Category: Markets

Japanese Economy Grew in the Fourth Quarter


Japan’s GDP grew by 2.2 percent in the fourth quarter of 2014 because of exports. Despite an expectation of 3.6 percent growth, many economists believe Japan’s dark days are passing.

This news gives Prime Minister Shinzo Abe enough wiggle room to implement more of his growth-based policies, otherwise known as “Abenomics.” Abenomics has “three arrows,” which are structural reforms, fiscal stimulus and easy money. His aim is to get Japan out of its two-decade economic slump, but there are some hurdles to overcome.

Understanding the Divide Between the German Workers and Elite


The differences between Eurozone members tend to be a key focus for investors and policy makers.  There is another fissure which is typically is under-appreciated.  It is within Germany itself and not discussed in polite company.  It is the divide between German workers and the economic elite.

The German economic model, under which it exports 40% of everything it produces, presupposes a highly disciplined work force, where employers keep the lion’s share of productivity gains, fiercely resisting increases in unit labor costs.  

A Preview of this Week’s Events Among the Emerging Markets


EM assets are starting the week mixed, as markets await fresh signals for trading. Between the various central bank meetings in developed markets (BOE, ECB, RBA, and BOC) and the US non-farm payrolls, there are plenty of sources of volatility.  We think the jobs data will underscore our call for a Fed takeoff around midyear. On the EM side, markets will be closely watching for a chance of dovish surprise out of Brazil or Poland, though we think the chances of this happening in Brazil are very slim. 

China’s Xi’s Speedy Power Consolidation in all Domains


When China’s President Xi Jinping took up his position in 2012, the Chinese Communist Party (CCP) lacked political leadership. His predecessor, Hu Jintao, had lost control of political power long before holding the 18th Party Congress. The result was a simmering political struggle that included Bo Xilai setting up his own kingdom in Chongqing and Zhou Yongkang openly violating the law. Just over two years later, Xi’s current position is a testament to his ability to consolidate his own power and his vision for China’s future.

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Categorized as China

Recent Debates Highlight the Negative Side of Singapore’s Meritocracy


Recent debates on meritocracy raise questions as to what Singapore regards as merit. Several concepts have emerged reflecting how meritocracy is evolving in the Singaporean context, such as ‘compassionate meritocracy’, ‘trickle up meritocracy’ and ‘meritocracy through life’.

The 50th anniversary of independence is an opportune time for Singaporeans to deliberate; how they understand the country today, its driving forces, and the idea of meritocracy.

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Categorized as Singapore

Emerging Markets Status Update


Over the last week, Hungary (+2.1%), Mexico (+1.9%), and Malaysia (+1.9%) have outperformed in the EM equity space as measured by MSCI, while Russia (-2.1%), Colombia (-1.9%), and Turkey (-1.2%) have underperformed.  To put this in better context, MSCI EM rose 0.5% over the past week while MSCI DM rose 0.4%.

The Complexities of Law over China’s Nine-Dash Line


Suggestions that China could claim historic fishing rights within the nine-dash line misinterpret international law. While Sourabh Gupta’s arguments, outlined in a recent Forum article, relating to the UN Convention on the Law of the Sea (UNCLOS) Articles 62 and 123 have been disputed elsewhere, we argue that his argument regarding Article 56 is also incorrect.

Low Inflation, Rising Jobless Claims Bring Deflation Fears to U.S.


A mixture of low and falling inflation combined with a rise in jobless claims may indicate the United States could follow the Eurozone down a deflationary path.

According to the Cleveland Federal Reserve, the median consumer price index rose just 0.2% in January, while the trimmed-mean CPI rose 0.1% for the same period.  A drop in motor fuel, which fell at a 91.5% annualized rate in January drove the low growth, followed by a 58.5% annualized fall in fuel oil.

Trading Latency to Stop a ‘Flash Crash’


Ask people on the street what mental image they associate with the words “stock exchange,” and you’ll likely hear about a large imposing building in the middle of New York or Chicago. Inside the building there is a huge space crowded with traders in multicolored jackets screaming and gesticulating to each other.

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Categorized as Markets