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Europe ‘fragments’ after Renzi poll No

Europe ‘fragments’ after Renzi poll No

4 Dec 2016

Italy’s No to Prime Minister Matteo Renzi’s constitutional reform proposals signals further European fragmentation. Renzi’s resignation aftermath could mirror the outcome of French President Charles de Gaulle’s 1969 departure after he lost a similar plebiscite.

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  • Marsh on European banks and the dollar

    Marsh on European banks and the dollar

    2 Dec 2016

    David Marsh on CNBC's Squawk Box analysed the effects of rising equity prices, the ECB becoming 'less aggressive' on easing, European banking sector consolidation, and the comfort that Donald Trump will feel thanks to the 'exorbitant privilege' of the dollar.

  • Click here to watch the interview
  • Yen set to plummet against dollar

    Yen 'set to plummet' against dollar

    1 Dec 2016

    The yen is set to weaken to as low as 130 against the dollar, said Shumpei Takemori of Keio University in Tokyo, in an OMFIF telephone briefing on the 'modest results' of Abenomics, Japan's monetary future and the country's distributional challenges.

  • Click here for a recording of the briefing
  • Dec Bulletin: Power of personality

    December Bulletin: Power of personality

    1 Dec 2016

    December's Bulletin focuses on constraints on central bank independence. In the next three years, six top central bank governors finish their terms. Donald Trump’s criticism of Janet Yellen has generated headlines before he moves into the White House.

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  • Greenspan - the 'gun-shy chairman'

    Greenspan - the 'gun-shy chairman'

    29 Nov 2016

    Alan Greenspan was the 'pre-eminent post-war financial figure', but also a 'gun-shy chairman', Sebastian Mallaby, author of The Man Who Knew: The Life and Times of Alan Greenspan, told an OMFIF meeting on the former Fed chief and his role in central banking.

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    Commentary

    • Trump's European baptism of fire

      by Desmond Lachman in Washington | Tue 6 Dec 2016

      Italy is a large economy of systemic importance. Its poor fundamentals make it ill-prepared to weather prolonged political instability. Italy's economic well-being is essential for the euro's long-term survival, but it is too big for Europe to save in the event of a full-blown crisis. Donald Trump looks likely to face a European baptism of fire. He should tone down his rhetoric and provide leadership that might limit the fallout. If he does not do so, markets in the US and Europe should brace themselves for a very rough ride.

      MARKET: Europe

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    • European fragmentation accelerates

      by David Marsh in London | Mon 5 Dec 2016

      Italy’s No to Prime Minister Matteo Renzi’s constitutional reform proposals signals further European fragmentation that could eventually escalate into the departure of a large member country from the euro. Following Renzi's resignation announcement last night, Italy’s short-term future is in the hands of President Sergio Mattarella, who has to decide whether to reappoint Renzi or ordain an ‘institutional government’ to carry on until the next general election due in early 2018.

      MARKET: Europe

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    • Heading for trade war with China

      by Steve Hanke in Baltimore | Mon 5 Dec 2016

      America’s habitual excess of spending over saving is financed through credits from the rest of the world. Donald Trump is promising policies that will increase the trade deficit still further. When that happens, Trump will blame China, which accounts for 48% of the US trade deficit. A trade war with the world’s second biggest economy appears increasingly likely. The spat over Trump’s Friday phone call with Taiwan President Tsai Ing-wen, breaking decades of diplomatic protocol, offers an uncomfortable foretaste of more squalls ahead.

      MARKET: US

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    • In defence of monetary financing

      by Riaz Riazuddin in Karachi | Fri 2 Dec 2016

      The ultimate objective of central banks is to increase the welfare of people through designing and implementing monetary and financial regulatory policies. Coordination between monetary and fiscal authorities is crucial, yet this has become weaker with the modern approach to central banks as independent institutions. However, independence in no way precludes such useful co-operation. We need central banks and governments which are willing to defy convention.

      MARKET: World

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    OMFIF Chart

    Investment clock: Trump vote could strengthen overheat phase

    by Trevor Greetham

    The markets had another surprise in November with the election of Donald Trump. His victory has been taken badly by the bond market as it marks a transition from monetary ease towards fiscal ease. This is a positive backdrop for stocks.

    Investment clock: Trump vote could strengthen overheat phase

    Investment clock: Brexit boosts multi-asset returns

    by Trevor Greetham

    Multi-asset performance has been very strong since the UK referendum, rewarding sterling-based investors with exceptional returns for the year to date. Bonds surged globally, while stocks benefited from an increase in the value of overseas earnings in sterling terms.

    Investment clock: Brexit boosts multi-asset returns

    'Investment clock' shows gains for equities

    by Trevor Greetham

    The pick-up in global growth against a low inflation backdrop puts the investment cycle still in an equity-friendly ‘recovery’ phase, according to the Investment Clock, a model-based framework linking asset returns to different phases of the global business cycle.

    Investment clock

    UK's external financing needs

    by Ben Robinson

    One way of measuring economic vulnerability, says Moritz Kraemer of S&P Global in an OMFIF Commentary, is to analyse an economy’s annual gross external financing needs. The UK score is 755%, the highest among all 131 sovereigns rated by S&P Global Ratings.

    UK's external financing needs
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    Advisory Board View

    Rate rise predicted for Fed in December

    The majority of respondents to December Advisory Board poll – 95% – expect the Federal Reserve to raise rates, while 5% expect an interest rate cut. Of those expecting higher rates, 90% believe this will occur in December and the remainder foresee the rate rise in the first half of 2017.

    Rate rise predicted for Fed in December
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