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Category Archives: Currency Markets
Commodities Gone Wild
Prices in commodity markets now seem divorced from the forces of supply and demand; set instead by extreme speculation and financing activities. As awareness of this market failure mounts, the whole sector is setting itself up for a massive fall. For once global regulators react - as they must do eventually – retail 'investors' who have helped to fund the over-investment though products like index trackers are going to discover just how risky being a speculator can be.
Also posted in Commodities, Fund Management, Uncategorized Tagged aluminium, CFTC, coffee, commodities bubble, copper, oil Comments closed
Update: QE Opponents Write Open Letter to Ben Bernanke
Expect currency debasement and inflation is what the US can expect if it maintains its present course, warn 23 economists and political analysts in an open letter to the Wall Street Journal, on 15 November. This nicely summarises the differences between the Fed and the opponents of its quantitative easing programme.
Also posted in Bond markets, Economy, Politics, Uncategorized Tagged Federal Reserve, QE Leave a comment
Eurozone Governments May Need To Bail Out Municipalities
A lot has already been written about the risk to municipal bond holders in the U.S., as a growing number of states face severe fiscal problems. But local government debt is an even bigger threat in Europe - where it could force governments to assume the debt, putting further pressure on sovereign bond spreads.
Also posted in Bond markets, Economy, Uncategorized Tagged bonds, EU, Euro, Germany, Greece, Italy, municipal debt, Spain, US Leave a comment
Update: Call for A Eurozone Break-up
A rare column arguing that the peripheral countries of the monetary bloc should simply leave the eurozone by decree, has been published in the Institutional Investor. Vincent J. Truglia, Managing Director of Global Economic Research at Granite Springs Asset Management, writes that the flawed structure of the eurozone - which was built for political rather than economic reasons - leaves only two questions: 1) How do you handle the shrinking or dismantling of the Eurozone? and 2) What is the timing of such changes? As the tensions tearing the euro apart will only grow, it's likely that we'll see a lot more articles like this one in the future.
Europe’s Sovereign Debt Crisis Hasn’t Gone Away
It’s surprising that the banking crises facing Ireland and Portugal, and the wider European banking sector - have not been more contagious. While the risk of Ireland and Portugal defaulting soars, other Europe sovereign bond yields remained fairly flat in the third quarter, and Greece even enjoyed a rally of 140bp to 775bp. This calm is not likely to last long though, before more questions are asked of the banks which own the dodgiest euro-zone debt.
Also posted in Bond markets, Economy, Politics, Uncategorized Tagged banks, dollar, Greece, Ireland, Portugal, sovereign debt crisis, UK Leave a comment
Is There Wind in the UK’s Sails?
The weak pound is the UK’s saving grace. Investment is recovering, and before long so will manufacturing. That's the game plan anyway. The biggest questions remain. What effect will budget cuts have on overall employment? And can the private sector make up the difference? So far, Sterling's weakness, and the UK's underrated capabilities as a trading nation, have helped cushion the economy. But as Mayor of London Boris Johnson has warned, there are stormy political and economic waters for the UK to navigate before the ship of state can be steadied on a new and prosperous course. And there are signs it's getting rougher out there. Still, it wouldn't be wise to bet against the UK's manufacturing and export sectors riding out the turbulence, and continuing the recovery they've started.
Also posted in Bond markets, Economy, Politics, Uncategorized Tagged Caterpillar, Kraft, property, QE, Sterling, UK Leave a comment
It’s Time to Force China to Play By Our Rules
You’d think, given the critical role global imbalances played in building up the systemic risk that caused the Great Recession that addressing them would be an urgent issue. China’s everyday flouting of World Trade Organisation trade rules would be bad enough in normal circumstances. But now when Beijing clearly stands in the way of economic recovery, Paul Krugman is right to be exasperated that the Chinese have been allowed to keep taxing imports while subsidizing exports.
Also posted in Commodities, Economy, Uncategorized Tagged anti-dumping, Asia, China, currency manipulation, dollar, global imbalances, import tariffs, undervalued Asian currencies, US, WTO, yuan Leave a comment
The First Green Energy Trade War?
If Congress votes to penalize Chinese imports and start a trade war it may have a lot to do with the Democrats’ frustration at their inability to build a homegrown clean energy sector. After all, it would be particularly embarrassing if the companies President Obama has boasted about being “the future” were to go bankrupt. So, because the green stimulus has failed to live up to the hype, and mostly created new jobs abroad, leading Democrats may now think the answer is to restrict imports.
Also posted in Economy, Global Warming Scare Tagged Asia, China, clean energy, solar, stimulus, trade war, undervalued Asian currencies, wind Leave a comment
America is Serious About Balancing its Trade With China
On the question of its undervalued currency China may have finally overplayed its hand. Following a number of impolitic moves on the geo-political front, it looks like the U.S. is finally in the mood to walk the talk and force China to revalue its currency – even if it means slapping import tariffs on [...]
Also posted in Economy Tagged Asia, China, currency manipulation, global imbalances, protectionism, subsidies, trade sanctions, US, WTO Leave a comment
Germany’s Approaching Götterdämmerung