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Posts Tagged ‘G20’

2013/02/11: Calendar, OECD still mixed with US the key

February 11, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

The Weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective will be added sometime soon. Yet, in addition to the calendar are two key areas of interest we want to cover today: What a significantly robust week it is on all fronts, and (in spite of what some may say about the possible self-sustaining potential of the Chinese and other Asian economies) the degree to which the US remains the key to the rest of the world’s further growth prospects.

That we have quite a bit of important midmonth economic data is a given. After a light data day today, those always include a range of global GDP figures (somewhat after the US release), US and UK Retail Sales, various Chinese data even though it is closed all week for the Lunar New Year. And first but not least of the truly global indications was the OECD (Organization of Economic Cooperation and Development) Composite Leading Indicators (CLI.)

Still mixed... US holds the key

Still mixed… US holds key (click for full report.)

       Those still showed a very mixed picture that we interpreted to mean there is still quite a burden on the US to continue to lead any further global economic growth. More on that later. But for now, there are also extensive finance minister and central bank meetings this week beginning with Europe today and tomorrow and evolving into the G20 in Moscow Thursday and Friday.

And those are looking to be pretty contentious this time around.

 

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2011/11/09: Quick Post: Opera Berlusconi Continues… With Equities in Thrall, Yet Not Necessarily Bad

November 9, 2011 Leave a comment

© 2011 ROHR International, Inc. All international rights reserved.

Opera Berlusconi has finally seen the fall of the ebullient Prime Minister. If not for his policies and management of the state, he will at least be remembered for the excitement he provided. Of course, that includes the degree to which his shenanigans pointed out the ineffectiveness of leadership in the profligate southern European sisters, and even Europe as a whole.

It was the sort of demonstration of narrow partisan domestic focus that ultimately belied the myth of there being a cohesive Euro-zone even more so than the riots in the streets in Greece. Italy is just that much larger, ostensibly competitive on an industrial basis, and potentially capable of the right sort of fiscal balance if only the political will were effectively exerted. And yet, the other aspect which is clear even from Italian domestic politics is that it also suffers from its own North/South divide. In that sense, it is the fractal miniature example of why Europe cannot really be a monetary union without becoming a fiscal and political one as well; and that’s not happening.

As just a brief early word on two primary asset classes’ price activity, on current form it seems the government bond markets had it right by rallying on the weak economic news and disturbing developments in Europe. That was in spite of the strength of equities, which can be an anticipatory bid during earnings season and then weaken once things revert to normal. However, in this case they seem to have also been defying the crushing logic of the fact that Europeans who had been so adept at kicking the can down the road, well, finally seem to be running out of road.

Italian 10-year government bond yields shooting up above 7.00% in spite of Mr. Berlusconi’s resignation (at least seemingly so for now) came as somewhat of a surprise to casual observers. We are not sure why they would be so shocked by that, as an spite of his obvious weaknesses and problems Mr. Berlusconi was at least a strong leader up until the recent extreme loss of confidence in him. What we do know is that the market is exhibiting a rational reaction to the fact that no one else in Italy is considered much better, or much more likely to generate support for the necessary budget adjustments.

This would seem to be a classic example of “be careful what you wish for.”

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2011/11/04: Quick Post: Draghi Not Soggy. But Does G20 End Up Just a Cannes-Game?

November 4, 2011 2 comments

There was quite a bit of concern about whether Signore Draghi taking the reins at the European Central Bank (ECB) would lead to a much looser regime that would ignore inflation. In the first instance he is an Italian central banker, who historically have been known to have no qualms about allowing significant amounts of inflation. While he has been personally committed to far more fiscal rectitude than any of his Italian predecessors, that still left a question in the air.

Especially so at a time when Italy is going to need seemingly massive help with its sovereign debt problem. There was some passing concern (nothing really too serious) that he might be overly accommodative in supporting the Italian government bond market through ECB purchases. And all of that was seemingly compounded by the first interest rate decision under his regime yesterday, as the ECB put through a surprise 25 basis point rate cut to 1.25%.

Horror of horrors? Well, not really. Along with the rest of the world, European inflation does remain very high at present. As such, an easing ECB seemed to be joining Fed Liquidity Lubrication Club. However, in the context of the recalcitrant rate rises into an obviously weakening European economy by hawkish predecessor Jean-Claude Trichet, the reversal of one of those hikes hardly makes Signore Draghi an inflation Dove.

In fact, the economic data all seems to have vindicated his decision to make a bold move at his first interest-rate meeting as ECB President. As events have evolved today at the G20 meeting in Cannes, he has also rejected the idea that the ECB should continue purchasing the sovereign bonds of Europe’s weakest fiscal sisters. In that regard his indication that the Euro-zone needs to get its European Financial Stability Facility (EFSF) act together (funding, mandate, leveraging mechanism) is wholly consistent with that of his predecessor. On the whole, a very solid showing.

However, whether the ECB has turned just a bit more dovish is the least of the equity market’s concerns. The now bizarre machinations in Greece, and more importantly the continued lack of agreement on the critical funding and operational aspects for EFSF are plaguing the markets today. The biggest problem seems to be recurring failure of lofty pronouncements followed by no credible details on all of these various rescue at fiscal reform plans. And once again at the G20 in France, it is all starting to feel like not much more than a Cannes-game!!

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