Well, well, well .... some unlikely allies for Mr Salvini

ref :- "Economists back Salvini in Italy budget dispute" , The Financial Times , International Section We thought we'd point you towards this FT article, which might make some people question received wisdom. Whether it makes the markets do the same is another matter of course, and there's no sign of them doing so this morning. But first ...... The world is not a very happy place this morning. According to some of the market reports written earlier yesterday, apparently there were a few optimistic souls reckoning that it was time to take a breather from the "risk-off" trading patterns brought on by trade war escalation and slowing global growth. Poor misguided fools .... what were they think

"Borrow more, spend more” -- doesn’t sound very German but times they are a ‘changing (as someb

ref: - " "Black books" -- Public debt in Germany”, The Economist, Finance and Economics Even in the dry and crusty world of finance and economics, things are constantly evolving -- and sometimes in surprising directions. Take Modern Monetary Theory, or MMT, for example. In essence (and among other things), MMT states that governments with their own sovereign currency system can (and indeed should) print as much money as they need to spend because they can't go broke unless a political decision to do so is taken. That flies in the face of all traditional wisdom, which would hold that rocketing (unconstrained?) levels of debt would be a sure-fire recipe for hyperinflation and thus for economic

How to make money from the Trade War .... assuming it goes to plan, that is

ref: -"Short Aussie. Long Yen Is the Hot New FX Bet for Trade War”, Bloomberg Markets 22/5/19 Investors find things a lot easier if they are not required to make decisions based on their prognostications for the future. If they only had to buy something nice and safe with a comparatively decent yield for example... well, life would be just dandy (although possibly not as dandy as it used to be now that yields generally are so low). But the fact is that very few investment strategies are so simple that they can ignore what might happen in the future, not least because it would be irresponsible not to take protection against the possibility of events conspiring against you. Of course, many spe

The trade war's getting bloody... and the key battle could be on foreign exchanges

ref: - " Xi lays the groundwork for all-out trade conflict with the US" Tom Mitchell in the Financial Times, Global Insight " Renminbi volumes surge as investors square off with China's central bank", The Financial Times, Markets and Investing So where are we with all this? The US' assault on Huawei, with all its enormous ramifications, would seem to put the mockers on the idea that the recent upsurge in tension between Washington and Beijing is likely to be just a short-term thing, just part of the belligerent "negotiating process” long favoured by President Trump. If such tactics were likely to see immediate results, we probably wouldn't have China's ambassador to the EU calling US actions

Bad news from China, stocks jump... Good news from Germany, bund yields down. Not obviously logical?

ref: - “Germany enjoys first-quarter rebound", The Financial Times, International Section There are plenty of bright investors knocking about… you wouldn't necessarily ascribe any great philosophical or intellectual depth to all of them, but fortunately, those attributes are not generally required to make a success of markets. What is a very basic prerequisite however is an ability to see beyond the headlines? On an almost daily basis, we see market moves that might seem illogical to those with no experience. They are easily enough explained most of the time, but a newly-arrived Martian keen to have a punt on the markets might find them... well, "counter-intuitive" shall we say? Yesterday sa

Powerful weapons, yes ..... but are they two-edged swords ?

ref :- "China Is Armed With Powerful Market Weapons in Duel With Trump" , Bloomberg Economics So ..... at one minute past midnight NYT the US duly raised the tariff on $200bn worth of imports from China from 10% to 25%. What's more, President Trump has been pouring more petrol on the fire by suggesting that he might widen the range of the 25% rate to include just about all of the $540bn worth of goods sells to the US each year. Cue market meltdown ? No, not really ..... no more than we've seen throughout the week and in fact China's battered equity markets have managed a noteworthy bounce this morning. Well, we were saying earlier in the week that the tariff hike today would not have been un

Presidential tweets still a big headache for Fed Chair Powell even when he's not the target…

ref: - "TRUMP TWEETS JUMP START RATE-CUT BETS, UNRAVELING POWELL EFFORTS”, Bloomberg Markets 6/5/19 The world is well aware of the President's super-aggressive negotiating style. It follows that much of Mr Trump's most forthright posturing will not necessarily be taken completely at face value. One only has to look at his journey from threatening to wipe N. Korea off the map to love-ins with Kim Jong-un (and back again to somewhere between the two even as N. Korea resumes missile testing) to realise that it's wise to treat presidential rants with some caution. One could argue that bullying is just part of the bargaining position, and very often there's more than an element of truth to that,

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