Against the tide
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LATEST ARTICLES
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Two elections in Europe in a month will certainly ruffle the feathers of financial markets.
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The populist surge is being restrained for now, but several factors are likely to drive up sovereign bond yields in Europe.
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The dollar’s multi-year bull run might last a couple more months, but its fundamental underpinnings are weakening.
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With the sizeable majority voting no to political reform in the Italian referendum, the anger vote has claimed its next victim – Italy. The dominoes of Brexit, Trump and now Italy continue to fall.
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The rise of populism in general, and Trumpism in particular, brings severe geopolitical and economic risks and could have a disastrous impact on growth and productivity.
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Another European banking crunch is on the horizon thanks to legacy problems that have not been fixed.
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The European Project faces a much greater danger from the rise of populism than from the sovereign debt crisis.
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The advantages of helicopter money are dubious and they come with large risks attached.
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The failed coup in Turkey shows that we are in one of those periods in history when politics matter as much or more than economics for financial markets.
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US growth should start a strong rebound this year, increasing the chances of rate rises.
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Central bank initiatives are carrying less and less influence and their diminishing returns increasingly point to a toxic race to the bottom.
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When the numbers look bleak and central banks are out of tools, cash and gold make sense.
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Weaknesses in Japan and Asia will mean a flight to quality.
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It is going to be a bumpy ride for Asia and other commodity-producing economies this year.
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The euro is on course for parity with the dollar in 2016.
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Britain’s renegotiation of its relationship with the EU could be a good thing for Europe too.
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The country is an indicator of the European Union’s future.
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The US Federal Reserve has harmed its credibility by postponing a rate hike.
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Renzi’s reforms and favourable winds seem to be working some magic on the country’s numbers.
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Structural problems and over-leverage mean the focus will switch to Asia for the next global currency moves.
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Investors ignore valuation at their peril – a period of lacklustre returns looms. The Fed’s move on interest rates is key.
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The newly elected Tory party must wrestle with an invigorated SNP and its old bête noire, the EU. The proposed in/out referendum will cast a long shadow over the UK.
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The eurozone recovery looks increasingly secure but the low growth rate is still a big cause for concern.
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At times the ECB seems to lurk so far behind the curve that it appears to be using some sort of random monetary-policy generator.
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Political pressures and lack of growth have put the European project under threat. Reform is urgently needed to set Europe back on course.
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The eurozone’s economic fortunes should start to recover with the arrival, at last, of full-blown quantitative easing. As the world’s leading currencies are set for a race to the bottom, it could be time to buy gold.
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Time is running out for Italy to make the reforms it needs to produce a self-sustaining recovery.
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The US looks to benefit from a changing energy landscape, at the expense of Russia and the Middle East, while Europe will be happier to be less reliant on those producers.
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The financial sector remains central to the eurozone’s economic woes. Promises of ECB support only prolong the problem.
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The ECB president is striving to stave off deflation in the eurozone yet Germany will not countenance full quantitative easing. Something must give.
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The big happening in the next 12 months will be the repricing of global capital. It will impact the price of every currency and asset. It’s a complex and exciting story.
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Key energy suppliers are increasingly politically unstable and Europe faces a rise in prices, even though demand is falling.
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ECB president Mario Draghi has resisted using his quantitative easing bazooka up to now. However, with inflation expectations already moving lower, he will have to fire it before the year is out.
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There is no time to waste for intervention to overcome persistently low inflation in the eurozone.
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The ECB view that eurozone disinflation is slowly reversing is unconvincing. QE might be the only strategy left, although it is not risk free
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The crisis in Crimea should give the west pause for thought in its relations with eastern European states and with Russia.
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The EU elections are likely to deliver big gains for populist parties of the left and right, namely those opposed to the European project and/or further integration.
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A more optimistic picture of the eurozone economy is clouded by deflationary pressures, which are especially perilous in Greece. There is no easy fix, but a cheaper euro would help.
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US claims that Germany’s external surpluses are hindering global recovery are inaccurate and unjustified
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The debt crisis is not over. A renewed bout will spring from banks in the EU periphery.
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Germany will dig in its heels about structures that might put it in a minority in decision-making and might expose its taxpayers to unwanted bailouts.
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The Fed’s U-turn on tapering and the likely shakiness of any coalition Merkel builds in Germany both add uncertainty to investor sentiment.
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Despite recent positive GDP figures, there is still depressed consumer demand and tight credit in large parts of the single-currency area.
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Dovish forward guidance from the European Central Bank has been followed by a similar approach from the Bank of England.
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The immediate actions of key financial strategists have a direct impact on the markets. But what of the trends that are beyond these leaders’ control?
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There is just about enough global growth activity to sustain growth-dependent assets. But stagnating Europe remains the weak link that could disrupt peaceful progress.
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The Cyprus solution is inadequate as well as sending the wrong messages on depositors’ risks and free capital flows. Then there’s Slovenia... and Italy.
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In the ledger of economic recovery, reasons to be optimistic are neatly balanced by reasons to be pessimistic.
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The mini-deal reached to avert the US fiscal cliff offers no solution to excessive public borrowing, which has to be dealt with by the end of this month.
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Spain, Italy and Greece should not expect a happy new year – the eurozone’s bumpy ride is set to continue.
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The US, Japan and Europe will be too cold next year. Manufacturing from emerging economies might be too hot. The result, though, might be just right.
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Domestic political concerns continue to stall progress on solving the euro crisis. Fortunately, there are more propitious financial indicators elsewhere in the world.
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Financial markets should benefit from recent policy moves in the eurozone and the US, but the underlying economic picture remains uncertain and potentially grim.
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Eurozone moves to resolve the euro crisis are propitious for global markets. But an Israeli attack on Iran this autumn would undermine economic recovery.
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The pressure is on for the US to get its private and public sector debt down – through inaction.
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Spain cannot expect pan-EU economic reform measures to be introduced quickly enough to save itself from a troika programme.
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None of the policy responses, monetary or fiscal, addresses the real global sickness: debt.
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The end of QE support means that markets must face up to a repricing of assets on the basis of economic reality.
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Greece will be forced to default and face an exit from the eurozone. That’s when the issue of contagion will rear its head again.