A Wild Ride into the Weekend
Tomorrow could be among the most challenging sessions of the third quarter. The focus is primarily on Japan and Europe, but the US reports its first estimate of Q2 GDP. After a six-month soft patch that heightened fears in some...
Trump Leads the Republicans to Splitsville on Trade
No issue better illustrates the agony and self-inflicted wounds in the Republican Party than the Trump-inspired clashes over the future of US trade policy. While the Democratic Party has been wracked by deep divisions over trade for three decades —...
The Link between Outward-Looking Trade Policies and Rapid Economic Growth
Since trade started being emphasized as a locomotive of growth, export promotion trade policies have become a popular option for countries in search of higher economic growth rates. East Asian countries in particular have witnessed a distinct success in terms...
Looking Further Out for Fed Action Clues
After reversing lower yesterday after the FOMC statement, the US dollar has continued to move lower against the major currencies, save sterling. While the market is not fully confident of a rate cut by the Reserve Bank of Australia, indicative...
International Investment Law’s Future Includes Asia
European and North American capital exporting countries have shaped international investment law for most of its history. They pushed for the customary international minimum standard of protection, forged the classical model of bilateral investment treaties (BITs) and now drive the...
The Fed, on Cue, Meets Expectations
The Federal Reserve met market expectations fully. It upgraded its assessment of the economy, recognized that the near-term risks had diminished, and remained committed to normalizing monetary policy. There was one dissent from the steady stance, and it the KC...
Fiscal Stimulus Questions Force Abe’s Hand
As uncertainty over Japan's fiscal stimulus roiled the yen and domestic equities, Prime Minister Abe was forced to announce his fiscal intentions earlier than he initially intended. The JPY27 trillion (~$265 bln) package. The details are far from clear, which...
Expressing the Fed’s Leadership through its Statement
The Federal Reserve's two-day meeting concludes today. There is little doubt that it will stand pat. There is not press conference afterward, so the statement is the only thing investors will get. The statement is important. We argue that the...
Hillary Clinton, the TPP, and the Environment
Hillary Clinton and many of her fellow Democrats meeting in Philadelphia hope to show the party unity arguably lacking when the Republicans gathered in Cleveland. A sticking point to a unified Democratic Party, however, has been the Trans-Pacific Partnership (TPP), one of...
How did the Yen Become So Attractive?
The strength of the Japanese yen is the main development in the foreign exchange market today. It has gained nearly 1.5%, as short-term participants grow skeptical of the kind of stimulus that had driven the yen around 7.5% lower between...
China Unhappy over the PCA South China Sea Ruling
China’s reaction to the Permanent Court of Arbitration’s relatively harsh ruling against it on the South China Sea has been angry. The court upheld nearly all of the 15 points on which the Philippines approached the Court in 2013. China...
Cause and Effect, and then there is Monetary Policy
Contrary to conventional wisdom, we think monetary policy remains an important variable for asset prices. Interest rates and foreign exchange are two dimensions of the price of money. There is a relationship, even if it is not linear or temporally...
Is there Additional Upside for the Dollar and S&P?
The US dollar gained against all the major currencies over the past week. It also rose against many emerging market currencies. A notable exception was the Chinese yuan. The yuan rose before the weekend, extended its advancing streak to four...
The Brexit in a Flash (PMI)
As the week draws to a close, there are three main developments in the capital markets. First, the profit taking seen in US equities yesterday has continued in Asia and Europe today. The MSCI Asia Pacific Index and the Dow...
Tanzania Walks Away from the Trade Table
Tanzania’s refusal to sign a new trade deal between the East African Community (EAC) and the European Union (EU) has generated anxious reactions. If news reports are to be believed, plans had been made for a signing ceremony to take place...