Terminology and semantics have an important place in communication because we want to convey concise and accurate meaning as efficiently as possible. That is why I disdain the term “petrodollar” when speaking or writing about the global exchange standard that replaced gold in the Bretton Woods sense. The idea of a “petrodollar” conveys some of the “right” characteristics but leaves [...]
After enduring quite a bit of restlessness even into the early part of 2014, the Banco do Brasil (Brazil’s central bank) believed it had regained order in its currency “market.” Going back to the dramatic and global tightening episode around Chairman Bernanke’s taper threats in the middle of 2013, the real was caught in a very dramatic downdraft that has [...]
Last week was pretty much a disaster, not just economically speaking, for a wide swath of the globe – from Japan’s ongoing "unexpected" collapse to Europe’s "unexpected" third go at contraction (without recovery) to a very dim and "unexpected" view of credit markets pretty much everywhere including the US. This week started out with more grimness, in places like China [...]
Even though the data is stale by the time of its eventual release, I think the TIC figures still maintain some relevance. If nothing else, even on a rear-facing basis, it provides more consistent data to confirm or deny previous narratives. To this point, that description includes central banks mobilizing dollar assets to deflect continuous dollar funding difficulties. The February [...]
The news from China this morning was unexpected only to those who still cling to the idea that the PBOC control is omnipresent. Exports were down 6.6% Y/Y in March (after dropping 18.1% Y/Y in February), while imports simply collapsed 11.3% Y/Y. Since China has been operating as the global trade pivot, the results on both sides of the trade [...]
There is more than one way to look at the emerging markets and frame the debate about what should or might be done. I think this quote from the Financial Times, however, falls outside the boundaries of reason: “So far we are still not seeing the impact of the currency devaluation we had last year,” said David Beker, economist with [...]
Earlier in January, despite the auspices of assurances from the Banco do Brasil, the Brazilian government auctioned its newest 10-year government bond (NTN-F) at a record high yield. Almost immediately there was an attempt to soften such a blow, as the Brazilian commentary network was filled with, “it wasn’t as bad as expected.” The “when issued” yield came out at [...]
In the wake of taper tightening, currency markets and credits everywhere around the world are adjusting pretty much as they had previously. While the Indian rupee remains stuck in a range, the Bank of India tried to ignite growth through “surprise” interest rate non-movements. Other markets have not been so fortunate, particularly Indonesia. While India soaked up much of the [...]
Perhaps being deprived of incoming data has set my mind too far toward conspiratorial, but there were a few developments in the global finance realm that piqued my interest. First, the head of the World Bank basically warned emerging market economies to get their act together in the next few months. “We think that now emerging market economies have maybe [...]
The emerging market story has unfortunately been turned into, as the kids say, a meme. According to Bloomberg, the “weakest” of the EM currencies have been dubbed the “Fragile Five” by Morgan Stanley “strategists”. These include the South African rand, Brazilian real, Indian rupee, Indonesian rupiah and Turkish lira (3 out of the 5 BRICS). Such incandescent weakness, a surprise [...]
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