- USDJPY reversing gains. Japan is export driven economy & therefore sensitive to JPY. The more JPY rallies, the more the Japanese economy is likely to deteriorate (e.g. -12% GDP Jan & Jan exports -46% YoY) and the more likely the BoJ intervene, both of which make JPY less attractive.
- The state of the US economy & the debt burden puts $ hegemony at risk in the long term. The US is a net borrower (current a/c deficit -5% GDP) and a net debtor (70% of GDP by 2010) while fiscal deficit -3.5% and rising. Moreover, the countries that fund the deficit are strategic rivals/ unstable petro-states and their reserves are being diverted to fixing their domestic economies. The US is vulnerable to the kindness of strangers.
- A large part of $ safe haven status is technical, driven by flight to US Treasuries & countries/ companies that funded themselves in $ who can't refinance debt.
- EUR: Asked whether Germany would risk seeing the Eurozone break up rather than take action if one of the member states could not refinance its debt, Peer Steinbrück, finance minister, told a press conference: “Could you imagine anyone would be willing to put up with this? We would have to take action.”
- £ concerns overdone:
1. public debt = 55% of GDP & 70% by 2010 but < 1916-1970
2. UK not only country increase public debt:GDP ratio. UK's 70% of debt:GDP = Germany, < France/ US
3. Nationalisation of banks risky but falling GBP offsets foreign liabilities on bank balance sheets
4. UK default assumes inability of state to manage economy
Another Look at the Wage Growth Tracker’s Cyclicality - Another Look at the Wage Growth Tracker’s Cyclicality John Robertson, Atlanta Fed’s Macroblog, July 11, 2017 Though Friday’s employment report show...
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