Credit Writedowns » Mexico

[Premium] China’s growth is slowing much faster than expected

Edward Harrison — Fri, 11 May 2012 16:00:25 +0000

The latest data out of China will give those expecting a soft landing pause about China's economic situation. While inflation has come down somewhat of late, so too have industrial output and capital investment. This is creating EM feedback loops which diminish the number of equity, corporate and sovereign plays in this space. Asia in particular should be impacted

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Intervention Risks Rise In Latin America

Win Thin — Tue, 07 Feb 2012 20:30:50 +0000

FX intervention is certainly in the air this week for Latin America. Brazil stands out as the most aggressive, of course, as the central bank intervened in the forward market Friday and in the spot market Monday

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Developments continue to be bullish for Mexico

Win Thin — Wed, 25 Jan 2012 17:30:12 +0000

Given what we see as a basically hands off policy with regards to the exchange rate when MXN is appreciating, we see more potential upside for MXN compared to, say, BRL, where Brazilian authorities are clearly going to work against further currency strength. Others in Latin America are concerned with currency strength, including Colombia. As such, going long MXN vs. BRL or COP would be a good alternative too. On the other side, Banxico has installed circuit-breakers to help boost peso liquidity during times of stresses as part of an effort to prevent disorderly downside movement in the peso

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Seven Observations about Commitment of Traders in FX

Marc Chandler — Mon, 23 Jan 2012 14:00:00 +0000

The Commodity Futures Trading Commission requires futures traders to identify whether they have an underlying business interest (commercials) or if they don't (non-commercials). Here are seven take-aways from the most recent report that covered the week through January 17th

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Nervous Calm over Currency Market

Marc Chandler — Tue, 13 Dec 2011 12:30:00 +0000

A good reception to a Spanish bill auction and a some what better than expected German ZEW investor survey helped stabilize the risk sentiment which had been battered yesterday. The major foreign currencies are mostly firmer on the day, but the modest gains have left the short-term momentum indicators a bit over-extended. This would seem to favor early North American participants selling into the currency bounce

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News Links: Down with the Eurozone, It’s not about Berlusconi

Edward Harrison — Sun, 13 Nov 2011 14:30:48 +0000

Down with the Eurozone – Nouriel Roubini – Project Syndicate For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone’s consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of

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Expect a lot more trade intervention

Michael Pettis — Wed, 02 Nov 2011 12:30:49 +0000

The currency may well be undervalued, but a significant rise in the RMB, especially if it is countered domestically by an increase in credit at lower real rates, might actually make the global imbalances worse and, more worryingly, cause China’s debt burden and capital misallocation to rise. This would make China’s eventual adjustment far more difficult. The focus should be on shifting China’s economy towards the more labor-intensive and efficient sectors, and an appreciating RMB might actually make things worse, especially if it encourages hot money inflow. It is much better, I think, for China to raise interest rates than to raise the value of the

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The United States of Eurasia?

Marc Chandler — Tue, 13 Sep 2011 11:36:46 +0000

The dollar remains supported in choppy markets; French banks under pressure amid funding concerns. Euro zone risk premium continues to widen; Greece dances with default, tepid Italian bond auction. Banco de Mexico is likely to cut by at least 25bps in October; macroeconomic asymmetries in EMs

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China losing competitiveness

Edward Harrison — Fri, 13 May 2011 12:00:22 +0000

As labour costs in China rise, economists are beginning to think about replacing labour with capital, something we have already seen as a major factor in suppressing wage gains in developed economies. This is also in line with what economists say developing nations need to do to counteract the problem. More importantly, developing economies that reach this juncture must move up the industrial ladder to production of higher value-added goods or they will see their export competitiveness severely eroded

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A Credible Solution to Europe’s Debt Crisis

Guest Author — Sat, 30 Apr 2011 16:00:46 +0000

In April 1989, Mexico's external debt negotiator, Angel Gurria, asked his country's commercial bank creditors for a 55 percent haircut. This was the opening pitch of the newly created Brady Plan, which finally addressed both the debt overhang of developing countries and the weak balance sheets of their commercial bank creditors, ultimately resolving the LDC Debt Crisis. More than twenty years later, Europe is in the midst of a similar sovereign debt and banking crisis. The EU is in a destabilizing feedback loop that it cannot control. Sovereign credit is deteriorating and this is reducing confidence in national banking systems, causing or increasing the likelihood that sovereigns will have to assume bank liabilities. This further impairs the sovereign credit and increases the lack of confidence in the banks. We review the basic tenets of the Brady Plan in the context of our personal experience working on many of these sovereign restructurings and how they could apply in a comprehensive solution for the European debt crisis. The markets and the Eurozone desperately need a positive confidence shock in the form a comprehensive plan that simultaneously addresses the sovereign debt overhang and the balance sheets of European commercial banks

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