Category: Weekly

US GDP numbers and Russian sanctions scenarios

US GDP numbers and Russian sanctions scenarios

The bottom line here is that I have been and still am bullish on the cyclical prospects in the US, UK and Spain in particular. The US jobless claims numbers are unusually low and that tells you that slack in the labour market is declining. Moreover, we are likely to see inventory builds here, adding to more momentum. Nonetheless, I do have two caveats for the US.

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Europe: A plan to boost economy by cutting taxes

Europe: A plan to boost economy by cutting taxes

By Andrea Terzi originally published at Social Europe and republished with consent of Author The anti-austerity vote in the European elections reflected two different kinds of discontent. One is a feeling of frustration, which is invigorating nationalism: the vote for “less Europe.” The other is a lack of confidence in current EU policies: the vote for “another Europe.” In both […]

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On Ukraine, the Indian mobile space and Abenomics

On Ukraine, the Indian mobile space and Abenomics

Russia is signalling de-escalation in Ukraine, at least on economics
The mobile battle is moving to India
The limited window on Abenomics is closing

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Economic and market themes: 2014-07-25 Ukraine, China, Japan, technology overvaluation

Economic and market themes: 2014-07-25 Ukraine, China, Japan, technology overvaluation

Ukraine is at risk of becoming a failed state
China’s growth is due to stimulus
Japan’s macro figures worsen
Microsoft’s strategy is weak
Facebook is overvalued

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QE is fiscal policy

QE is fiscal policy

By Frances Coppola A new paper by Johnston and Pugh of the legal department of the University of Sheffield discusses the legality and the effectiveness of QE and its relatives, including the ECB’s OMT “whatever it takes” promise. The background to this is the German Constitutional Court’s ruling that OMT amounts to monetary financing of government deficits and is therefore […]

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The EU weighs level three sanctions on Russia just as the European economy improves

The EU weighs level three sanctions on Russia just as the European economy improves

This is a long-form post on Ukraine. The big news, however, is from the European Union where the PMIs and a slew of other economic data came out today. The data showed the European economy improving broadly from its weakened recovery status. This will give the ECB room to take a wait and see approach. At the same time, the EU foreign ministers met yesterday and, according to reports are ready to impose heavier sanctions on Russia in the wake of the downing of Malaysia Airlines Flight 17 over Ukraine. There’s a lot data to digest here so let me start off with the EU – Ukraine – Russia narrative.

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Apple’s shift into China shows the company’s masterful execution

Apple’s shift into China shows the company’s masterful execution

Apple’s Q3 2014 earnings report yesterday was a mixed bag in terms of actual results. But from my perspective the results show a company that continues to execute its strategy well given the onslaught from cheaper handsets using the Android operating system. Apple posted a smaller-than-expected 6% gain in quarterly revenue due to sluggish growth in saturated markets in Europe and North America. But revenue in China surged 28% despite Apple’s premium pricing. Apple’s growth days are over in developed markets. But I have been upbeat about Apple’s results because of the China strategy and this report shows that Apple’s growth has some momentum, mainly because of that market. Some figures and comments below.

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Ukraine, US subprime and the erosion of US financial hegemony

Ukraine, US subprime and the erosion of US financial hegemony

Ukraine will have global impact
More sanctions are coming but will be somewhat limited
The global financial system is moving away from the US
US auto subprime is going to blow up

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Some brief thoughts on framing the war in Ukraine

As the war in Ukraine moves to the center of global consciousness, I think it is important to remember the various actors’ positioning, constraints and likely agendas. As much as we would like to know ‘the truth’, the reality is always that beyond a core set of known facts, any situation is subject to interpretation based on positioning, constraints and agendas. And to the degree these factors make for focus on very different sets of data points, it makes it hard to reach common ground in a negotiated agreement.

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The political economy of the military conflict in Ukraine

The political economy of the military conflict in Ukraine

The geopolitical situation regarding the conflict in Ukraine has escalated considerably due to the downing of a passenger jet from the Netherlands to Malaysia. Given the visceral and gruesome nature of the events now unfolding, domestic political opinion throughout the West is now a major force in this conflict. However, given the political economy in Russia and the United States in particular, the potential for de-escalation is small. The potential for the conflict to now have wide-reaching economic impacts has grown. In the analysis below I explain how the political economy in the U.S. favours President Obama taking an increasingly hawkish position and how the political economy in Russia favours President Putin also maintaining an aggressive stance regarding Ukraine. In addition, the airline massacre also means that the EU will be galvanized into supporting tougher sanctions against Russia, with the potential of a tit-for-tat response.

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Exogenous shocks

Exogenous shocks

As I write this, Twitter is going berserk with news of Malaysian Airlines Flight 17 from Amsterdam to Kuala Lumpur with 280 passengers and 15 crew having gone down in Ukrainian airspace. There is video and photo footage of the wreckage. And my heart goes out to friends and family of those onboard because they are learning about the tragedy […]

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More on how loss socialization actually happens

More on how loss socialization actually happens

Michael Pettis has a good piece on debt and credit that I ran on the blog this morning. His thoughts on loss socialization are important not just in the context of China but also of other markets like Europe, the US, Canada and Australia where private debt levels have increased markedly. Some of this has resulted in phantom growth which […]

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