Global Macro


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


The West isolates China trade cheat

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


How will China respond next to the trade war?

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


Could there be a trade war boom?

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


An automation apocalypse for older workers

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,


Ray Dalio on universal basic income

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


Markets declare US trade war winner

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


Is “The West” dead?

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


US and China mull new trade talks

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


World rounds on China trade cheat

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