Global Macro


Demography is destiny

Late last week, the World Economic Forum (WEF) published a fascinating article on the UN Population Division’s latest projections for global population growth (h/t Bernard Hickey). Below are some extracts from WEF’s article: “Demography is destiny” is an old phrase and may seem an exaggeration. However, there is no doubt that two major demographic trends–an


Europe leaps a puddle

Quite a lot of action in Euroland last night. Firstly the big news, although completely expected, was that the Constitutional Court rejected a series of lawsuits aimed at blocking Germany’s participation in the Euro bailouts but handed more power to the German parliament around the decision making process: Germany’s top court handed its country’s parliament


Europe’s optimism trap

To describe as sobering last night’s UBS report into the consequences of a European breakup hardly does it justice. It is about time someone began to assess the consequences of a breakup with a hard, cold eye and kudos to UBS for doing so. Hopefully it will help dispel some of the elementary drivel floating around


The Merkel effect

The true personal price of the Eurozone disaster was read out to  Angela Merkel overnight as her and her party got wiped out in the election in her very own state: German Chancellor Angela Merkel’s party suffered its fifth election loss this year after she failed to sway voters in her home state with a campaign


A tale of two economies

It is far better to have “Dutch disease” than be part of the world wide malaise of the developed world. Australia’s unbalanced economy still has far more growth in it than the US, Europe or Japan. But the non-resources part of the economy is showing some weakness, which must affect portfolio allocations. UBS is saying


Europe’s crunch month

I looks to me that September is going to be “crunch month” for Europe, obviously I could be wrong and this show could go on for another year, but recent events seem to suggest that we are approaching some sort of “do or die” moment. Over the weekend the Greek Finance minister was fire-fighting rumours


Data vault

Australian Data The domestic data calendar was dominated by deteriorating data from the non-mining sector with new home sales and house prices falling along with private sector building approvals and weak credit figures while an increase in retail sales wasn’t enough to stop the annual trend rate dropping to the lowest on record. Private capex


European M1 signalling recession

As my readers would be well aware I have been watching Europe for well over a year and providing near-daily commentary on the economic events that are occurring across the continent. One of the things I have been watching over the last few months is the monetary aggregates. I noticed that the ECB had provided


Global manufacturing at the brink

It may come as some carrion comfort to Australian manufacturers to learn that the majority if their global brethren are also now in recession. Yesterday and last we night we learned from PMI releases that the manufacturing sectors of Taiwan, South Korea, UK and Europe all contracted in August. China managed an insipid rise as


The noose tightens around Portugal

After recent cuts in GDP growth from Europe due in part to austerity, or at least the threat of it, in many of the 17 nations it wasn’t really a surprise when it was reported last night that the PMI has fallen into contraction: Europe’s manufacturing industry contracted more than initially estimated in August, adding to


European soap

Overnight we saw more politico-speak over the the ongoing Greek collateral squabbling. We now seem to be in a new phase where all those involved claim that there will be a resolution even though their very obviously isn’t one yet: Euro zone countries are discussing ways to charge fees on any collateral Greece would use to back


Churning and burning Europe

It is interesting to compare brokers’ assessments of the European stalemate with the posts and comments on MB. After all, it is the markets that decide whether Europe is salvageable; if they deem that it is, it is. If they deem it is not, then it will probably not be. In that sense we are


EU marks to fantasy

Well I guess I shouldn’t be too surprised by this news given that it has been quite obvious for many months that the European banking system is in a far worse state than anyone has been saying. But the following is a bit embarrassing for Mr Trichet who only yesterday stated that “There is no


The Fed is boxed in

So, yesterday’s and today’s US data has come in mixed. So far, markets have twisted the results to the upside. On Monday, Personal Income and Outlays for July came in above expectations at 0.8 in July, and real PCE increased 0.5% as the price index 0.4 percent. Pending Home Sales Index came in below expectations with a 1.3


European schisms

As I noted recently the new IMF chief is having a bit of trouble communicating exactly what her strategy is for Europe. Last night we saw her struggling again: A fresh round of capitalisation for European banks was firmly ruled out by EU officials and bankers when they appeared before an emergency meeting of the


Chart of the Day

A Eurodollar breakout? The EUR/USD cross has finalised a descending triangle reversal pattern, but has surprised to the upside. This is a mixed signal at best, as the longer term weekly chart below shows significant resistance at 1.50 to the upside, and the usual status of the EUR is to weaken during a crisis (i.e


Eyes back on Greece

Over the last month the Greeks must have been thanking their lucky stars. For at least a short period the eyes of the financial world were peering somewhere else. Italy and Spain were under the spotlight while Merkel and Sarkozy held their own side show. We have now seen Italy state that it will be


Data vault

Australian Data It was another quiet week on the data front in Australia with the only release of note being Construction Work Done during Q2. The flow of data will pick up next week with a number of key data points scheduled for release. Construction Work Done After an enduring run of weak domestic data,


Bernanke Speech: no QE3 yet

Here is Chairman of the Federal Reserve, Ben Bernanke’s full speech at Jackson Hole this morning – no formal announcement of QE3, but September meeting may bring about a “different” policy. The Near- and Longer-Term Prospects for the U.S. Economy Good morning. As always, thanks are due to the Federal Reserve Bank of Kansas City


Fitch debunks decoupling

A new Fitch and Oxford Economics report nicely models the global knock-on effects in the event of a US recession. And its bye bye decoupling, even though the assumptions used are quite conservative. To begin, Fitch lays out a moderate recession scenario: Although a “double-dip” recession in the US is not Fitch’s base case, the agency


Cry Wulff

The German President looks to be attempting to single handedly destroy what is left of European economic stability. Yesterday, in front of  Nobel economics laureates and other financial experts, he opened the European economic conference with a speech that obviously was not proof read by anyone from the EU: In a cannon shot across Europe’s bows,


Groundhog day

So, here is what I wrote on the eve of the Jackson Hole conference last year: The S&P500 tilted at the the key 1040 level again today, the neckline of a scary head-and-shoulders top pattern, and held. The Dow is sitting right at the psychologically potent 10,000 level. Gold is sitting right below all time


Europe’s banker bloodbath

Well the news for the Germans didn’t get any better after the horrible ZEW: German business morale posted its steepest drop this month since the aftermath of the Lehman Brothers collapse in late 2008, raising fresh doubts about the broader European economy as it grapples with a crippling debt crisis. The Munich-based Ifo think tank said on


Euro investor confidence smashes banks

European data was looking ok last night right up until the ZEW: The cost of insuring European bank debt against default rose to a record as German investor confidence fell to the lowest in more than 2 1/2 years on concern the region’s debt crisis will curb growth. The Markit iTraxx Financial Index of credit-default


European data

It is a busy day for economic data in Europe today with many countries reporting their national PMI. Given how sensitive the European market is at the moment I thought I would post some of the data as it comes out. Swiss trade data Swiss exports fell in July as the strengthening franc curbed companies’


The Jackson hole

I haven’t seen a single commentator predict that QE3 will be foreshadowed at the Federal Reserve Jackson Hole meeting this Friday (US time). The blogospheric consensus is that instead, we’ll get ‘Operation Twist’, a contorted effort to stimulate without stimulating by manipulating the yield curve. Calculated Risk, the FT, and Gavyn Davies all provided commentary on the likely


European stalemate

It is getting very difficult to determine what is going to happen next in Europe. Over the last couple of days we have seen a renewed and very strong message from Germany and France that a supra-European debt instrument is not going to happen without some significant adjustment in policy governing national fiscal independence. European


Good news for oil (and Libya)

The FT is reporting that: Colonel Muammer Gaddafi’s 41-year rule over Libya was collapsing as rebel forces advanced deep into the capital, capturing his son, Seif al-Islam. As jubilant crowds filled Green Square at the heart of Tripoli on Sunday night, the rebels said they would grant safe passage to Col Gaddafi and his family


Big trouble ahead (posted by Leith van Onselen)

Back in May, former Reserve Bank of New Zealand advisor, Terry “Macca” McFadgen, wrote a guest post on MacroBusiness entitled: Will Aussie housing go bust?  Now Terry is back with another serving of ‘Maccanomics’. In this installment, Terry provides a sobering assessment of the global economy, and maps-out how events might unfold. This is a



Anyone who has been following my posting for any length of time would know that I am certainly not a friend of the IMF. In my opinion their persistent “one plan fits all” ideology has been very damaging to the world’s economy and has made the recent crisis in Europe far worse. The IMF has