Global Macro


US-Saudi tensions erupt at the wrong moment

Via Bloomie, this is not what the market needed: Saudi Arabia threatened on Sunday to use its economic clout to retaliate against any punitive measures, hitting back after U.S. President Donald Trump said he could take action against the world’s largest oil-exporter over the disappearance of a government critic. “The kingdom emphasizes that it will


Macquarie: EMs still in the gun

Via the excellent Viktor Schvets at Macquarie: EMs in the crosshairs: Between war games, fake news and bonds From military exercises to trade wars, the fury is intensifying. At the same time, global liquidity is compressing while rates are rising. Growing uncertainty, contracting liquidity & rising cost of capital will continue to place non-US assets


World hates Trump but fears China

Via Pew: America’s global image plummeted following the election of President Donald Trump, amid widespread opposition to his administration’s policies and a widely shared lack of confidence in his leadership. Now, as the second anniversary of Trump’s election approaches, a new 25-nation Pew Research Center survey finds that Trump’s international image remains poor, while ratings for the


The US/China Cold War erupts

The US/China Cold War is here and how. It’s brinkmanship at sea, via The Australian: Australia has warned Beijing that the use of “intimidation or ­aggressive tactics” was “destabilising and potentially dangerous” following reports a Chinese navy destroyer launched an “unsafe” challenge to a US warship in the South China Sea. In the latest conflict


Laugh at Donald Trump if you want but he’s POTUS and you’re not

The Guardian, along with much of the world’s press, had a sneerfest at Donald Trump’s expense yesterday: For the rest of the world, President Donald Trump’s America is a laughingstock, not a leader. That was the takeaway from Trump’s speech to the 2018 United Nations general assembly. Trump opened his speech the same way he


Donald Trump to lose the trade war in twelve months?

Donald Trump, America’s first Jacksonian president in the modern era, launched a new broadside on China at the UN last night: America’s policy of principled realism means that we will not be held hostage to old, discredited ideology and experts that have been proven wrong over the years. This is true, not only in matters


AEP goes all-in on GFC 2.0

Via Ambrose Evans-Pritchard (h/t Researchtime): (i) “When the next recession comes, it is going to be deeper and last longer than in the past. We don’t have any strategy to deal with it,”… a bleak scenario more akin to the depressions of the 1870s or the 1930s than anything experienced in the post-War era… a


Doctor Doom returns

Via Nouriel Roubini today at Project Syndicate: As we mark the decennial of the collapse of Lehman Brothers, there are still ongoing debates about the causes and consequences of the financial crisis, and whether the lessons needed to prepare for the next one have been absorbed. But looking ahead, the more relevant question is what


Assessing the emerging market dominoes

Via SocGen comes a handy scorecard for EM vulnerability: External position Current account deficit currencies underperform those with a surplus in times of stress. A country with a current account deficit requires a steady inflow of foreign capital, which can dry up when sentiment toward emerging markets is depressed. Eight countries have deficits – the


FTAs are really about entrenching corporate interests

By Leith van Onselen Jayati Ghosh – Professor of Economics at Jawaharlal Nehru University in New Delhi – has penned a thought-provoking opinion piece arguing that so-called “free trade” has entrenched corporate interests and worsened inequality: Some argue that free trade is being demonized simply because people do not understand what is in their own


What the next GFC will look like

Via JP Morgan: What will the next crisis look like? This year marks the 10th anniversary of the 2008 Global Financial Crisis (GFC) and also the 50th anniversary of the 1968 global protests. Currently, there are financial and social parallels to both of these events. Leading into the 2008 GFC, some financial institutions underwrote products


Which yield curve inversion is the one to watch?

Via the Federal Reserve: Information in the Yield Curve about Future Recessions Michael D. Bauer and Thomas M. Mertens The ability of the Treasury yield curve to predict future recessions has recently received a great deal of public attention. An inversion of the yield curve—when short-term interest rates are higher than long-term rates—has been a


BIS study: Macroprudential controls work

By Leith van Onselen The short-sightedness of former RBA Governor Glenn Stevens’ comment in 2014 that macroprudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed via a new working paper from the Bank for International Settlements (BIS), which evaluates evidence from 56 economies over more than two


How does the great US decoupling end?

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


US and China enter “new Cold War”

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


Credit Suisse: Buy the Emerging Market panic

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.


China sends trade delegation to US

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


Memo to Greg Jericho: Lower UK immigration lifts wages

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


Turkey to smash commodity prices

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


Bank of England joins the hawks

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


The genesis of white-collar criminology

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