It is tragic that this ‘liquor and women’ quote is the discussion dominating headlines as the EU celebrates the 60th anniversary of the signing of the Treaty of Rome.Read more ›
British Prime Minister Theresa May will trigger her country’s exit from the EU on 29 March, a spokesperson for the Prime Minister has confirmed. Afterwards, the clock will be ticking, as the UK will have two years to wind up any negotiations for exit before the country’s membership ends on 29 March 2019 after 46 years. The biggest questions are what this means for the UK economy, the EU economy and whether it is a precedent others will want to follow. Some thoughts below
Yesterday three big things happened in three different eurozone economies that I think are interrelated. And I am going to tell you what I believe they mean for the European political economy by tying them together in this post under the somewhat provocative banner of “Europe’s delusional economic policies”. The reason for the title is that what I see happening is an anti-growth economic framework which is having political consequences by fomenting nationalism and anti-EU sentiment.
One of the lead stories at Bloomberg this morning is an article about foreigners shying away from “financing the US government”. And the conclusion of this article is that it could mean higher interest rates in the US. Is this conclusion the right one though, and how should you respond as an investor? I have some thoughts on that below.
Early on in President Trump’s new administration, too much of his energy is being placed on divisive ‘cultural’ issues and not enough attention is being paid to economic policies. To the degree Trump has turned to the economy, much of his policy has been focused on issues that will not yield long-term economic benefits but contain considerable risk, like trade with Mexico and China. And so, while Donald Trump is only a few weeks into his presidency, I think we can begin to take stock of what his presidency will mean for the US economy.
The FT is reporting that US President Donald Trump sees Germany as a ‘currency manipulator’ of sorts, a view bound to have negative consequences on bilateral relations. What’s more, according to the Financial Times, Trump’s top trade advisor, Peter Navarro, has accused Germany of using a “grossly undervalued” euro to “exploit” the United States as well as Germany’s own EU monetary union partners. This makes three countries in Trump’s sights: China, Mexico and, now, Germany.
On Monday, UK Prime Minister Theresa unveiled her vision for Britain’s exit from the European Union. The Prime Minister couched her outlook in positive terms, speaking of Britain leaving the EU but remaining in Europe. She spoke of EU member states as friends and partners. And she insisted that Britain would prosper after Brexit is achieved. I have written about what the key takeaways from her speech were. But to get a better sense of how realistic her vision is in political and economic terms, I also asked Prime Economics Co-Director Jeremy Smith for his take.
For managers of money, the post-crisis low growth world has had major implications for asset allocation strategies. Assumptions about returns are greatly affected by the both monetary easing used to counteract the slowing and the yield curve flattening indicative of that easing’s ineffectiveness. Recent research on demographic trends and wage growth suggest trends now in place may continue, with grave implications on returns.
The last few days have made clear that monetary policy is having less and less impact as time goes along.In particular, the latest salvos from the Bank of Japan smack of desperation, as if BOJ Governor Kuroda has decided to throw everything but the kitchen sink into his grab bag of unorthodox monetary policy. Because the Bank of Japan is so far along the curve toward both secular stagnation and unorthodox policy to counteract that slowing, we should pay attention to how their experiments go. I do not expect good results.
As the Brexit worries began two weeks ago, I flagged Italian banks – more than the UK economy – as one of my principle concerns, because of the potential to cause systemic damage to the euro system. And now the contagion is spreading, with Deutsche Bank the most obvious weak link. The question now is twofold. First, does the Italian banking crisis solve itself without a major overhaul of EU institutional arrangements. Second, if not, how does the EU solve this problem? Some brief thoughts below.
This is a quick run through of the post-Brexit vote decision tree. The opportunities and constraints after the UK vote to leave the EU are now coming into view. It is clear that the UK is likely to leave the EU given not only statements by Prime Minister Cameron but also the Home Secretary Theresa May, both of whom campaigned for ‘Remain’. But it is also clear that the EU will not broker formal or informal discussions with the UK until the UK has invoked Article 50, which can only be done by an act of Parliament. Below, I want to run through some of the constraints in order to build a few scenarios that I see as possible now that we are a week into the post-Brexit era.
Overall, the figures tell us the US employment picture is the best it has been since the Great Recession.Read more ›
Last week, I wrote how the Labour Party in the Netherlands suffered a historic defeat in parliamentary elections because voters questioned their priorities – and how this is emblematic of Western social democratic parties everywhere. And as if to prove my point, Dutch finance minister and Eurogroup leader Jeroen Dijsselbloem has produced an analogy on fiscal spending about ‘liquor and women’ that has outraged many. Let me put his comments in the proper context here to make a wider point about the European Union.Read more ›
Yesterday, Ally Financial warned that profits would underperform expectations. Now, they dd not say that profits would fall or that they were taking credit writedowns. Neverthless, the warning is an important marker and should be of grave concern. Here’s why.Read more ›
British Prime Minister Theresa May will trigger her country’s exit from the EU on 29 March, a spokesperson for the Prime Minister has confirmed. Afterwards, the clock will be ticking, as the UK will have two years to wind up any negotiations for exit before the country’s membership ends on 29 March 2019 after 46 years. The biggest questions are what this means for the UK economy, the EU economy and whether it is a precedent others will want to follow. Some thoughts belowRead more ›
On Wednesday night, the Dutch elections saw the two parties in the governing coalition lose 37 of the 79 seats they now hold between them. That’s a massive defeat frankly. Yet, the Prime Minister’s party is spinning this as a win. And for some reason, the international press is focusing on the underwhelming gain of the anti-Euro PVV party as if that’s the big takeaway. It isn’t.Read more ›
I am going to start commenting on the weekly jobless claims figure more actively because I like it as a real-time indicator. For me, it is the best real-time data point we have on how the employment picture intersects with consumption demand and GDP because it is released every week.Read more ›
As expected, the Bank of England left rates unchanged at a record low 0.25% in today’s Monetary Policy Committee decision. There was a dissent, however, with soon to be departing MPC member Kristin Forbes wanting a quarter-point rise.Read more ›
Today the Federal Reserve raised the base USFed Funds interest rate a quarter percentage point to the range between 0.75% and 1.00%. There was only one dissent from Minneapolis Fed President Neel Kashkari. And because this move was anticipated by everyone, the real question now goes to what comes next.Read more ›
The present Prime Minister of the Netherlands, Mark Rutte, is the first Prime Minister from a party other than the two traditional centrist parties, PdVA and the CDA, and their predecessor parties since the Dutch constitution and voting system was fundamentally changed in 1917. Clearly, we are seeing a change in voting patternsRead more ›
Starting in 2007, global markets were buffeted by a series of financial and economic crises that created the greatest deflationary scare since the Great Depression. We have left out-and-out crisis mode. But the challenges are still considerable, especially politically.Read more ›