Markets Archives - Page 538 of 782

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

The huge reversal last week in the underperforming currencies (BRL and RUB) has put some of the bears on the defensive. In addition, the recent political news (except for Mexico) has been positive: Indonesia’s increase in subsidized fuel prices was followed by similar action in Malaysia; Brazil’s financial team looks solid (on paper at least); and the surprise interest rate cut by China sends an important signal of support for EM and commodities.

The Dollar Appears to be Back on Everyone’s Wish List

A new phase in the markets began this month. The Federal Reserve ended its QE3+ purchases. The Bank of Japan unexpectedly and dramatically stepped up its asset purchases under its QQE operations. The government’s largest pension fund announced aggressive portfolio diversification plan.

Thai-Cambodia Relations Holding Back Economic Development for Both

Domestic uncertainties in Thailand and Cambodia have hindered progress along the heavily militarised border and the Preah Vihear temple dispute.

Has Japan Entered a Third Lost Decade?

Japan’s recession is not paving way for sustained growth. It is prolonging new debt and liquidity and thus deteriorating fiscal discipline.

In the last quarter, Japan’s economy fell into recession. In the West, it was characterized as “unexpected.”

The realities are precisely the reverse. With its third ’lost decade,’ Japan has entered an era of massive monetary expansion that it not adequately supported by the fundamentals of its economy.

The Latest in the Emerging Markets

1) Peace talks in Colombia are becoming more tenuous

2) Brazil still doesn’t have an economic team, but there is a frontrunner

3) Center-right candidate Klaus Iohannis won the Presidential election in an upset result

4) Indonesia’s government finally raised its subsidized fuel price

5) Mexico and Russia’s bond sales yielded vastly different results

Fed Sees U.S. Facing “Severe Economic Headwinds”

The U.S. is resisting severe economic headwinds to global markets, according to a new release from the Federal Reserve.

In a public statement, the Fed said they see a “limited impact from global slowdown” on the United States economy, which is seeing steady improvement after its slow recovery from the 2008 global financial crisis. The Federal Reserve Open Market Committee acknowledged that “recent foreign economic developments” were one of many significant “downside risks” currently facing the United States.

Did Abenomics Fail Shinzo Abe?

The decision by Japan’s Prime Minister, Shinzo Abe, to call a snap election barely two years into a four-year term demonstrates a degree of political flexibility other world leaders can only envy.

Abe did not need to go to the polls until 2016. Instead, he announced on November 18 he would dissolve the lower house of the Japanese Diet a few days later and hold a general election on December 14 2014. There are several reasons behind the decision, including the failure of Abenomics to revive the Japanese economy.

Australia’s Abbott Reaches out to Jinping – Twice

Forget shirt-fronting Russian President Vladimir Putin. Australian Prime Minister Tony Abbott’s most challenging task in the summit season was breaking an uncomfortable silence with Chinese president Xi Jinping. And he had to do it twice: first at the APEC meeting in Beijing and again at the G20 in Brisbane.

After vigorous lobbying by the US and Japan, Australia’s involvement in the China-led Asia Infrastructure Investment Bank was scuttled by the National Security Committee of federal cabinet on strategic grounds.

The End of Quantitative Easing

The Federal Reserve (The Fed) has finally ended ‘quantitative easing’ (QE), a policy that forced trillions of US dollars into the financial system. The jury will be out for some time on whether or not the QE strategy worked, and what will ultimately be the consequences. For now, the Federal Reserve’s main policy committee has suggested that there has been a substantial improvement in the labor market, and that there is underlying strength in the economy on a broader scale.

Surprise Inflation in U.S. as Services Grow Pricey

Wholesale prices rose in October despite falling oil prices and lower energy costs.

The producer-price index (PPI) rose 0.2% in October after falling 0.1% in September, according to the Bureau of Labor Statistics. Expectations for a 0.1% decline were far off due to a rise in trade services, which rose 0.8% in October after rising 0.2% in September.

Transporting and warehousing costs were flat, while other services prices rose 0.1%. In total, services prices rose 1.6% year-over-year in October, mostly in line with the prior five months.