Global Manufacturing Steadies as She Goes, or Does She?

The year got off on a much better foot than might have been expected, at least as far as global manufacturing is concerned. So the fall in global manufacturing has flattened out, even though the bounce back has more of a dead cat look about it than anything else. As usual in recent months the report was very much a mixed bag

[Premium] Growth momentum shift to Emerging Markets continues

Two weeks ago I highlighted the fact that Indonesia has re-attained an investment grade rating, continuing the upward path it has been on since the Asian crisis derailed the Asian growth story 15 years ago. Indeed, we should expect emerging markets, and Asian emerging markets in particular to outperform developed economies

The Swiss Franc is the most overvalued currency in the world, and the Indian Rupee most undervalued

That’s what the Economist’s Big Mac Index tell us. According to this index, the Swiss Franc and the Norwegian Krone are both more than 60 percent overvalued compared to the US dollar. Much further down are Sweden with over 40% overvaluation and Brazil which shows more than 30%.

The flip side comes with the Indian Rupee, which had been hitting record lows last year. Here, we’re talking about a 60% undervaluation

Roubini: Moving From the Post-Bubble, Post-Bust Economy to Growth

Here are the important extracts from a recent paper in terms of the causes of the crisis. I have also embedded the full pdf version, which has suggested policy prescriptions as well

EFSF Enhancement Hinges on Slovakia

Equity markets paring back recent gains after one-week recovery ahead of Slovakia EFSF vote. Slovakia is the last country to vote on EFSF enhancement; “Yes” vote is not a done deal. News reports indicate China’s SWF is buying bank shares; Indonesia unexpectedly cuts rate

Faber: Market May Fall Below 1,100

Marc Faber told CNBC yesterday that he thinks the S&P500 could fall to as low as 1010 by the end of the ongoing sell-off. Faber also believes gold could fall. However, he believes both markets are oversold and is more keen to buy gold on a rebound than equities

Asian central bank preview: on hold for now

In the Asian EM space, central banks from Malaysia, the Philippines, Indonesia, and South Korea all meet this Thursday. We don’t see any change from these four central banks and in general we believe EM central banks have moved into dovish wait-and-see mode for now, with the obvious exception of Brazil and Turkey, who have both cut. At some point, more EM central banks are likely to cut if the global outlook worsens, but we think it is prudent, and likely, that most remain on hold for now. Markets are, however, punishing countries that have cut rates with an eye towards a weaker currency, Brazil and Turkey

Asian Manufacturing PMIs suggest slowing economic growth

My take: economic growth is moderating in Asia and that has caused central banks to become more dovish. Markets no longer expect the tightening cycle there to continue at the same pace. The 50 basis point cut in Brazil could be seen as a harbinger of more dovish emerging market interest rate policy everywhere – not that the CBs would go so far and cut as Brazil has done. The real question is China. They have been tightening. Will they continue to do so in the face of obvious weakening domestically and in Europe and North America

Eight thoughts at the end of a tumultuous Week

This has been an extremely tumultuous week throughout the capital and commodity markets. August itself has been a cruel month. The German stock market has lost around a quarter of its value. A marked slow down in the US and Europe in Q2 has given rise double dip fears in the former and compounding difficulty achieving deficit targets. There are a number of take-aways for investors from this week’s developments

US real 10 year yields at record 225bpt discount to JGBs

PIMCO, the world’ largest bond fund call this suppression of yields financial repression because it means savers and bond investors get negative real returns. However, John Hempton pointed out that in Japan, where this monetary policy is well-advanced, deflation has set in and real yields are positive despite the zero-rate interest policy (ZIRP)

Think tank: China’s assertiveness could lead to armed conflict in Asia

A world in which basic natural resources are neither cheap nor abundant and in which the debt levels in leading economies are very high is one prone to geopolitical instability

Here’s why Jim Rogers is bullish on Asia

Jim Rogers is bullish on Asia. In a twenty-minute interview with the BBC, he explains why? Hat tip Paul Kedrosky. Like Paul, “I find many of his rhetorical tricks maddening” but it is an informative interview nonetheless. Videos below