Featured Articles Archive

The TPP on a collision course with OBOR as it was likely intended.

Can the U.S. and China Achieve Mutually Assured Prosperity?

Date: 26 April 2016

After years of talks, negotiators concluded an agreement on the US-led Trans-Pacific Partnership (TPP) in October 2015. Since China is excluded from the TPP, one would expect antagonism rather than symbiosis between the Washington-advocated trade package and Beijing’s One Belt, One Road (OBOR) strategy. However, closer scrutiny suggests that the TPP and OBOR may be converging by design and destiny.

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Outmoded labor regulations are preventing India's workforce from working.

Putting India's Working-Age Population to Work

Date: 26 April 2016

One of India’s most promising economic features is its large working-age population. Yet if India doesn’t find jobs for its young people, this boon will quickly turn into a powder keg, as evinced by the recent agitations of unemployed Jats in Haryana. The most important impediment to job growth in India is the country’s outmoded labour regulations.

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Authoritarian rule is growing in China.

Passing on Reform Opportunities on Purpose

Date: 26 April 2016

China is experiencing the most sustained domestic political crackdown since Tiananmen Square. Much attention has been devoted to the increasing state repression being directed at lawyers, journalists and civil society activists. However, there is a separate and more fundamental concern.

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Germany's Schaeuble appears to be channeling Meghan Trainor: No.

Germany's Schaeuble: Chief Obstructionist

Date: 26 April 2016

German Finance Minister Schaeuble appears to have taken on a new role:  chief obstructionist.  Schaeuble seems to be reveling in the fact that due to Chancellor Merkel's immigration stance, and perhaps because of her accommodation of Turkey, her public support has fallen below his.

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“Traditional media” has been on its deathbed for what feels like a decade now.

People are the New Media

Date: 26 April 2016

“Traditional media” has been on its deathbed for what feels like a decade now. Opinions on the severity of the situation differ, but it is generally accepted that in its current form, the media industry will not be able to survive a landscape of internet-only publishing in its current state.

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One central bank move doesn't seem to sway another central bank.

To Each Their Own (Monetary Policy)

Date: 26 April 2016

The news stream remains light ahead of tomorrow's conclusion of the FOMC meeting and Thursday's BOJ conclusion.  Many observers seem to be exaggerating how important the former is for the latter.  Recall that the Fed's rate hike in December, and indications at the time that most at the Fed thought four hikes this year would be appropriate, did not deter the BOJ from adopting negative interest rates at the end of January.  Nor did the ECB easing in early December preclude the Fed from tightening a fortnight later.

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Global tensions will likely be on the rise around the June FOMC meeting.

This FOMC Meeting Overshadowed by June

Date: 25 April 2016

We expect the FOMC statement this week to recognize the improvement in the global conditions that have been an increasing worry for officials over Q1.  At the same, time the soft patch of the US economy is undeniable.

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Maybe rising U.S. yields are weighing on Emerging Markets.

The Tide Lifting Emerging Markets' Boats Goes Out

Date: 25 April 2016

EM ended last week on a soft note.  Perhaps the main driver was rising US yields, as markets become wary of a more hawkish Fed this Wednesday.  Perhaps it was technical, as the EM rally became over-extended.  Whatever the reasoning, the correction continued into the weekend and is likely to carry over to this week as well.

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The dollar pares losses against its foes.

The Dollar Fights Back

Date: 25 April 2016

The US dollar starts what promises to be an eventful week giving back some the gains score in second half of last week against the euro and yen.  Equity markets are extending their pre-weekend losses.  Commodities are also trading with a heavier bias.  Markets in Australia, New Zealand, and Italy are closed for national holidays.

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Malaysia's elections are free, but not necessarily fair.

Malaysia's Free, but not that Fair, Elections

Date: 24 April 2016

On 7 May residents of Sarawak, the larger of the two Malaysian states located on Borneo Island, will be going to the polls. Sarawak is the only one of Malaysia’s 13 states to hold its state and federal polls separately. This is the first election in Malaysia since the emergence of the 1Malaysia Development Berhad (1MDB) crisis engulfing Prime Minister Najib Razak.

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Speculators are buying the dollar's competition at at potential bottom.

Bailing at the Bottom?

Date: 24 April 2016

Speculators in the futures market continued to press a bearish view of the US dollar the CFTC reporting week ending April 19.  According to the Commitment of Traders report, speculators added to their gross long currency futures position in seven of the eight currencies we track. The exception was the British pound, where speculators liquidated a minor 1.1k contracts, leaving them with 32.8k gross long sterling future contracts.

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The dollar's technical indicators improved, oil is stuck, and the Brexit.

Catching Up with Currencies and Commodities

Date: 24 April 2016

It is not that the US dollar had a particularly good week.  It was mixed.  The best performers were sterling and the Canadian dollar. The pound led with a 1.6% gain, followed closely by the Canadian dollar.

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The last week of April is a big week in the markets.

Market Participants Gear Up for a Big Week

Date: 24 April 2016

The last week of April is eventful. The Reserve Bank of New Zealand, the Federal Reserve and the Bank of Japan hold policy meetings.  The UK, Eurozone, and the US provide the first estimates of Q1 GDP. Japan, the Eurozone, and Australia report consumer prices, while the US updates the Fed's preferred (targeted) inflation measure, the core deflator of personal consumption expenditures.

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Japan's relationship with the US will likely survive the presidential election.

Is the Japan-U.S. Relationship Stronger than Isolationist Rhetoric?

Date: 22 April 2016

Signed in 1951, the US–Japan Security Treaty and the alliance it established have endured for over six decades and continue to play an instrumental role in shaping the regional security order. However, with Republican presidential nominee frontrunner Donald Trump’s ‘America first’ isolationist foreign policy views gaining traction in the United States, concerns are mounting over the future of the alliance.

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India's new budget did not contain any headline grabbing measures.

India's Budget Maintains Fiscal Prudence

Date: 22 April 2016

On 29 February, Indian Finance Minister Arun Jaitley presented the National Democratic Alliance government’s third Union Budget. The government, having assumed office a little less than two years ago, is no longer new to the job.

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The RCEP is bucking the push-back trend in trade talks around the world.

Asian Trade Forges Ahead with the RCEP

Date: 22 April 2016

There seems to be a pushback against trade agreements in the post-global financial crisis era. The Trans-Pacific Partnership (TPP) was signed in early 2016, but US presidential candidates have spared no effort criticizing it so near-term ratification is highly uncertain.

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China's central bank makes EM news, as does Brazil's impeachment process.

An Emerging Markets Status Update

Date: 22 April 2016

China’s central bank may be leaning less dovish, Turkey has a new central bank governor, Argentina issued external debt for the first time since it defaulted 15 years ago, Brazil's lower house voted to impeach President Rousseff by a 367-137 vote

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