The International Monetary Fund (IMF) has begun warning the largest economies in the world that a global economic catastrophe could occur if concerted action is not taken; however, many economists fear that the Group of 20 (G20) economies are unwilling or unable to do anything about the IMF’s dire predictions.
The euro has peeled off a cent from yesterday’s high near $1.1060 as some short-term players move to the sidelines ahead of the ECB meeting. Recall that after peaking near $1.1375 on February 11 when the New Year’s market angst peaked, the euro fell back to the lower end of its old range near $1.0825 in the middle of last week. It then recovered by about 2.5 cents into yesterday’s high, which saw it test the 20-day moving average for the first time since February 22.
Imagine a country in which there is no statutory right to paid holiday, no legal limit on the number of hours employees can be required to work, no right to a daily rest period, no laws to prevent employers discriminating against workers who are disabled or who have particular religious beliefs, and no right for employees to take time off work to look after a sick child.
This was the UK before the New Labour government was elected in 1997. Since then a substantial number of employment rights have been introduced – most of which have their roots in EU legislation.
A few weeks ago, investors were bemoaning a new bear market for equities, and there was much ink spilled drawing parallels between now in 2008-2009. Falling commodities, weakening growth, and prospects of Fed tightening saw the MSCI Emerging Market equity index fall 21.5% from early-November through the third week in January. Since then it has rallied more than 16%, and both yesterday and earlier today traded above where it finished 2015.
North Korea’s relations with the wider world have taken a tangible turn for the worse. Pyongyang’s double whammy of a nuclear test on 6 January 2016 followed by a satellite launch on 7 February 2016 was arguably nothing new. The Kim regime has conducted both kinds of tests regularly for a decade, each time condemned and sanctioned by the UN Security Council (UNSC). There was no reason to hope Kim Jong-un was about to change his spots.
Recent trends, which include firmer equities and oil, weaker euro and bonds, and stronger dollar-bloc currencies, are reversing today, a turn-around Tuesday of sorts. MSCI’s Emerging Market equity index is snapping a seven-day advancing streak, giving back yesterday’s gains and a little more. However, Chinese shares managed to post small gains.
Whether Hillary Clinton, Donald Trump or somebody else takes the White House, pragmatism is likely to be the eventual winner. Dan Steinbock looks ahead to how an American presidency led by either of the two leading contenders will deal with China and Asia, including on matters of trade and geopolitics.
In the US presidential election, the leading contenders – Democrat Hillary Clinton and Republican Donald Trump – are now seeking to consolidate their lead from Super Tuesday’s multiple state contests.
The International Chamber of Commerce (ICC) has expressed deep approval for the Organization for Economic Cooperation and Development’s (OECD) plan to allow all countries to participate in its Base Erosion and Profit Shifting (BEPS) plan.
The US dollar is retracing part of its pre-weekend losses against the European currencies and dollar-bloc today while falling equity prices are underpinning the yen.
Brent is nearing $40 a barrel, and WTI is pushing through $36. Iron ore prices were limit up in China. US 10-year Treasury yield is three bp higher to poke through 1.90% level for the first time since February 4. European bond yields are mostly 2-3 bp lower, with notable exceptions of Portugal and Greece.
Sometimes the news stream drives prices, and sometimes the price action drives the narratives. We argued that the sharp decline in equities at the start of the year was fanned the doom and gloom in the media and market commentary. Many had been taking about a new financial crisis and parallels were drawn between the price action now and the 2007-2008 period.
