Testing
EM investing, part 1 – framework
This post is the first of a series of four posts relating to emerging markets (EM). With commodity prices falling, the Fed likely to raise interest rates soon and investors spooked because of events in China, the recent EM sell-off has been painful. So while this post is topical, I have also been reading a very detailed and interesting book by Shalendra Sharma about the Asian Crisis in 1997. This has helped me understand some of the economic issues relating to EM investing and I am happy to share my knowledge on this topic. Many of the points that were relevant in 1997, remain important today. With this in mind, in this post I give a backdrop to EM investing and lay out the key macro items to consider. Continue reading
Posted in Emerging markets
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Fed minutes – September rate hike off the cards?
Not quite so “resonably confident”
The minutes to the Fed’s last meeting – July 28-29 – were released last night and a rate rise in September now appears a lot less likely. Despite noting that the conditions for a rate rise were “approaching”, the minutes showed that the Fed’s stance has become more dovish. Significantly, it noted that the conditions for a rate hike “had not been met” and that “almost all members [indicated] that they would need to see more evidence that…. inflation would return to the Committee’s longer-run objective over the medium term.”
The committee also expressed concerns about China, the strong Dollar and low oil prices. Given that turbulence in China has risen (and it has devalued its currency since the meeting took place) and the oil price has also fallen, the case for a rate hike in September is fast receeding. October or later is now most likely. Compared to 80% on Monday, only 40% of economists are now predicting a rate rise in September. The minutes, combined with yesterday’s CPI report, China, oil and my blog post on Monday, have clearly shifted sentiment. Continue reading
What Corbyn and Trump have in common
What does Tiririca think of Corbyn and Trump?
As people, Jeremy Corbyn and Donald Trump couldn’t be more different. Mr Corbyn seems like a genuinely nice guy, while Mr Trump is rude and brash. The latter is a good orator, unlike Mr Corbyn. The former is said to listen, but Mr Trump is too important to do that. They couldn’t be further apart as people, or on the political spectrum. Yet despite their differences, both are anti-establishment and feel authentic. And that resonates with voters. But is there any substance? And how worried should we be? Continue reading
When will the Fed raise rates?
An interest rate rise in the US is likely sometime this year and most private sector economists expect this to happen on September 17th. But what should the Fed should consider before making its move? It may be worth reviewing the Fed’s mandate – ensure “maximum employment, stable prices and moderate long-term interest rates” – in order to answer this question. I argue that forecasting maximum employment – or the NAIRU – could be its most important task. Continue reading
Posted in Labour market, Monetary policy, US
Tagged Fed, FOMC, Inflation, NAIRU, Technology
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Greece and Eurozone follow up
It’s been over a month since my initial post about Greece and I’ve finally managed a follow up. Slack blogging I know. In the interim I’ve had some deliberations about who this blog is for and how I should go about writing it. I’ve also questioned some of the key assumptions and framework for my initial analysis: specifically, the relationship between monetary and fiscal policy – are the two inextricably linked? In this post I discuss some of the points of contention and give a brief update on the Greek bailout and its impact on the Eurozone. More generally, for more about this blog and what I intend to do with it, check out the updated About page. Continue reading
Posted in Eurozone, General, Monetary policy
Tagged Eurozone, fiscal policy, Greece, monetary policy, Syriza
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Greece and money: Eurozone doomed no matter what!
I was watching CNBC’s coverage of the Greece crisis last week, and the views of one particular guest compelled me to write my first ever economics blog post. The gentleman in question was very well informed and made some interesting points. However, on the biggest issue of all he was completely wrong. According to him, “if Greece leaves the Euro, the Eurozone could collapse”. And he’s not the only one to use this logic, but in fact, the opposite is true: if Greece stays in the Euro (on Syriza’s terms), then the Eurozone will collapse. And here’s why: Continue reading
First post
Hello,
This is my blog about Brazilian economics
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