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The emerging markets crisis has three causes

The emerging markets crisis has three causes

On Friday, I wrote about the slowdown in China, the bear market in commodities, and the volatility in emerging markets as being all interrelated. Of course, there is more to the selloff in emerging markets than just the slowdown in China and commodity prices. Much of the problem is political and has to do with macro imbalances in particular markets. But the perceived tightening in the US and now the UK has also brought a new risk-off source of volatility as well.

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News: 2014-01-27

News: 2014-01-27

News links for 27 Jan 2014

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Argentina’s devaluation backfires

Argentina’s devaluation backfires

Back in early December the government of Argentina raised taxes on credit card purchases in foreign currency to 35% from 20%. Online Christmas shopping abroad became increasingly expensive. However, dollars continued to flow out of the country even with this high levy, pressuring foreign reserves.

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Oh no, not again: Ed Balls’ 50p tax rate

Oh no, not again: Ed Balls’ 50p tax rate

At the Fabian conference yesterday, Ed Balls announced the Labour Party’s intention, if elected in 2015, of restoring the 50p tax rate that was abolished by the present Coalition government. It is the central plank of his deficit reduction plan. But it is by no means clear that it is capable of bearing the weight he would like to place upon it.

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The slowing of Chinese growth and the rout in commodity currencies

The slowing of Chinese growth and the rout in commodity currencies

I am less and less concerned about the eurozone periphery over the medium term because recovery in Europe looks poised to last. On the other hand, the slowdown in China could have wide-ranging consequences, particularly for countries dependent on commodities for growth. The currencies of commodity producers are declining, making interest rate policy trickier as their economies slow.

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News: 2014-01-24

News: 2014-01-24

News links for 24 Jan 2014

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Argentina – From Bad to Worse

Argentina – From Bad to Worse

We appear to be on the cusp of a more serious crisis in Argentina, as things are moving from bad to worse. Spot ARS has dropped as much as 20% earlier today, while the implied “blue chip” FX rate has fallen nearly 10% over the past two days. The central bank does not appear to be intervening by selling dollars, […]

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Spain: The Market’s Darling

Spain: The Market’s Darling

By Marc Chandler We argue that part of the euro’s rise over the past several months reflects a reassessment of Spain’s outlook.  Many global investors had been under-weight Europe though most of H1 13, favoring the US and Japanese equities. However, as the PMIs began indicating an economic recovery, foreign investors moved back into Europe.   Some hedge funds made a […]

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News: 2014-01-23

News: 2014-01-23

News links for 23 Jan 2014

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Shinzo Abe betting on wage growth

Shinzo Abe betting on wage growth

Wage increases are vital for Abenomics – without them the current policies are simply unsustainable (see discussion). If consumers are squeezed (see post), spending will decline and the nation will face deflationary pressures once again. The government is applying pressure on the corporate sector to boost pay. According to ISI Research, the following 5 firms have announced wage increases.

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