dataset” measuring private and public debt across the global economy since the 1950s, which showed that the world had hit peak debt: The first observation is that, almost a decade after the collapse of Lehman Brothers, global debt, at $164
Via CNBC comes rumours of the death of the West being greatly exaggerated: President Donald Trump on Wednesday said the United States and the European Union had launched a “new phase” in their relationship, saying that the two major economies would start negotiations immediately on a number of areas including working toward “zero tariffs” on industrial goods
By Leith van Onselen BBC News has published a fascinating report on how young Norwegians have enjoyed a 13% rise in disposable household income while their counterparts in other nations are going backwards, thanks largely to the nation’s Sovereign Wealth Fund (SWF), which saved the bounty of its oil and gas boom: Best known for
Via Goldman: The tariff impact on S&P 500 EPS through lower revenues is minimal. S&P 500 firms derive just 2% of aggregate sales explicitly from China. Even a global trade war where every country imposes a 5% tariff on all trading partners would have a muted revenue impact. Our economists estimate the demand-side effects of such
Definitely. At the AFR: Treasurer Scott Morrison has warned the deepening US tariff war with China could derail a global economy that has finally shaken off the effects of the financial crisis and has directly challenged Donald Trump’s view that countries can win trade wars. As the International Monetary Fund described the US as among
By Leith van Onselen Back in March, job search website Adzuna estimated that around one-third Australian jobs could be lost to automation by 2030, with lower-skilled and manual labour jobs most at risk. Now, a new collaboration study between Marsh & McLennan’s Global Risk Centre, Mercer, and Oliver Wyman, estimates that Australian workers, like other nations,
Via Ray Dalio of Bridgewater: What is Universal Basic Income (UBI)? In general, UBI is a type of cash transfer that is: Universal: every citizen receives the transfer regardless of employment status or income. Unconditional: recipients have no restrictions on how they can spend the cash. Basic: the amount will cover “basic needs” and will constitute
Via Moody’s: Financial markets believe that the U.S. is likely to fare better than most other major economies in an allout trade war. This is because (i) international trade accounts for a smaller share of U.S. business activity, (ii) the U.S. imports far more than it exports, and (iii) the U.S. now well outperforms other
Via The Australian: Donald Trump created “utter panic’’ among NATO allies — who have agreed to pay more, and on a quicker timeline — after he warned the US could withdraw from the organisation in January if other wealthy countries did not immediately increase their spending on defence to 2 per cent of gross domestic
Via Bloomie: After the U.S. unveiled a list of Chinese imports worth $200 billion that could face higher duties, China’s Vice Minister of Commerce Wang Shouwen called on his U.S. counterparts to resolve the conflict through a new round of bilateral negotiations. While that came amid fresh threats of retaliationfrom Beijing, it matches a willingness from
Via Bloomie today: U.S. President Donald Trump’s assault on China’s trade policies will garner several high-profile advocates on Wednesday, as some of the world’s largest commercial regions will meet in Geneva to thresh out the ramifications of Beijing’s entrance into the World Trade Organization 17 years ago. Chinese representatives will say things are going well and that the
Alan Kohler has tackled the trade war: President Trump has declared that America’s trade deficit with China must shrink dramatically, which is the purpose of the tariffs. In fact, he says America’s trade deficit with the whole world — $US43.1bn in May — must shrink, because it means the United States is losing. He thinks trade deficit
Via Bloomie: President Donald Trump threatened to impose tariffs on every single Chinese import into America as the world’s two largest economies exchanged the first blows in a trade war that isn’t set to end anytime soon. After months of rhetoric, a 25 percent levy on $34 billion of Chinese goods entering the U.S. took effect just
Recall that China has tried to play Europe for the chump, via Reuters: China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month but is facing resistance, European officials said. In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including
Via Morgan Stanley: We no longer doubt that the US administration’s proposals signal the direction of trade policy. An escalatory cycle of protectionist actions, not just rhetoric, has begun and will continue. It’s another reason why pressure should continue in risk markets, which now must eat their US policy vegetables after feasting on dessert in
OK, so the rhetoric of trade war is heating up fast. And it’s not all talk. The US is about to impose tens of billions in tariffs on China. With hundreds of billions more in the pipeline. China meanwhile is crashing the yuan and preparing the troops, via Bloomie: President Xi Jinping presided over a
The Trump Administration effort in reversing thirty plus years of free trade negotiations in less than 12 months via the use of tariffs and trade restrictions is still reverberating around the globe. Like a lot of Trumpian antics, there is some truth to the matter, because during those decades, the United States middle and working
Via the always good value Tim Duy at Fed Watch: Headlines blared the latest recession warning today, this time from David Rosenberg of Gluskin Sheff & Associates. The culprit will be the Fed: “Cycles die, and you know how they die?” Rosenberg told the Inside ETFs Canada conference in Montreal on Thursday. “Because the Fed puts
At times I have agreed with Horseman Global (known by the some as the world’s most bearish hedge fund) but not today: One of the most dangerous things to happen in financial markets is to be right for the wrong reasons. If you fail to recognize that you were lucky, then you will continue to
It’s pretty obvious that there can only be one winner. Surplus nations do not benefit from trade wars. They are the reason for them in the first place. China will lose. But the important question for investors is how will it lose? President Trump has done a very nice job of wedging Xi Jinping now
Satyajit Das at Domainfax: Several factors could lead to a dangerous shortage of liquidity in the event of a crisis. First, since 2009, low interest rates have driven investors into riskier, less liquid assets in search of return. These include longer-dated securities, corporate bonds and emerging-market issues — frequently of low credit quality — as
