Amid a recovering world economy beset by risks, the outlook for Asia–Latin America economic ties seems bright. Asia needs commodities for its dynamic global factory and Latin America has abundant natural resources. Asia needs food for its large population and Latin America has fertile agricultural land.
China and the US are entering a new and troubling phase of cybersecurity. The recent crash of North Korea’s internet network reveals just how inexperienced world leaders are in dealing with cyber conflict. It shows how one reckless act in the cyber realm can quickly devolve into a bigger international crisis. The confusion and ambiguity surrounding this sequence of events has left the US and China entangled in a high profile cybersecurity standoff.
Negotiations between the European Union (EU) and the United States (US) on the Transatlantic Trade and Investment Partnership (TTIP) are currently dragging on without a clear time target—no wonder in view of the highly complex topics on which to agree. Nevertheless, international speculation is running high about the potential economic and geostrategic implications of the TTIP for the EU’s economic relations with Asia, and the People’s Republic of China (PRC) in particular.
The federal equalization program envisioned by Canada had the best of intentions. However, consequences have pushed two provinces to turn away from the most sensible economic opportunities for their areas, reducing job opportunities, incomes, and tax revenues. Two examples of this issue are the ongoing ban imposed on hydraulic fracking in Nova Scotia, and the recently imposed ban on fracking in New Brunswick.
It is not about the data today though there has been a slew of data that in other times would have moved the market. The flash HSBC China PMI reported above expectations at 49.8 from 49.6 in December, but still shows that the manufacturing sector of the world’s second largest economy is slowing. Eurozone’s flash PMI was also a bit better than expected, consistent with 0.2%-0.3% quarterly GDP.
The European Central Bank confirmed it would spend 1.1 trillion euros on asset-backed securities to fight deflationary trends throughout the Eurozone, while business leaders and politicians discussed economic trends at Davos.
The ECB announced Thursday that its program would aim at targeting deflation in the Eurozone, causing the euro to fall and European stocks to rise. Many rumors had suggested over 1 trillion euros would be committed to the program before the announcement.
By allowing the European Central Bank (ECB) to start buying debt issued by its member states, the Eurozone is copying a strategy now associated with the earlier return to growth in the US and UK.
Quantitative easing (QE) may not have worked in the way its architects hoped; reviving private investment by reducing borrowing costs and raising asset values. But QE has set up conditions for such revival by helping governments and households finance their debt at low cost, so that spending picks up and gives an incentive to invest.
Today is all about the ECB. The press claims to have access to people or documents that have the ECB buying 50 bln euros of bonds a month. The duration of the program is not clear. There was a conflict in the media. Some claimed that the program would last a year. Others claimed it would last until the end of 2016.
Investor enthusiasm cheered European markets after rumors surfaced that the European Central Bank will inject as much as 1.1 trillion euros in the European Union.
The ECB, which will announce its plans today, will spend the money purchasing assets throughout the European Union in an effort to boost the Eurozone. While the ECB has not made an official comment on the rumor, many news outlets have already reported the asset purchases agreed upon by ECB President Mario Draghi and the ECB Executive Board.
1. What is the ECB going to do? The ECB is widely expected to announce that it will accelerate and broaden its efforts to expand its balance sheet.
