Category: Economics

The U.K. Election is Underway and has Eurozone Economic Growth Surpassed the U.S.?


The dramatic sell-off in European bonds continues apace today.  In part, sparked by the easing of deflation pressure, there is a taper tantrum of sorts playing out.  The 10-year German bund yield is up 18 bp to 76 bp.  Recall that about a month ago, it was at 5 bp, and everyone knew it was going to go negative. 

Data Show a Drop in UK Living Standards, Unless Your Rich


The state of living standards in the UK has been a hotly contested issue in the build-up to the country’s general election. The coalition government has argued that living standards have increased since it came to power in 2010. The Labour Party and other opposition parties claim that living standards have fallen.

Understanding China’s Frustration with the World Bank and the Creation of the AIIB


To understand the impetus for launching the Asian Infrastructure Investment Bank (AIIB), look no further than China’s concern that the governance structure of existing international financial institutions was evolving too slowly.

More Odd Behavior Leads Economists to Ask, “Has the Recovery of the US Economy Stalled?”


Since the US economic recovery began, following the “Great Recession” of 2008, things have been slow but steady. That is, they were until the first quarter of 2015. A number of growth indicators have been off for some time, but at the start of this year, the economy barely grew, and all indicators point to similarly sluggish growth right now.

Surging Oil Catches Traders Off-Guard


After losing 50% of its value in 2014, oil prices have surged in 2015, rising from $40 to over $60 a barrel in just three months.

The price of oil rose to over $60 a barrel in the United States on Tuesday, and has risen even further in early Wednesday trading. Analysts disagree on the exact causes, but as one analyst wrote in a note on Wednesday, “bulls are in control of the market.”

There is More to the Minimum Wage than a “Living Wage”


On April 1, in an announcement that just a year or two ago might have been seen as an April Fools’ prank, McDonald’s said that by July 1 it would raise wages to at least one dollar above the local minimum wage in each of its 1,500 US stores.

While this only applies to about 90,000 workers at company-owned restaurants, it puts pressure on the more than 3,100 McDonald’s US franchisees, each running an average of about four stores each. These outlets have about 750,000 workers, who no doubt will clamor for their own pay hike.

There is Still Great Trade Potential between India and Pakistan


Is the time ripe for a new push for normalised trade between India and Pakistan? The foreign secretaries of both nations recently met in Islamabad. The two countries can expect formal talks to resume after a hiatus of six months. This came soon after the announcement by Khurram Dastgir, Pakistan’s Commerce Minister, that Pakistan may grant ‘non-discriminatory market access’ or Most Favoured Nation (MFN) status to India, a move that will get the two countries closer to striking a deal to fully liberalise trade between them.

The AIIB’s Membership Represents a Diplomatic Victory for China


With the number of founding members reaching 57, Asian Infrastructure Investment Bank (AIIB), is surely a diplomatic success for China. This is not the first bank initiated by the country. The development bank for Shanghai Cooperation Organization (SCO) groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan (with Azerbaijan and Armenia in talks to join) has been talk and has been in talks since 2009.

U.K. Data Shows Pre-election Jitters While Europe Heads in Two Directions


There are four developments today that impact global investors.

The first is that the Reserve Bank of Australia delivered a 25 bp rate cut but signaled in its statement that is has returned to a wait and see mode.  The Australian dollar initially sold to just below $0.7790 and quickly rebounded to nearly$0.7920 before the buying faded.  It settled in a $0.7860-$0.7885 range.