Global Macro


UK to copy Australia’s faux ‘skilled’ visa system

The United Kingdom’s Conservative Party is looking to copy Australia’s points-based migration system, which has been met with condemnation from employers wanting low and semi-skilled migrant workers: Boris Johnson’s proposed “Australian-style” points system to reduce immigration has been criticised for failing to understand how vital low and medium-skilled jobs are to the UK economy and


Aussies drowning in household debt

The Bank for International Settlements (BIS) has released its global household debt data for the June quarter, which again ranks Australians as the second most indebted in the world. The next table summarises the ratios of household debt to GDP: As you can see, Switzerland (131%) takes the gold medal in the global household debt


Stiglitz: It’s time to dump GDP

Nobel Prize winning economist, Joseph Stiglitz, has called on governments to dump GDP as the key economic measure of progress and instead focus on better measures of societal wellbeing: The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore… The standard measure


Dr Doom: As stocks party, economies get worse

Nouriel Roubini at Project Syndicate: This past May and August, escalations in the trade and technology conflict between the United States and China rattled stock markets and pushed bond yields to historic lows. But that was then: since then, financial markets have once again become giddy. US and other equities are trending toward new highs,


Vancouver house prices rebounding

The Teranet-National Bank House Price Index for October has been released, which shows that Canadian house prices fell by 0.1% across the 11 major markets, with annual growth improving to 1.0%: However, prices in Vancouver rebounded, rising by 0.2% in October to be down 6.2% since peaking in July 2018. The Real Estate Board of


UBS: 2020 global growth to be weak again

Via UBS: We expect a recovery in 2020 but a much weaker one than consensus Things will get worse before they get better. Assuming any Phase One US-China deal is limited (no tariff roll-back), the existing tariffs should continue to work their way into the data and create an air-pocket in US growth in H1-20`


CS: The everything bubble will also burst

Via the excellent Damein Boey at Credit Suisse: Another day, another set of US President Trump and China headlines. Overnight, we heard reports from Chinese officials that US officials were prepared to rollback existing tariffs as each phase of trade negotiations progressed. We later heard US officials confirm these reports from their perspective, although there


Dalio: Fix wealth inequality or face “violent revolution”

Via the Hartford Courant: Two hedge fund founders on Tuesday called for the reform of capitalism to combat economic inequality and stem political upheaval. Before a crowd of about 200 at the Greenwich Economic Forum, a two-day alternative investment industry conference, Ray Dalio, founder of Bridgewater Associates, and Paul Tudor Jones, founder of Tudor Investment


How far can the risk rally get?

Via the excellent Damien Boey at Credit Suisse: Overnight, US equities rallied to new highs, bonds weakened and the yield curve steepened on positive trade headlines: US officials suggested that a deal with China is “almost there”. Chinese officials expressed doubt as to where phase I of the trade deal will be signed, questioned how


Ray Dalio is the new Dr Doom

Not without justification: Billionaire Ray Dalio says the global economy faces a ‘scary situation’ — Bloomberg Economics (@economics) October 29, 2019 A few points. The technology revolution is as much solution as it is problem. Productivity gains will lift income to deleverage private sectors. It is over to governments whether or not this


Dr Doom hoses MMT

Via Nouriel Roubini: With the global economy experiencing a synchronized slowdown, any number of tail risks could bring on an outright recession. When that happens, policymakers will almost certainly pursue some form of central-bank-financed stimulus, regardless of whether the situation calls for it. A cloud of gloom hovered over the International Monetary Fund’s annual meeting


What will a trade war pause fix?

Via Morgan Stanley, the answer is nothing: Trade tensions between the US and China have been the single biggest source of uncertainty for the global economy over the past 18 months. After a protracted period of negotiations, some progress has been made towards a deal, with a potential Phase 1 to be signed in mid-November. How


Australia tumbles down global wealth rankings

Credit Suisse has released its 2019 Global Wealth Report, which reveals that the recent housing bust has pushed Australia down the wealth rankings, falling from second place to fourth: According to Credit Suisse: Household wealth in Australia grew quickly between 2000 and 2012 in USD terms, except during 2008. The average annual growth rate of


When will oil crack?

Via the EIA last night: Brent crude oil spot prices averaged $63 per barrel (b) in September, up $4/b from August and down $16/b from the September 2018 average. Brent spot prices began September at $61/b and increased to $68/b after attacks on major Saudi Arabian oil infrastructure disrupted the country’s crude oil production. However, Brent spot


Global recession or inventory cycle?

Is there any difference? Via the excellent Damien Boey at Credit Suisse: What a wild ride it was for bonds overnight! In the Asia-Pacific time zone, bonds sold off aggressively outside Australia, as investors became worried about a potential slowdown in BoJ asset purchases in a fairly illiquid environment. But in the US time zone,


Trump impeachment scenarios

Via Rabobank: Summary The Democrats in the House of Representatives have decided to start impeachment proceedings against President Trump. While impeachment is possible as the Democrats have a majority in the House of Representatives, conviction is unlikely as long as the Republicans in the Senate continue to support their President. In this case the removal


ECB mulls MMT

Via Bloomie: European Central Bank President Mario Draghi said the Governing Council should be open to ideas such as Modern Monetary Theory, while noting they’re closer to fiscal policy and should be directed by governments. …“These are objectively pretty new ideas,” Draghi said. “They have not been discussed by the Governing Council. We should look


Dr Doom: The four horsemen of recession

Via Nouriel Roubini at Project Syndicate: In the classic game of “chicken,” two drivers race directly toward each other, and the first to swerve is the “loser.” If neither swerves, both will probably die. In the past, such scenarios have been studied to assess the risks posed by great-power rivalries. In the case of the


India prints to cut taxes

Via Damien Boey at Credit Suisse: Trade war negotiations remain in the limelight, with investors fearing that US-China talks had collapsed again on Friday night following the cancellation of a Chinese delegation trip to Montana and Nebraska. However, over the weekend, it was revealed by Chinese officials that the trip was not cancelled because of


UK workers still enjoying Brexit bonanza

While Australian wages remain stuck in the mud, held down in part by the endless deluge of migrant workers, the lower immigration arising from Brexit continues to be a bonanza for UK workers, who are enjoying both strong wage growth and unemployment at 45-year lows: Wages have continued to grow at a strong pace and


The great university con

The NewStatesman has published a terrific article on how Britain has been flooded with worthless university degrees: Over the past 30 years, successive governments, from Thatcher to Blair, to Cameron and May, have imposed a set of perverse incentives on universities. Their effect has been to degrade and devalue the quality of British degrees. Academic


Ray Dalio warns again

Via Ray Dalio today: The most important forces that now exist are: 1) The End of the Long-Term Debt Cycle (When Central Banks Are No Longer Effective) + 2) The Large Wealth Gap and Political Polarity + 3) A Rising Work Power Challenging an Existing World Power = The Bond Blow-Off, Rising Gold Prices, and


Beware the Trump departure trade

Via Michael Every at RaboBank: Despite the fact that the German IFO survey was ‘I-ful’, with the official word being that the outlook is “increasingly dire”, and that US core durable goods were -0.4% vs. flat expected, both of which confirm that the real economy is perhaps in real trouble, markets seemed to sigh with relief