Posts Tagged ‘carry trade’
December 8, 2019
This is a rhetorical question of course, for the lack of wage growth is to be found in the vast amount of money chasing a global labor pool.
It is capital that had benefited from the last 30 years of the unleashing workers after the fall of the Soviet Empire and the black/white cat policies of Deng in pursuing growth in China. Now that other emerging economies are attracting capital in an effort to create jobs, there still remains a great deal of downward pressure on wages. Even the movement of supply chains out of China will act as a drag on global earnings as manufacturers will act to hold down wages as way of remaining attractive to foreign direct investment. The world has been watching as Chinese earnings growth has accelerated over the last 10 years but one of the outcomes from the Trump tariffs will be to force a slowdown in China’s wage inflation.
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Tags:carry trade, China, Euro, Fed, Swiss Franc, tariffs, trade war, U.S. Dollar, U.S. jobs data, wage inflation
Posted in Currency, United States | 24 Comments »
April 11, 2013
Over and over, financial news airwaves are filled with noise about since the Bank of Japan–under the supervision of Governor Kuroda–has embarked on a massive dose of Quantitative Easing, there has been no real outflow of YEN around the world. The only problem with this bloviating is that its devoid of fact. The BOJ’s action, or rather, call to action has led to a drop in European bond yields as well as a new pillar of support for U.S. Treasuries. Further proof is last night’s employment data from Australia, which was much weaker than expected (a 36,000 job loss and a 0.2% jump in the unemployment rate to 5.6%), but the AUSSIE DOLLAR rallied after an initial selloff as Japanese investors are seeking higher returns. A favorite place for higher yields for Japanese seekers has been Australia and New Zealand. Many financial institutions offer what are known as Urudashi and Samurai bonds. These are bonds issued in Japan in foreign currency of usually kiwi and Aussie. Those who say that the Japanese don’t invest afar and remain in Japan–what is called HOME BIAS–are badly misinformed.
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Tags:Aussie Dollar, BMW, carry trade, Daimler, Eur/Yen, Governor Kuroda, Honda, Japan, Nissan, RBA, Shinzo Abe, Toyota, U.S. Dollar, Volkswagon, Yen
Posted in BoJ, Currency, Germany, Japan, RBA | 4 Comments »
February 18, 2013
As expected, the G-20 communique was more insipid blathering about global growth, BIS capital regulation and the enactment of some new macroprudential regulations to ensure global financial tranquility. To reflect on the lack of consistency in this communique, let me quote from point 20: “We welcome the OECD report on addressing base erosion and profit shifting and acknowledge that an important part of fiscal sustainability is securing our revenue bases.” This is pure nonsense for it reflects the great divide that exists between the old line powers of the G-7 and the more broad-based and emerging economies found within the structure of the G-20.The old line (developed) economies want to preserve their tax bases so as to have enough revenue to maintain previous promises of retirement and pension programs for their aging populations.
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Tags:Ben Bernanke, Brazilian real, carry trade, ECB, Fed, FOMC, G-20, G-7, Janet Yellen, Lorenzo Bini Smaghi, OECD, Shinzo Abe, tax harmonization
Posted in Currency, Debt Market, ECB, Fed, G-20 | 7 Comments »
August 17, 2011
(and I Thought Madoff Was In Jail)
It seems that Vice President Biden used some of his miles to head to China for his summer vacation. The Chinese have been vocal critics of the U.S. and its profligate ways. As the largest foreign holder of U.S. Treasury debt, the Chinese have more than a passing concern in the outcome of U.S. economic and fiscal policy. The Chinese are not the single largest holder of U.S. debt as that award goes to the FEDERAL RESERVE. The Obama administration sent BIDEN to reassure the Chinese that the U.S. still maintains a FICO score more than 720.
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Tags:carry trade, China, Election 2012, euro swiss futures, Federal Reserve, Gold, haven status, Joe Biden, Obama, Pound, SNB, strong dollar, Swiss Franc, zero interest rates
Posted in China, Currency, Switzerland, UK | 6 Comments »