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Global Economic and Market Preview

Shaping the holiday week, we identify five general points that we expect to underpin the US dollar and equities.

1. Last week’s events (FOMC and SNB) reinvigorated the divergence thesis that was questioned during what appears to have been a technical correction. US data in the days ahead will reinforce the perception of US economic strength. This may also ease concerns that the strength of the dollar is curbing growth. At the same time, more aggressive ECB action is anticipated, while the BOJ may have to increase its efforts.

Dollar’s Strength could be Global Economy’s Weakness, Says BIS Report

Global financial advisors have warned that the growing strength of the US dollar poses a threat to the stability of emerging economies. The Bank for International Settlements (BIS), often referred to as the central bankers’ bank, has warned that fragility in financial markets could have an acute impact on the global economy, especially in emerging economies like India and China.

The Week in Review: Falling Rouble, Dovish Fed

U.S. stocks rallied and investor confidence returned late this week after a rise in volatility from falling oil prices and geopolitical risks stemming from Russia’s economic collapse.

Several economic indicators showed an improving economic environment in the U.S., even as oil continued to fall and foreign investors exited emerging markets. Most attention focused on Russia, where economic sanctions from the European Union and falling revenues from cheaper oil pressures the energy-dependent economy.

The AEC Needs to Include Unskilled Labor Migration Provisions

By the end of 2015, the ASEAN Economic Community (AEC) expects to establish a single market and production base in the region. With an ASEAN overall workforce of more than 300 million people, the AEC will have strong implications in terms of labour migration and human resource development. By promoting efficiency gains and structural transformation, the AEC will shift the demand for labour skills across countries and sectors, based on evolving patterns of comparative advantages. As a result, labour migration expects to increase, both within the region and with the rest of the world.

‘Middle China’s’ Informal, Private Economy is Thriving

‘Benghai’ was changing. Returning to my old office, my home for ten years of fieldwork in rural China, it was clear something was amiss. Gone was the grizzled caretaker, listlessly following his mop around the ground floor of the four-storey building. In his stead was a bank of impossibly cheerful uniformed women in their early twenties. Their smiles could signify only one thing: real estate.

An Emerging Markets Status Update

Over the last week, Colombia (+9.5%), Mexico (+1.9%), and Chile (+0.1%) have outperformed in the EM equity space as measured by MSCI, while Hungary (-9.6%), Turkey (-7.3%), and Russia (-5.8%) have underperformed. To put this in better context, MSCI EM fell -1.0% over the past week while MSCI DM fell -0.2%.

Singapore Forecasts Moderate Growth

Recently, experts have suggested that Singapore’s economy may be back on track for moderate growth this year, in part because of the economic growth in the United States. Demand from the US could help Singapore exports.

Australia – More ASEAN, Less U.S./China

Things just haven’t clicked the way they should have in the Australian–ASEAN relationship. We seem far removed from the time when as Australia’s Foreign Minister I had no counterparts anywhere in the world with whom I felt more close and comfortable. And from when, at one of the Cambodian peace conferences, having stumbled inadvertently into an ASEAN foreign ministers’ coffee meeting, my apologies were waved aside with the words ‘Come on in. You’re one of us.’

Russia Interest Rate Hike, Falling Oil, Bring U.S. Equity Uncertainty

U.S. stocks saw an unusual day of price swings Tuesday as investors mulled the significance of an interest rate hike in Russia and falling oil prices.

U.S. equities fell, rose, and fell again on Tuesday as traders assessed the significance of a falling Russian ruble, which fell over 6% Tuesday morning. The Russian currency saw so much increased volatility that some retail brokers halted trading of the ruble against the U.S. dollar, as fears of illiquidity mounted. Brokerage FXCM was one of the firms to suspend USD/RUB trading.

Surprise Raids in China Part of an ‘Anti-Monopoly Campaign’

Surprise raids by Chinese government officials on the offices of major multinationals in China to catch out monopolistic business activity have created perceptions of bias against foreign firms in the enforcement of the anti-monopoly law.