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Monday Market Moves and More

The US dollar is mostly softer as North American participants prepare to return from what, for many, was a long weekend. The greenback had initially moved higher, hitting JPY119.15 while the euro slipped to $1.2420.

The proximate cause was the continued fall in oil prices and news that Moody’s cut Japan’s credit rating to A1 from Aa3. However, the dollar shed its gains in the European morning. Falling equity markets sent the dollar to almost JPY118, and the euro recovered to almost $1.2480.

Are Lower Black Friday Sales a Good Sign for the U.S. Economy?

For many, the annual Black Friday chaos commences the official beginning of the season. Retailers throughout the United States begin to enhance their efforts to sell by offering greater discounts and opening earlier to attract more shoppers. Often times, the general consensus seems to be that heavy spending on Black Friday is a sparkling sign for the American economy. However, less reliance upon seasonal discounts for consumerism would indicate a more confident customer, and better economic health overall.

Misconceptions about China’s Economic Growth Sources

Virtually every dimension of China’s economic success over the past three-and-a-half decades can be attributed largely to the rise of markets and private businesses. Private firms account for almost all the growth in employment, most of the expansion of output and investment in manufacturing, and in recent years for over half of the growth in exports. Because they are more productive, private firms have largely displaced state firms in sectors that are open to entry.

Revisionists Threaten to Isolate Japan

Abe’s persistent stance on the Yasukuni Shrine, the Dokdo/Takeshima territorial dispute and the ‘comfort women’ issue has elicited fierce opposition from the South Korean government. While no rapprochement on any of these conflicts has been achieved, the Japanese government should be aware that its hawkish and revisionist rhetoric is hurting Japan’s reputation and risks driving the country into international isolation.

Economic Development on the mind of Thai Prime Minister Chan-o-cha

The recent state visit by Thai Prime Minister Prayuth Chan-ocha to Cambodia represented part of the Thai military government’s uphill diplomatic battle to build and strengthen its legitimacy abroad. This visit occurred amid mounting diplomatic pressures from Europe and the US, calling for a rapid return to democracy.

Emerging Markets Over the Last Week

1) Oil prices have taken another sharp leg down

2) The People’s Bank of China surprised the markets with rate cuts last Friday

3) Malaysia cut fuel subsidies just days after Indonesia’s new President Joko Widodo took similar measures

4) Nigeria devalued the naira, moving the peg rate and widening the band around that rate to +/- 5% from +/- 3% previously

5) Joaquim Levy will be the new Finance Minister for Brazil

OPEC Meeting Fallout, Japan and Eurozone Repercussions

OPEC’s decision to roll-over existing quotas sent oil prices sharply lower, pushed European bonds and stocks higher, and generally gave the U.S. dollar a boost. Today’s theme is more consolidative in nature. At the same time, the dollar’s firmer tone against the yen helped lift the Nikkei while European stocks and bonds are struggling to extend yesterday’s advance.

Failing to Find Family Successors Could Threaten China’s Economy

China is facing a new economic crisis, and it is not about mounting local debt or even a rapidly slowing property market. The crisis in the making is about family business succession in the world’s second-largest economy. This issue may seem innocuous for many observers, but it is in fact one of the many pressing issues for the country’s economy, which is undergoing a painful process of rebalancing. Why is the family succession issue so important?

Competition for Global Investment Coming from State-Owned Enterprises

State-owned enterprises have played a relatively minor role in the era of investment-driven globalisation that began in the 1970s. As recently as 2007, when annual flows of foreign direct investment by multinational enterprises reached a record US$2 trillion, state-owned enterprises were sitting on the sidelines, accounting for only 3–4 per cent of international mergers and acquisitions, the main vehicles multinational enterprises use to acquire and control international operations.

Shinzo Abe’s Challenges Go Beyond the Upcoming Election

When Abe dissolved the lower house on 21 November 2014 and called a snap election for December, top leaders in the Liberal Democratic Party (LDP) and New Komeito identified keeping 270 seats as the low-water mark, which would represent a loss of 56 seats. Given current economic conditions and the state of public opinion, a unified and confident opposition would probably extract such losses and would challenge the LDP–New Komeito coalition’s majority. But the opposition is still struggling to unify, so Abe and the coalition look reasonably safe.