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Markets
Albert Edwards on the US currency and China
In the last post at Credit Writedowns Pro on jobs, I promised to talk about currency issues but I didn't! here are two issues then: the increasing current account surplus in Germany and the strong dollar's effect on China.
On Germany,…
June rate hikes are still on the table as US unemployment falls to 5.5%
Today, we got the latest jobs report from the US. And the data were mostly good, with non-farm payrolls expanding by 295,000 and the unemployment rate falling to 5.5%. The big takeaway from the jobs report was not that job growth is so…
Some thoughts on relative value in the US and Europe
Despite the crisis in Greece, I have been talking about rotating into Europe because I believe equities are priced more reasonably than the US and because fixed income assets will get a boost from QE. I want to talk a bit more about this…
Fed rate hikes and global growth
Continuing where I left off last week, I am going to emphasize here that the Federal Reserve is likely to raise US interest rates unless the US economy slows materially. Meanwhile, the economic and market fundamentals are moving in the…
Greek debt swap, dollar weakness and Denmark’s intervention struggles
Three stories dominating the headlines today are the Greek sovereign debt crisis, the euro area’s economic fortunes and crude oil. I want to tell these three stories through the lens of the debt swap proposed by Yanis Varoufakis, through…
Revisiting Greek negotiating positions and more comments on capex and interest rates
This post will be a brief revisiting of three recent topics - Greece, oil capex, and Anglo-Saxon bond yields - due to recent news. The recent news reinforces my position regarding the potential for a deal in Greece. On capex reduction, the…
Thoughts on the economic effects of the reduction in capex from the energy sector
The rout in the energy sector is complete now. Cuts in capital expenditure are everywhere you look, not just in shale oil. With oil stocks at a record high level, it is unlikely that a rebound in prices will happen in the near term. And…
The convergence to zero continues, favouring Anglo-Saxon government bonds
The Reserve Bank of New Zealand is now signalling rate cuts are possible, coming out of its last policy meeting. Its 10-yr bonds have the highest yield of all developed economy major Central Banks. Meanwhile the US Federal Reserve’s last…
Negative yields, quantitative easing, currency wars, and reflexivity
Compared to the 1930s, this deflationary crisis has played out much slower and more benignly. That doesn’t mean it isn’t a crisis. It is one, as evidenced by the beggar-thy-neighbour tactics like negative rates and quantitative easing that…
The Danish krone problem
In the wake of the turmoil surrounding the Swiss Franc, the Danish krone has become the subject of speculative attack. Unlike the Swiss, the Danes have a peg to the euro that is permanent and long-lasting. They also have a backstop via a…