Global Macro


Why unregulated cryptocurrencies could trigger another GFC

Cross-posted from The Conversation: The price of bitcoin hit $17,000 late last year and – although the cryptocurrency has plunged since then – there are signs that an absence of regulation can hurt investors and trigger the next financial crisis. Despite the laudable blockchain technology and the great opportunities it offers in enabling quicker transactions,


7Eleven foreign worker scandal spreads to USA

By Leith van Onselen More than two years after the 7Eleven wages fraud scandal broke in Australia, the United States is undergoing a similar experience. From The Brisbane Times: US Immigration and Customs Enforcement agents showed up at dozens of 7-Eleven stores across the US before dawn on Wednesday to interview employees and deliver audit


If you want stronger wages growth, cut immigration

By Leith van Onselen Back in November, Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University, penned an excellent article in Project Syndicate which, among other things, explained why never-ending mass immigration pushes down wages growth: Standard economic theory tells us that net inward migration, like free trade, benefits the native population only after


Mobile Payments – Open Thread

There was an interesting Wall Street Journal article yesterday on mobile payments in China – I knew mobile payments were big in China (and that the US is a long way behind on cashless) but I hadn’t realised how stark the difference is: BEIJING—Soliciting handouts near a grocery store, Zhao Shenji, a slender man with


IMF debunks “China is different” meme

The International Monetary Fund (IMF) put out a white paper Friday entitled “Credit Booms—Is China Different?” The answer? Not in any meaningful way. Here are some selective quotes and charts (the yellow notes are my comments – and apologies on the IMF’s behalf for the poor quality of their charts): Strong Chinese output growth after the


Creighton: Basel capital rules have caused financial systems serious harm

By Leith van Onselen The Australian’s Adam Creighton has written a ripper article today on the damage caused by the Basel capital adequacy accord, which Creighton argues has sown the seeds of financial crises across the globe: During the Basel Committee’s almost 30 years of deliberation — the first version of the Basel rules emerged


The Australian dollar smash of 2018

DXY rebounded firmly Friday night as Trump tax reform is go: Australian dollar pulled back: EM forex took off: AUD CFTC speculative positioning lifted slightly to 41k last week, still moderately long: Gold held: Brent too: US rigs fell a bit last week but a new rush is coming: Base metals soared on growth hopes:


BTFD US dip!

DXY firmed overnight: AUD surged on: It demolished EMs: Gold rose: Brent too: And base metals: But big miners fell: And EM stocks: Junk was OK: Treasuries were sold: Bunds too: Stocks fell: Four events of note. US retail sales boomed: Advance estimates of U.S. retail and food services sales for November 2017, adjusted for


Boring! New record highs for stocks

DXY is off and running as we await the Fed: Weirdly, so is the AUD! Technical no doubt: It crushed EMs: Even though gold sagged: Brent sagged: Though base metals lifted: Big miners didn’t: Nor did EM stocks and they will keep falling if DXY runs: Junk held on: Treasuries were sold: And bunds: With


Outrageous predictions for 2018

Via Saxo comes the Outrageous predictions for 2018: Fed loses independence as US Treasury takes charge Treasury enacts 2.5% yield cap after massive spike Bank of Japan loses control of its monetary policy USDJPY rises to 150 and then collapses to 100 China issues CNY-denominated oil futures contract Petro-renminbi surges, USDCNY below 6.0 Volatility spikes on


BofAML: 2018 so bullish it’s bearish!

From the BofAML presser: A Year Ahead Forecast So Bullish, It’s Bearish BofA Merrill Lynch Global Research today issued a bullish macro outlook for 2018, calling for robust global economic growth, steady U.S. expansion and solid stock returns that peak in the first half of the year. However, it warns of signs that the long


Metals mashed as US dollar surges

DXY took off last night in some delayed response to US tax reform: That bashed AUD back into place: EM forex was mixed: But metals hated it. Gold is verging on breakdown: Brent held up: Base metals broke: Big miners too: And EM stocks: Junk was OK: US yields marched on, curve flattening too: Bunds


Trump busts and booms in one night

DXY has soft Friday night: AUD took off with iron ore futures: And against EMs: AUD net longs fell 1k last week to still long 39K: Gold pumped and dumped: Brent rose as US rigs added only three last week: Base metals firmed: Big miners just can’t catch the iron ore updraft: EM stocks look


Japan’s tight labour market generates deflation…

Just a quick observation today as Japan released its October unemployment rate at 2.8%, way below supposed full employment. Yet it’s still waiting for wage inflation to kick in, for about  twenty years now… Japan is unique in some ways with its social contract between dead wood salarymen and other stabilising institutions, still as the


World booms, Australia busts

DXY was soft last night mostly owing to a bid EUR for no obvious reason: AUD was weak against DMs: And EMs: Gold was hit: Brent too: Base metals yawned: Big miners were mostly weak: EM stocks were hit: EM junk too: Treasuries launched, even the long end: Bunds a bit: Why anyone wants the


JPM: Boom 2018, Doom 2019

From JP Morgan today on the US cycle: The prospects for the economy at the end of 2017 look about as favorable as they have at any point in this expansion. The animal spirits of both consumers and businesses appear energized; the  ever-present global headwinds of the last half decade have turned to a tailwind;


Did the iPhone kill global productivity?

Cross-posted from FTAlpahville: Dan Nixon from the BoE’s content and strategy division asks an important question this week regarding the connection between digital distraction and flailing productivity. As he points out on the Bank’s Bank Underground blog, there’s a chance digital systems, rather than adding efficiency in weird and mysterious algorithmic ways, could be causing something of


US shares boom to new record highs

DXY was strong last night: AUD was soft: And weak against EMs: Gold jumped on another Korean missile. Yawn: Brent eased: Base metals were hit: Big miners too: EM stocks firmed: Junk too: Treasury yields climbed and the Australian spread inversion deepened: Bunds are bogged: The MB Fund S&P500 long is partying hard: US data


US charges into Trump boom and bust

DXY firmed overnight: AUD fell: And against EMs: Gold was firm: Brent eased: China caught up with base metals: And big miners: And EM stocks: And junk: Treasuries were bid: Bunds too: Stocks held at the highs: The US is booming. Data was strong with the Dallas Fed easing but still elevated and new home


Research: Mass immigration kills wages, productivity and well-being

By Leith van Onselen Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University, has penned an excellent article in Project Syndicate debunking commonly used economic justifications for mass immigration: Standard economic theory tells us that net inward migration, like free trade, benefits the native population only after a lag. The argument here is that


Japan shows how to grow sustainability amid a shrinking population

By Leith van Onselen For more than a decade, the Productivity Commission has debunked the common myth that immigration can overcome population ageing. For example: PC (2005): “Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”. PC


The Trump boom and bust measured

DXY was soft Friday night: But AUD was outright weak: Against EMs as well: And against gold: Brent lifted: Base metals too: Big miners a little: EM stocks hit new highs: As junk held: Treasuries were sold but the curve flattened: Bunds are going nowhere: DM stocks eased: There are more Trump tax doubts, from


Markets boom as Trump tax cuts rush ahead

DXY firmed overnight: AUD was soft against DMs: And weak against EMs: Gold fell: Brent too: And base metals: Big miners caught a bid: EM stocks took off: Junk snapped back: US yields climbed, the curve flattened: German yields did nothing: Stocks roared: Data was pretty good in the US with strong industrial production, builder