Category: Global Economics

Dollar – Diversification, rotation and valuations

Media and analyst reports focussing on the scope for further US Dollar weakness and Emerging Market currency outperformance have continued to proliferate in the past month.

The consensus view is still seemingly that a Democratic administration will fuel large US twin deficits and expectations of higher domestics inflation while Fed will keep rates on hold, eroding the value of Dollar assets.Read the rest

How independently do financier think?

Yesterday, we released the results of our markets survey (see below). Typically, a respondent will compare his/her responses against those of the masses in order to identify potential pitfalls of group-think.… Read the rest

Emerging Market currencies: Hopes and Realities

Media coverage of Emerging Market currencies tends to oscillate between the very bearish and very bullish, with little differentiation between low and high-yielding currencies or between regional blocks let alone between the dozens of currencies still referred to, rightly or wrongly, as “emerging”.Read the rest

Risk aversion, not panic, in face of uncertainty

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited directionality, narrow trading ranges and very low volatility, with the notable exception of currencies in Latin America.Read the rest

Comment: Money talks

  • Monetary growth has accelerated, prompting inflation warnings from Monetarists
  • The pick-up reflects extraordinary policy interventions in response to the pandemic
  • Demand for money balances has risen too, although the surge appears to be waning
  • There are also many reasons to expect an extended imbalance of supply and demand
  • It seems to be too early to conclude that price stability is at serious risk

Surge tide

Quiescent for many years, broad monetary growth has surged across the major advanced economies over the past three months.… Read the rest

Comment: Forgive us our debts …

  • Total global debt has continued to burgeon in the ten years since the Financial Crisis.
  • The COVID-19 pandemic stands greatly to add to debt burdens.
  • Much of the additional debt that has been incurred is unlikely to be repaid.
Read the rest

Lessons learnt from Q1 collapse in global GDP

Global GDP growth, in year-on-year terms, slowed to -2.7% in Q12020  from +3.1% in Q4 2019 and in quarter-on-quarter terms to -4.5% from +0.6% in Q4, based on growth rates in 14 major economies accounting for close to 90% of world GDP.Read the rest

Alan Brazil SOM Macro

Update On Strategies For The Coronavirus World

Hi. I hope all of you and your families are well and have found something to binge-watch.

Well, I was going to send this piece out a few days ago, but every time I was ready to send it, another academic study on the virus came out.… Read the rest