No one can feign surprise that the Bank of England kept policy steady. Nor was the 9-0 vote truly surprising, though there had been some speculation that of a couple of dovish dissents. Nevertheless, there are two important takeaways for investors.
The United Kingdom is seeing a weaker manufacturing sector, pressuring workers’ wages even as house prices continue to skyrocket and basic goods and services see accelerating inflation.
There is a common ploy used by many analysts and reporters that often simply does not stand up to close scrutiny, and would in fact be mocked in the university. The ploy is to take two time series and put them on the same chart but use different scales.
Such a ploy often is used to demonstrate a closer relationship between the two variables than is actually the case. A current example is a chart of the dollar-yen rate and Japanese stocks.
Voters across 40 police force areas in England and Wales will go to the polls next month to choose their next police and crime commissioner (PCC). This is the second round of such elections. The first cohort of 41 PCCs were elected in November 2012 against a backdrop of widespread fears about the “politicisation” of the police. As a result, turnout was extremely low (at 15.1%) and in a significant minority of contests “independent” PCCs triumphed over those standing on a party ticket.
General elections are around the corner for South Korea, scheduled for 13 April 2016. The road to the polls has been rocky, beginning with the delayed approval of electoral boundaries. The redrawn electoral map was finally passed on 2 March, more than four months past the deadline.
Indicators of weakening conditions in the United Kingdom are alarming economists, who believe the country’s reliance on rising housing prices may be setting the country up for an economic collapse.
A new survey of businesses in the United Kingdom shows that corporations are seeing weaker confidence and investment, both of which have fallen to “a low ebb.”
The World Trade Organization (WTO) recently released its “World Trade 2016 and Prospects 2016” report. In it, the only nation to achieve “impressive” import-export growth in 2015 was a surprising Southeast Asian nation: Vietnam.
The report analyzed the performance of 30 of the leading import-export economies of the world that are members of the WTO. None of the other nations reviewed showed results for import-export growth last year that were as high as Vietnam’s.
South Korea goes to the polls on 13 April. Up for grabs are the 300 seats of the unicameral National Assembly. However, the election itself has been overshadowed by the declining popularity of President Park Geun-hye and intense infighting within the ruling Saenuri (New Frontier) Party between pro- and anti-Park camps.
The global energy situation is changing rapidly. The shale revolution has led to plunging oil prices that have remained around US$30 a barrel since OPEC’s failure to reach a consensus to cut oil production at its November 2014 meeting. This is an astonishing drop from the seemingly endless period of high oil prices of above US$100 a barrel. What do falling oil prices mean for the South Korean economy?
Some dovish signals from the Fed and a bounce in oil prices helped EM end last week on a firm note. This week, the US retail sales report could be important, and the same goes for CPI and PPI data too. The Fed’s Dudley, Kaplan, Harker, Williams, Lacker, Lockhart, Powell, and Evans all speak this week.
The Fed releases its Beige Book Wednesday for the upcoming FOMC meeting April 27. Within specific EM countries, risks remain in place. We continue to feel that markets are too optimistic regarding the impeachment process in Brazil.
