If you have been following the plight of the AUD over the last few months, you would have thought it had no friends. Day after day, the financial press and the investment community found reasons why the AUD should be falling. Fed tapering – bad for the AUD. Commodity prices falling – bad for the […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-08-12 06:00:052018-05-21 06:00:31Mr Wong Responds to Australian Dollar Weakness
It used to be the case that when the US sneezed, the rest of the world caught a cold. The US economy was so large that it dominated not only North America, but the rest of the world. In 1990, for instance, the US accounted for 24.7% of global GDP according to the IMF. By […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-07-15 06:00:372018-05-21 06:01:01When Does the US Stop Mattering?
The last two weeks saw the end of two of the finance industry’s most sacred cows. First, the stable value cash fund was replaced by market value daily valuation. Second, the method for fixing LIBOR, based on an average of bank estimates, was replaced by actual market referenced lending rates – at least in Singapore. […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-06-17 06:01:332018-05-21 06:02:03LIBOR Fixing and Stable Value Cash Funds – Two Sacred Cows, Butchered, Consumed
In an earlier post, I explained that the reason QE is non-inflationary is because the expansion of the monetary base has been offset by a significant slowdown in the velocity of money. Put simply, people in the QE economies are not spending the money that the Central Banks are dropping from their helicopters thousands of […]
It is a well-known fact in monetary economics that the Central Bank can control either the exchange rate or the interest rate but not both. China has been administering a fixed exchange rate policy for many years which has encouraged significant capital inflow and the buildup of reserves. As much as they would have liked […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-06-03 06:01:042018-05-21 06:01:30Forget International Pressure, China’s Domestic Problems Will Float the Yuan
Asset markets – stocks, bonds, property – are performing well. The popular press points their finger at the easy money policies of the Central Banks as the source of asset market strength. Does this argument have merit? ‘Quantitative Easing’ (QE) is the trendy expression for expanding the Monetary Base (currency and bank reserves) in the […]
European regulators are implementing plans for a trading tax to penalise ‘short term speculation’ and ‘reduce volatility’. While it is unclear that a trading tax can achieve either of these objectives, one certainty is that a trading tax will lead to less turnover, lower profits and job losses in the financial sector. But is a […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-05-14 06:07:472018-05-21 06:08:09Who Needs a Trading Tax When Interest Rates Are Zero?
Iggy Pop and David Bowie could hardly have predicted how many Central Bankers would want to emulate the Bank of Japan’s approach to FX intervention when they wrote the famous song ‘Turning Japanese’. It seems, however, that every nation experiencing upward currency pressure wants to turn Japanese. The BoJ, acting for the Ministry of Finance, […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-05-08 06:08:142018-05-21 06:08:57Is the RBNZ Turning Japanese? Is the RBNZ Turning Japanese? I Really Think So…
Central Banks and Sovereign investors are the most affected by the downgrade of the US to AA+ by S&P. This is because that group of investors tends to be restricted to highly-rated Government guaranteed sovereign bonds. If there is going to be a material impact on the holdings of US Treasury securities following the downgrade […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2013-05-06 06:38:082018-05-21 06:38:34Central Banks and Sovereigns Most Affected by the US Downgrade
One aspect of the Greek Debt crisis that has not been discussed are the conditions under which the ECB will print money to avert a default. Sovereigns with their own currencies do not default as they can simply monetise their debt. The resulting inflation is a tax borne by nominal asset holders. Greece shares a […]
Mr Wong Responds to Australian Dollar Weakness
If you have been following the plight of the AUD over the last few months, you would have thought it had no friends. Day after day, the financial press and the investment community found reasons why the AUD should be falling. Fed tapering – bad for the AUD. Commodity prices falling – bad for the […]
When Does the US Stop Mattering?
It used to be the case that when the US sneezed, the rest of the world caught a cold. The US economy was so large that it dominated not only North America, but the rest of the world. In 1990, for instance, the US accounted for 24.7% of global GDP according to the IMF. By […]
LIBOR Fixing and Stable Value Cash Funds – Two Sacred Cows, Butchered, Consumed
The last two weeks saw the end of two of the finance industry’s most sacred cows. First, the stable value cash fund was replaced by market value daily valuation. Second, the method for fixing LIBOR, based on an average of bank estimates, was replaced by actual market referenced lending rates – at least in Singapore. […]
Federal Reserve Tapering – Let Velocity Reign!
In an earlier post, I explained that the reason QE is non-inflationary is because the expansion of the monetary base has been offset by a significant slowdown in the velocity of money. Put simply, people in the QE economies are not spending the money that the Central Banks are dropping from their helicopters thousands of […]
Forget International Pressure, China’s Domestic Problems Will Float the Yuan
It is a well-known fact in monetary economics that the Central Bank can control either the exchange rate or the interest rate but not both. China has been administering a fixed exchange rate policy for many years which has encouraged significant capital inflow and the buildup of reserves. As much as they would have liked […]
Is QE Driving Asset Prices?
Asset markets – stocks, bonds, property – are performing well. The popular press points their finger at the easy money policies of the Central Banks as the source of asset market strength. Does this argument have merit? ‘Quantitative Easing’ (QE) is the trendy expression for expanding the Monetary Base (currency and bank reserves) in the […]
Who Needs a Trading Tax When Interest Rates Are Zero?
European regulators are implementing plans for a trading tax to penalise ‘short term speculation’ and ‘reduce volatility’. While it is unclear that a trading tax can achieve either of these objectives, one certainty is that a trading tax will lead to less turnover, lower profits and job losses in the financial sector. But is a […]
Is the RBNZ Turning Japanese? Is the RBNZ Turning Japanese? I Really Think So…
Iggy Pop and David Bowie could hardly have predicted how many Central Bankers would want to emulate the Bank of Japan’s approach to FX intervention when they wrote the famous song ‘Turning Japanese’. It seems, however, that every nation experiencing upward currency pressure wants to turn Japanese. The BoJ, acting for the Ministry of Finance, […]
Central Banks and Sovereigns Most Affected by the US Downgrade
Central Banks and Sovereign investors are the most affected by the downgrade of the US to AA+ by S&P. This is because that group of investors tends to be restricted to highly-rated Government guaranteed sovereign bonds. If there is going to be a material impact on the holdings of US Treasury securities following the downgrade […]
Greece
One aspect of the Greek Debt crisis that has not been discussed are the conditions under which the ECB will print money to avert a default. Sovereigns with their own currencies do not default as they can simply monetise their debt. The resulting inflation is a tax borne by nominal asset holders. Greece shares a […]