Russia is facing economic sanctions and a potential recession due to lower oil prices and a plunging currency. This report discusses Russia's option to back the rouble with gold reserves to stabilize its currency and economy, as was contemplated in the late 1980s and 1990s but not implemented. Doing so now would be more credible given Russia's stronger government and economy. If sanctions escalate further, playing the "gold card" may be an option Putin calculates as worthwhile to counter the economic effects of sanctions and reduce Russia's dollar dependence. This move would have broader implications for currency wars and the international monetary system.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Closing the Books - An Overview of Davos 2016Juan Pablo Poch
The document provides an overview of discussions at the 2016 World Economic Forum in Davos. Key topics included the slow economic growth in Europe and concerns over political instability impacting commodity prices and global growth. While refugee immigration posed challenges for Europe, leaders hoped technology developments could spur future growth and offset risks from a slowing China and low oil prices pressuring countries like Brazil and Russia. Geopolitical tensions also hindered Russia's economic recovery through sanctions.
The document discusses the investment outlook and portfolio positioning of Fasanara Capital. It states that despite weak economics and high valuations, the path of least resistance for markets in the short term is higher, as long as tensions in Ukraine do not escalate. Within equities, the portfolio prefers Italy, Greece, and Japan over US markets. The portfolio is positioned for a scenario where Russia de-escalates tensions in Ukraine, allowing markets to rise to new highs, especially in peripheral Europe. However, it remains hedged for a potential escalation causing a more significant market correction.
- The Brexit vote caused uncertainty and volatility in global markets, with the pound plunging and stocks selling off sharply, especially in Europe. However, markets rebounded from their lows by the end of the week with US and Canadian markets barely changed.
- Investors are looking for guidance on the economic impact but there are no clear parallels, as Brexit is primarily a political shock rather than an economic one. The economic effects will take time to assess.
- Global central banks will act to cushion any significant fall in asset prices, while the withdrawal process for the UK leaving the EU will take an extended period to negotiate and is unlikely to be completed overnight. The overall economic risks for global growth are expected to be
The Russian Crisis of 1998, also known as the ruble crisis, hit Russia on August 17th, 1998 as the country transitioned from a Soviet to market economy. High inflation, government deficits, and the Asian financial crisis weakened Russia's economy. On August 17th, the Russian government devalued the ruble, defaulted on domestic debt, and declared a moratorium on foreign creditors. This led to a 33% drop in GDP in 1998 and over 27% in 1999, severely damaging investor confidence and living standards. However, the crisis also strengthened Russia's domestic industries and banking system for the future.
1. The Dow Jones Industrial Average hit 20,000 for the first time on optimism about Trump's agenda. However, possible trade wars with China and Mexico could dampen economic growth.
2. Trump has accused the media of biased and fake reporting against his administration. He has waged war against news organizations for their coverage of his inauguration crowd size.
3. Samsung's operating profits increased 50% in the fourth quarter despite recalls of the Note 7, demonstrating the benefits of a diversified business strategy.
Global economic factors influence retailers, including currency movements, oil prices, and low inflation. The US economy is growing steadily but more slowly than historically, while China's economy is slowing significantly from double-digit growth previously. Currency appreciation is hurting emerging markets and export-focused economies. Low oil prices benefit consumers but hurt oil producers and the energy sector. Low inflation persists globally despite monetary policies, keeping interest rates low.
The document summarizes factors that contributed to recent volatility in global equity markets in mid-October, including historically weak performance in October, concerns over Ebola, slowing global growth, deflationary pressures worldwide, and various geopolitical tensions. It discusses the sharp drops and rebounds seen in markets in mid-October 2014, with the Dow falling over 460 points on one day amid increased uncertainty before regaining most losses by the end of the week. Central bankers' comments about further economic support helped reassure markets in the following week.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Closing the Books - An Overview of Davos 2016Juan Pablo Poch
The document provides an overview of discussions at the 2016 World Economic Forum in Davos. Key topics included the slow economic growth in Europe and concerns over political instability impacting commodity prices and global growth. While refugee immigration posed challenges for Europe, leaders hoped technology developments could spur future growth and offset risks from a slowing China and low oil prices pressuring countries like Brazil and Russia. Geopolitical tensions also hindered Russia's economic recovery through sanctions.
The document discusses the investment outlook and portfolio positioning of Fasanara Capital. It states that despite weak economics and high valuations, the path of least resistance for markets in the short term is higher, as long as tensions in Ukraine do not escalate. Within equities, the portfolio prefers Italy, Greece, and Japan over US markets. The portfolio is positioned for a scenario where Russia de-escalates tensions in Ukraine, allowing markets to rise to new highs, especially in peripheral Europe. However, it remains hedged for a potential escalation causing a more significant market correction.
- The Brexit vote caused uncertainty and volatility in global markets, with the pound plunging and stocks selling off sharply, especially in Europe. However, markets rebounded from their lows by the end of the week with US and Canadian markets barely changed.
- Investors are looking for guidance on the economic impact but there are no clear parallels, as Brexit is primarily a political shock rather than an economic one. The economic effects will take time to assess.
- Global central banks will act to cushion any significant fall in asset prices, while the withdrawal process for the UK leaving the EU will take an extended period to negotiate and is unlikely to be completed overnight. The overall economic risks for global growth are expected to be
The Russian Crisis of 1998, also known as the ruble crisis, hit Russia on August 17th, 1998 as the country transitioned from a Soviet to market economy. High inflation, government deficits, and the Asian financial crisis weakened Russia's economy. On August 17th, the Russian government devalued the ruble, defaulted on domestic debt, and declared a moratorium on foreign creditors. This led to a 33% drop in GDP in 1998 and over 27% in 1999, severely damaging investor confidence and living standards. However, the crisis also strengthened Russia's domestic industries and banking system for the future.
1. The Dow Jones Industrial Average hit 20,000 for the first time on optimism about Trump's agenda. However, possible trade wars with China and Mexico could dampen economic growth.
2. Trump has accused the media of biased and fake reporting against his administration. He has waged war against news organizations for their coverage of his inauguration crowd size.
3. Samsung's operating profits increased 50% in the fourth quarter despite recalls of the Note 7, demonstrating the benefits of a diversified business strategy.
Global economic factors influence retailers, including currency movements, oil prices, and low inflation. The US economy is growing steadily but more slowly than historically, while China's economy is slowing significantly from double-digit growth previously. Currency appreciation is hurting emerging markets and export-focused economies. Low oil prices benefit consumers but hurt oil producers and the energy sector. Low inflation persists globally despite monetary policies, keeping interest rates low.
The document summarizes factors that contributed to recent volatility in global equity markets in mid-October, including historically weak performance in October, concerns over Ebola, slowing global growth, deflationary pressures worldwide, and various geopolitical tensions. It discusses the sharp drops and rebounds seen in markets in mid-October 2014, with the Dow falling over 460 points on one day amid increased uncertainty before regaining most losses by the end of the week. Central bankers' comments about further economic support helped reassure markets in the following week.
Vladimir Putin has been President of Russia for 15 years, during which time he has pursued two objectives: stabilizing Russia and making it a global power. To achieve these, Putin has implemented aggressive domestic and foreign policies. Domestically, he cracked down on oligarchs and consolidated power around himself and the central government in Moscow. In foreign policy, he seeks to restore Russia's influence and undermine the U.S.-led global order. Putin has proven remarkably successful in these goals, strengthening his popularity at home and power abroad, though economic troubles and corruption remain issues.
1. Reflation Phase To Be Temporary, More Downside Ahead
Earlier on in 2016, ‘random and violent markets’ went off to panic mode out of (i) fears over China’s messy stock market and devaluing currency, (ii) plummeting oil price, (iii) strong US Dollar. Today, we believe complacent markets are similarly illogical and over-shooting, this time on the way up. As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off for risk assets.
2. Four Key Conviction Ideas
We analyze below our key ideas for the next 12 months:
Short Chinese Renminbi Thesis. In Q1, China only managed to keep GDP in shape by means of graciously expanding credit by a monumental 1 trn $. Unsurprisingly, at 250% total debt on GDP, you cannot borrow 10% of GDP per quarter for long, without a currency adjustment, whether desired or not.
Short Oil Thesis. Long-term, we believe Oil will follow a volatile path around a declining trend-line, which will take it one day to sub-10$. Within 2016, we expect global aggregate demand to stay anemic and supply to surprise on the upside, inventories to grow, primarily due to the accelerating speed of technological progress.
Short S&P Thesis. To us, the S&P is priced to perfection, despite a most cloudy environment for growth and risk assets, thus representing a good value short, for limited upside is combined with the risk of a sizeable sell-off in the months ahead.
Short European Banks Thesis. We believe that micro policies at the local level, while valid, are impotent against heavy structural macro headwinds, and only the macro environment can save the banking sector in its current form in the longer-term. Macro structural headwinds for banks these days are too heavy a burden (negative sloped interest rate curves, deeply negative interest rates, deflationary economy, depressed GDP growth, over-regulation, Fintech), and will likely push valuations to new lows in the months/years ahead.
Economic outlook for 2018 – more bumps in the road?DIXI Group
Macro FI CEE Special Ukraine
After a rather stable 2017, 2018 could become bumpier as elections and debt payments loom in 2019
Relations with foreign partners more strained on limited reform zeal and less patience of partners
Baseline scenario of moderate growth, somewhat weaker UAH and a return to single digit infl ation
No rating and outlook change expected; tight Eurobonds spreads might see a correction in the short run
After stabilization in 1993 Moldova maintained an unsustainable macroeconomic policy mix. The key problem was a lack of a fiscal adjustment, which resulted in large budget deficits. At the same time, the National Bank of Moldova (NBM) attempted to conduct a tight monetary policy. As a result, the exchange rate was appreciating, domestic absorption increasingly exceeded income and the country has been running large Current Account deficits. Moldova had an access to international financial markets and its indebtedness vs. the rest of the world was growing year by year at an alarming rate. Finally, in late 1998 Moldova suffered a balance of payments crisis, directly triggered by developments in Russia. Moldovan leu was devalued by about 70% and the current account improved.
The paper concentrates on the empirical dimension of the Moldovan financial crisis. It provides a case study of a) detecting and interpreting macroeconomic anomalies and b) identification of early warning signals of policy unsustainability and imminent change of financial market sentiment.
Authored by: Marek Jarocinski
Published in 2000
The Russian economy experienced a sharp decline due to the global financial crisis. GDP growth fell to 5.6% in 2008, lower than the previous decade. Investments and internal demand decreased substantially. The crisis impacted Russia's monetary sector as the Central Bank sold foreign reserves to support the rouble amid capital flight. Stock and debt markets also declined sharply. While oil revenues had built a large budget surplus, revenues declined in 2008, shrinking the surplus. The crisis threatened political stability as the ruling party saw declining support in regional elections. However, state control over large firms and property rights increased. Overall the crisis posed major challenges to Russia's economic and political systems.
The sharp fall in Russian markets was an overreaction to protests in Moscow following parliamentary elections. While events in other countries sparked regime changes, Russia's political consequences will likely unfold gradually. The protests were also not unprecedented and should not have justified the large sell-off. More important short-term issues for Russian investors include the EU debt crisis, China's economic growth, and oil prices. While not dismissing the protests, Russia's stable macroeconomic conditions differ significantly from those in countries experiencing Arab Spring uprisings. Changes in Russia are expected slowly rather than dramatically as public frustration has grown with a new middle class and expectations of reform.
The document provides an overview of various topics covered in the March 2016 edition of the USIS Review, including:
- Sterling reacted negatively to uncertainty surrounding the upcoming Brexit referendum, dropping to a seven-year low against the dollar. Other factors like interest rate hikes in the US also contributed to the slump.
- Trouble may lie ahead for the global economy as declining growth, falling commodity prices, and diminishing monetary policy options have increased anxiety. Central banks have introduced unconventional policies like negative interest rates to stimulate growth.
- Profit increased at British Gas but derivatives trading poses risks to the global economy. The rise of right-wing political groups in response to issues like migration was also discussed.
The Russian financial crisis of 1998 resulted from declining productivity, a fixed exchange rate between the ruble and foreign currencies, and declining oil prices. On August 17, 1998, Russia devalued the ruble, defaulted on domestic debt, and imposed a moratorium on foreign debt repayment. This led to high inflation of 84%, bank closures, reduced agricultural subsidies, and a political crisis for President Yeltsin. Russia recovered through rising oil prices in 1999-2000, devaluation boosting domestic industries, non-monetary exchange, and cash infusions paying back wages and taxes.
The Case for a Global Recession in 2016 and Beyond - The Obvious EvidenceRajveer Rawlin
The document discusses evidence that a global recession may begin in 2016 or beyond, including collapsing commodity and stock market prices, a collapse in shipping and freight activity, strengthening of safe haven currencies like the dollar and yen, excessive risk taking by banks, and declining money velocity. Long-term economic cycles also suggest a recession could last through 2020. Several factors like deflation, credit issues, and falling confidence that typically cause recessions are already occurring globally.
Once again the global economy is facing headwinds. The nascent global recovery at the beginning of the year has become subject to growing uncertainty due to mounting geopolitical tensions. The Cold War-like duel between the West and Russia over Ukraine is still escalating, and the Middle East has once again put itself into the spotlight with the war-like situation in Gaza and the advance of Isis in Iraq and Syria.
The document discusses the potential impact of conflict in Iraq on global oil markets and prices in Q3 2014. It notes that Iraq has become a key OPEC producer in recent years, exporting over 3.3 million barrels per day. The rise of Sunni militant groups in Iraq threatens to disrupt oil production and exports. If Iraqi supply is significantly reduced due to violence, global oil prices are likely to remain elevated through the end of the year as other OPEC producers may not be able to fully compensate for the lost supply. The conflict casts uncertainty over the outlook for oil prices in Q3 and raises concerns about tight global oil markets if Iraqi exports are curtailed.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Cover Story China Running out of Breath
Outlook Crude Oil
Stats India Trade Deficit FY-2014
Emerging Country Russia
In Focus Land Acquisition Bill- A Snapshot
View the most recent commentary from The PRS Group on international macro risk.
Our monthly coverage of the Americas includes a post-election update on Brazil, where President Dilma Rousseff only narrowly secured a second term at a run-off held in late October, and both her party, the PT, and its main ally
Macroeconomic Developments Report, December 2017Latvijas Banka
The document provides an overview of macroeconomic developments in December 2017, including:
- External demand continued to grow, supported by robust global demand and growth among Latvia's main trade partners, though UK demand weakened due to Brexit uncertainties.
- The ECB maintained interest rates and asset purchase programs as inflation remained below target. Financial conditions remained accommodative globally.
- Latvia saw strong economic growth in 2017, driven by external demand, private consumption, and recovering investment inflows. Wage growth outpaced productivity, however, weakening competitiveness.
The document provides an economic update and outlook for various regions and countries. It discusses recent economic data releases and performance of key markets. Some of the main points covered include:
- US economic data mostly met or exceeded expectations, suggesting continued recovery. However, valuations remain high after strong gains.
- UK and eurozone data was mixed but in line with forecasts. Further significant gains are unlikely.
- Chinese manufacturing PMI missed targets, indicating possible slower growth. Brazil inflation lower than expected.
- Markets showed divergent performance in March. Developed markets gains offset by overvaluation concerns. Asian markets dragged down by domestic issues in China and other factors.
- Overall a positive long-
The document provides an end-of-year summary and outlook for 2017 from an investment manager. It discusses:
1) Continued political turmoil and uncertainty in Europe that contributed to volatility in currency and bond markets.
2) Expectations that the US Federal Reserve will continue raising interest rates in 2017 and that Janet Yellen will not be reappointed as chair.
3) Anticipation that proposed US infrastructure spending and tax cuts under Trump will boost the economy and US dollar.
Saxo Bank’s Yearly Outlook 2011, “Bubbles and bulls and bears.. Oh My!” out now, paints a somewhat sombre picture of the quality and depth of global economic recovery based on continued concerns about the debt burden of developed countries and the questionable ability of government authorities to manage them in the long term.
The document discusses the Jones Act, which regulates domestic maritime shipping in the US. It summarizes arguments that the Heritage Foundation and others have made claiming the Jones Act increases shipping costs. However, the document argues these claims are not substantiated and ignores market factors like supply and demand that actually drive shipping rates. Backtesting of shipping routes and costs between the US Gulf Coast and East Coast do not show a significant difference in rates between Jones Act and foreign-flagged vessels. The economics of supply and demand in the US-flagged tanker market, including the limited fleet size, help explain current rate levels.
REPORT Wall Street bank involvement with physical commodities (11-18-14)GE 94
WALL STREET BANKS
MORGAN STANLEY
GOLDMAN AND SACHS & CO
JP MORGAN CHASE & CO
INVOLVEMENT WITH
PHYSICAL COMMODITIES
MAJORITY AND MINORITY
STAFF REPORT
PERMANENT SUBCOMMITTEE
ON INVESTIGATIONS
UNITED STATES SENATE
RELEASED IN CONJUNCTION WITH THE
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
NOVEMBER 20 AND 21, 2014 HEARING
RIM Crude/Condensate Price Assessment MethodologyGE 94
RIM Intelligence Co
●Cash/Paper Crude 3
Xx Cash WTI 5
Xx BFO 5
Xx DTD Brent 5
Xx Cash Dubai 5
Xx Dubai Swaps 6
Xx DME/Dubai Swaps 6
Xx Murban OSP Swaps 7
Xx DTD/Dubai Swaps 7
Vladimir Putin has been President of Russia for 15 years, during which time he has pursued two objectives: stabilizing Russia and making it a global power. To achieve these, Putin has implemented aggressive domestic and foreign policies. Domestically, he cracked down on oligarchs and consolidated power around himself and the central government in Moscow. In foreign policy, he seeks to restore Russia's influence and undermine the U.S.-led global order. Putin has proven remarkably successful in these goals, strengthening his popularity at home and power abroad, though economic troubles and corruption remain issues.
1. Reflation Phase To Be Temporary, More Downside Ahead
Earlier on in 2016, ‘random and violent markets’ went off to panic mode out of (i) fears over China’s messy stock market and devaluing currency, (ii) plummeting oil price, (iii) strong US Dollar. Today, we believe complacent markets are similarly illogical and over-shooting, this time on the way up. As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off for risk assets.
2. Four Key Conviction Ideas
We analyze below our key ideas for the next 12 months:
Short Chinese Renminbi Thesis. In Q1, China only managed to keep GDP in shape by means of graciously expanding credit by a monumental 1 trn $. Unsurprisingly, at 250% total debt on GDP, you cannot borrow 10% of GDP per quarter for long, without a currency adjustment, whether desired or not.
Short Oil Thesis. Long-term, we believe Oil will follow a volatile path around a declining trend-line, which will take it one day to sub-10$. Within 2016, we expect global aggregate demand to stay anemic and supply to surprise on the upside, inventories to grow, primarily due to the accelerating speed of technological progress.
Short S&P Thesis. To us, the S&P is priced to perfection, despite a most cloudy environment for growth and risk assets, thus representing a good value short, for limited upside is combined with the risk of a sizeable sell-off in the months ahead.
Short European Banks Thesis. We believe that micro policies at the local level, while valid, are impotent against heavy structural macro headwinds, and only the macro environment can save the banking sector in its current form in the longer-term. Macro structural headwinds for banks these days are too heavy a burden (negative sloped interest rate curves, deeply negative interest rates, deflationary economy, depressed GDP growth, over-regulation, Fintech), and will likely push valuations to new lows in the months/years ahead.
Economic outlook for 2018 – more bumps in the road?DIXI Group
Macro FI CEE Special Ukraine
After a rather stable 2017, 2018 could become bumpier as elections and debt payments loom in 2019
Relations with foreign partners more strained on limited reform zeal and less patience of partners
Baseline scenario of moderate growth, somewhat weaker UAH and a return to single digit infl ation
No rating and outlook change expected; tight Eurobonds spreads might see a correction in the short run
After stabilization in 1993 Moldova maintained an unsustainable macroeconomic policy mix. The key problem was a lack of a fiscal adjustment, which resulted in large budget deficits. At the same time, the National Bank of Moldova (NBM) attempted to conduct a tight monetary policy. As a result, the exchange rate was appreciating, domestic absorption increasingly exceeded income and the country has been running large Current Account deficits. Moldova had an access to international financial markets and its indebtedness vs. the rest of the world was growing year by year at an alarming rate. Finally, in late 1998 Moldova suffered a balance of payments crisis, directly triggered by developments in Russia. Moldovan leu was devalued by about 70% and the current account improved.
The paper concentrates on the empirical dimension of the Moldovan financial crisis. It provides a case study of a) detecting and interpreting macroeconomic anomalies and b) identification of early warning signals of policy unsustainability and imminent change of financial market sentiment.
Authored by: Marek Jarocinski
Published in 2000
The Russian economy experienced a sharp decline due to the global financial crisis. GDP growth fell to 5.6% in 2008, lower than the previous decade. Investments and internal demand decreased substantially. The crisis impacted Russia's monetary sector as the Central Bank sold foreign reserves to support the rouble amid capital flight. Stock and debt markets also declined sharply. While oil revenues had built a large budget surplus, revenues declined in 2008, shrinking the surplus. The crisis threatened political stability as the ruling party saw declining support in regional elections. However, state control over large firms and property rights increased. Overall the crisis posed major challenges to Russia's economic and political systems.
The sharp fall in Russian markets was an overreaction to protests in Moscow following parliamentary elections. While events in other countries sparked regime changes, Russia's political consequences will likely unfold gradually. The protests were also not unprecedented and should not have justified the large sell-off. More important short-term issues for Russian investors include the EU debt crisis, China's economic growth, and oil prices. While not dismissing the protests, Russia's stable macroeconomic conditions differ significantly from those in countries experiencing Arab Spring uprisings. Changes in Russia are expected slowly rather than dramatically as public frustration has grown with a new middle class and expectations of reform.
The document provides an overview of various topics covered in the March 2016 edition of the USIS Review, including:
- Sterling reacted negatively to uncertainty surrounding the upcoming Brexit referendum, dropping to a seven-year low against the dollar. Other factors like interest rate hikes in the US also contributed to the slump.
- Trouble may lie ahead for the global economy as declining growth, falling commodity prices, and diminishing monetary policy options have increased anxiety. Central banks have introduced unconventional policies like negative interest rates to stimulate growth.
- Profit increased at British Gas but derivatives trading poses risks to the global economy. The rise of right-wing political groups in response to issues like migration was also discussed.
The Russian financial crisis of 1998 resulted from declining productivity, a fixed exchange rate between the ruble and foreign currencies, and declining oil prices. On August 17, 1998, Russia devalued the ruble, defaulted on domestic debt, and imposed a moratorium on foreign debt repayment. This led to high inflation of 84%, bank closures, reduced agricultural subsidies, and a political crisis for President Yeltsin. Russia recovered through rising oil prices in 1999-2000, devaluation boosting domestic industries, non-monetary exchange, and cash infusions paying back wages and taxes.
The Case for a Global Recession in 2016 and Beyond - The Obvious EvidenceRajveer Rawlin
The document discusses evidence that a global recession may begin in 2016 or beyond, including collapsing commodity and stock market prices, a collapse in shipping and freight activity, strengthening of safe haven currencies like the dollar and yen, excessive risk taking by banks, and declining money velocity. Long-term economic cycles also suggest a recession could last through 2020. Several factors like deflation, credit issues, and falling confidence that typically cause recessions are already occurring globally.
Once again the global economy is facing headwinds. The nascent global recovery at the beginning of the year has become subject to growing uncertainty due to mounting geopolitical tensions. The Cold War-like duel between the West and Russia over Ukraine is still escalating, and the Middle East has once again put itself into the spotlight with the war-like situation in Gaza and the advance of Isis in Iraq and Syria.
The document discusses the potential impact of conflict in Iraq on global oil markets and prices in Q3 2014. It notes that Iraq has become a key OPEC producer in recent years, exporting over 3.3 million barrels per day. The rise of Sunni militant groups in Iraq threatens to disrupt oil production and exports. If Iraqi supply is significantly reduced due to violence, global oil prices are likely to remain elevated through the end of the year as other OPEC producers may not be able to fully compensate for the lost supply. The conflict casts uncertainty over the outlook for oil prices in Q3 and raises concerns about tight global oil markets if Iraqi exports are curtailed.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Cover Story China Running out of Breath
Outlook Crude Oil
Stats India Trade Deficit FY-2014
Emerging Country Russia
In Focus Land Acquisition Bill- A Snapshot
View the most recent commentary from The PRS Group on international macro risk.
Our monthly coverage of the Americas includes a post-election update on Brazil, where President Dilma Rousseff only narrowly secured a second term at a run-off held in late October, and both her party, the PT, and its main ally
Macroeconomic Developments Report, December 2017Latvijas Banka
The document provides an overview of macroeconomic developments in December 2017, including:
- External demand continued to grow, supported by robust global demand and growth among Latvia's main trade partners, though UK demand weakened due to Brexit uncertainties.
- The ECB maintained interest rates and asset purchase programs as inflation remained below target. Financial conditions remained accommodative globally.
- Latvia saw strong economic growth in 2017, driven by external demand, private consumption, and recovering investment inflows. Wage growth outpaced productivity, however, weakening competitiveness.
The document provides an economic update and outlook for various regions and countries. It discusses recent economic data releases and performance of key markets. Some of the main points covered include:
- US economic data mostly met or exceeded expectations, suggesting continued recovery. However, valuations remain high after strong gains.
- UK and eurozone data was mixed but in line with forecasts. Further significant gains are unlikely.
- Chinese manufacturing PMI missed targets, indicating possible slower growth. Brazil inflation lower than expected.
- Markets showed divergent performance in March. Developed markets gains offset by overvaluation concerns. Asian markets dragged down by domestic issues in China and other factors.
- Overall a positive long-
The document provides an end-of-year summary and outlook for 2017 from an investment manager. It discusses:
1) Continued political turmoil and uncertainty in Europe that contributed to volatility in currency and bond markets.
2) Expectations that the US Federal Reserve will continue raising interest rates in 2017 and that Janet Yellen will not be reappointed as chair.
3) Anticipation that proposed US infrastructure spending and tax cuts under Trump will boost the economy and US dollar.
Saxo Bank’s Yearly Outlook 2011, “Bubbles and bulls and bears.. Oh My!” out now, paints a somewhat sombre picture of the quality and depth of global economic recovery based on continued concerns about the debt burden of developed countries and the questionable ability of government authorities to manage them in the long term.
The document discusses the Jones Act, which regulates domestic maritime shipping in the US. It summarizes arguments that the Heritage Foundation and others have made claiming the Jones Act increases shipping costs. However, the document argues these claims are not substantiated and ignores market factors like supply and demand that actually drive shipping rates. Backtesting of shipping routes and costs between the US Gulf Coast and East Coast do not show a significant difference in rates between Jones Act and foreign-flagged vessels. The economics of supply and demand in the US-flagged tanker market, including the limited fleet size, help explain current rate levels.
REPORT Wall Street bank involvement with physical commodities (11-18-14)GE 94
WALL STREET BANKS
MORGAN STANLEY
GOLDMAN AND SACHS & CO
JP MORGAN CHASE & CO
INVOLVEMENT WITH
PHYSICAL COMMODITIES
MAJORITY AND MINORITY
STAFF REPORT
PERMANENT SUBCOMMITTEE
ON INVESTIGATIONS
UNITED STATES SENATE
RELEASED IN CONJUNCTION WITH THE
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
NOVEMBER 20 AND 21, 2014 HEARING
RIM Crude/Condensate Price Assessment MethodologyGE 94
RIM Intelligence Co
●Cash/Paper Crude 3
Xx Cash WTI 5
Xx BFO 5
Xx DTD Brent 5
Xx Cash Dubai 5
Xx Dubai Swaps 6
Xx DME/Dubai Swaps 6
Xx Murban OSP Swaps 7
Xx DTD/Dubai Swaps 7
Derivatives derive their value from underlying assets such as physical commodities, equity indexes, or services. There are two main families of derivatives: options and futures/swaps/forwards. Futures are standardized, cleared, and regulated contracts where counterparties exchange the future value of an underlying at a given time. Forwards and swaps are similar to futures but are not standardized and are mostly traded over-the-counter. Derivatives are used for hedging risk, arbitrage, and speculation. Shipping companies use derivatives like forward freight agreements to hedge risks from short positions in freight markets.
Trafigura Beheer B.V. released its interim report for the period ended 31 March 2015. The report highlighted the following:
- Net profit for the six-month period was a record $653.8 million, up 39% from the same period the previous year, driven by strong performance in both oil and petroleum products and metals and minerals.
- Oil and petroleum products generated $1,008 million in gross profit, up 77% year-over-year, as the division benefited from opportunities created by volatility in oil prices and spreads.
- Metals and minerals also increased profitability despite challenging market conditions, with gross profit up 31% to $509 million.
- The
How largest swiss refinery purchases gold extracted by children.GE 94
How largest swiss refinery purchases gold extracted by children.
Comment la Suisse se retrouve à raffiner de l'or issu de la contrebande au Burkina Faso
- The document analyzes the historical performance of commodity futures as an asset class by constructing an equally-weighted index of commodity futures monthly returns from July 1959 to March 2004.
- It finds that commodity futures have historically offered the same return and risk-adjusted return (Sharpe ratio) as equities, while being negatively correlated with equities and bonds due to different behavior over the business cycle.
- Commodity futures are also positively correlated with inflation, unexpected inflation, and changes in expected inflation.
Shipping U.S. Crude Oil by Water: Vessel Flag Requirements and Safety Issues GE 94
The document discusses the increase in domestic waterborne shipping of crude oil in the United States due to new sources of production. It raises concerns about the safety of tankers and barges moving oil and the impact of the Jones Act, which restricts domestic shipping to U.S.-built and crewed vessels. The higher costs of Jones Act compliant ships has resulted in some oil being shipped from Texas to Canadian, not U.S., refineries. Proposed legislation aims to study improving competitiveness of the U.S.-flag industry and oil spill response.
ISIS EXPORT GATEWAY TO GLOBAL CRUDE OIL MARKETS GE 94
The Islamic State of Iraq and Syria (ISIS) began to take over oil fields in late spring 2014.
Since then, ISIS has expanded its operations by creating a loosely integrated and thriving
black economy, consisting of approximately sixty percent of Syria's oil assets and seven
oil producing assets in Iraq. The terrorist organisation has also managed to set up an
extensive network of middlemen in neighbouring territories and countries, with the aim of
trading crude oil for cash and in kind. Upon extraction, the commodity is first lightly
refined on site and then a shadow supply-chain network takes over, to bring it to the
market.
World gasoil-jet-indexes Platts MOC methodologyGE 94
This document outlines Platts' methodology for calculating their global gasoil and jet fuel indexes. It discusses 7 parts: 1) data quality and submission standards, 2) security and confidentiality practices, 3) how the indexes are calculated using regional assessments weighted by demand, 4) Platts' editorial standards of integrity, 5) the correction process, 6) how to request clarification or file a complaint, 7) specifications for products included in the indexes. The indexes are calculated daily from assessments across Platts' offices worldwide, using previous days' values if a market is not assessed.
An analysis of the impacts of New Pipeline projects on the Canadian Energy Se...GE 94
This document analyzes the impacts of new oil pipeline projects on the Canadian energy sector using a TIMES energy model for Canada. It discusses Canada's significant oil resources and production, and need to increase export capacity to reach projected production levels. It outlines three key export market opportunities: central and south USA markets via existing pipelines; western North American coasts and Asia via proposed pipelines like Keystone XL and Trans Mountain; and eastern Canada and USA markets. The analysis will use scenarios examining different pipeline capacity expansion options to determine impacts on Canadian oil production and overall energy demand.
This document outlines Platts' methodology for calculating daily crude oil yield and netback values in eight major refining regions. It describes how Platts uses Turner Mason refinery models and daily refined product price assessments to estimate the value of products yielded from refining different crudes. It also explains how transportation costs are incorporated to determine netbacks to the crude origination point. The document covers data quality standards, security, methodology details, editorial procedures, corrections policies, and contact information for questions. Region-specific details are provided for US Gulf Coast crudes modeled.
Spatial Competition, Arbitrage, and Risk in U.S. Soybeans GE 94
Conceptually, traders arbitrage price differences until markets have equal basis adjusted for shipping costs. In fact, location arbitrage is a “trading strategy to profit from market inefficiencies in price differences”
Platts is launching new gasoline assessments for West Africa to bring transparency to this important and growing market. The assessments will reflect the specifications of gasoline imported into and sold in West Africa. Specifically, Platts will assess the price of gasoline delivered FOB Northwest Europe and CIF to ports in West Africa. The FOB assessment will be based on cargoes from Amsterdam and normalized to a size of 34,000 metric tons, while the CIF price will be calculated as a freight net forward from the FOB. These new assessments aim to accurately reflect the physical market for importing gasoline into West Africa.
Platts changed the sulfur de-escalator value for Forties crude oil from $0.60/b back to the original 2008 value of $0.40/b. This was due to a sustained and significant fall in crude oil prices from over $147/b in July 2008 to below $100/b in September 2008. The spread between sweet and sour crudes and products also narrowed. Platts conducted an industry review and determined that market conditions had returned to a state similar to late 2007, making a decrease in the de-escalator value appropriate.
- Tensions with Russia over Ukraine are seen as transitory but could cause market volatility in the near-term. Deflation in Europe is viewed as a more structural issue that will affect markets for the long-term.
- The ECB is expected to take a three step approach - enhancing terms for T-LTROs, finalizing stress tests, and delivering their own version of quantitative easing.
- Three top investment opportunities are seen in European deflation trades benefiting from ECB action, peripheral European equity with upside from an inflated bubble, and Japanese equity benefiting from further stimulus.
Summary - The Road to Global ProsperityAlberto Rocha
- The document summarizes Michael Mandelbaum's book "The Road to Global Prosperity" which argues that international economic growth and cooperation are essential for global stability and prosperity.
- It discusses the economic rise of emerging markets like Brazil, Russia, India, and China (BRICs) but also notes their political and economic challenges. While the BRICs saw strong growth, they face issues like corruption, overreliance on commodities, poverty, and pollution.
- It also analyzes the 2008 global financial crisis, noting the US housing bubble and eurozone crisis exposed flaws in both systems and imbalances like high US debt and Chinese oversaving that remain issues. International cooperation on trade and addressing economic tensions
12913, 515 PMGlobal financial crisis five key stages 2007-.docxhyacinthshackley2629
12/9/13, 5:15 PMGlobal financial crisis: five key stages 2007-2011 | Business | The Guardian
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A trader at the New York stock exchange. The last four years have seen five key stages of the global financial crisis,
with more likely to come. Photograph: Brendan Mcdermid/Reuters
9 August 2007. 15 September 2008. 2 April 2009. 9 May 2010. 5 August 2011. From
sub-prime to downgrade, the five stages of the most serious crisis to hit the global
economy since the Great Depression can be found in those dates.
Phase one on 9 August 2007 began with the seizure in the banking system precipitated
by BNP Paribas announcing that it was ceasing activity in three hedge funds that
specialised in US mortgage debt. This was the moment it became clear that there were
tens of trillions of dollars worth of dodgy derivatives swilling round which were worth a
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Global financial crisis: five key stages
2007-2011
From sub-prime mortgages in 2007 to the newly downgraded US
debt status, the latest crisis point is unlikely to be the last
Larry Elliott, Economics editor
The Guardian, Sunday 7 August 2011 16.49 BST
http://www.theguardian.com/uk
http://www.theguardian.com/business/global-economy
http://www.theguardian.com/info/cookies
http://www.theguardian.com/profile/larryelliott
http://www.theguardian.com/profile/larryelliott
http://www.guardian.co.uk/theguardian
12/9/13, 5:15 PMGlobal financial crisis: five key stages 2007-2011 | Business | The Guardian
Page 2 of 5http://www.theguardian.com/business/2011/aug/07/global-financial-crisis-key-stages
lot less than the bankers had previously imagined.
Nobody knew how big the losses were or how great the exposure of individual banks
actually was, so trust evaporated overnight and banks stopped doing business with each
other.
It took a year for the financial crisis to come to a head but it did so on 15 September
2008 when the US government allowed the investment bank Lehman Brothers to go
bankrupt. Up to that point, it had been assumed that governments would always step in
to bail out any bank that got into serious trouble: the US had done so by finding a buyer
for Bear Stearns while the UK had nationalised Northern Rock.
When Lehman Brothers went down, the notion that all banks were "too big to fail" no
longer held true, with the result that every bank was deemed to be risky. Within a
month, the threat of a domino effect through the global financial system forced western
governments to inject vast sums of capital into their banks to prevent them collapsing.
The banks were rescued in the nick of time, but it was too late to prevent the global
economy from going into freefall. Credit flows to the private sector were choked off at
the same time as consumer and business confidence collapsed. All this came a.
This presentation considers the possibility of a second recession in the face of the ongoing European Debt Crisis, misguided attempts to address the crisis through austerity and struggling world economies. It also reflects on the impact of the probable break-up of EU’s currency union, measures to avert the scenario and vulnerable positions of the economies of the USA, China and India to more trouble in the Euro-zone.
The doomsday scenario has been summarized by Martin Wolf of Financial Times (May 17, 2012):
“The mechanisms at work would be powerful: bank runs; the imposition of (illegal) exchange controls; legal uncertainties; asset price collapses; unpredictable shifts in balance sheets; freezing of the financial system; disruption of central banking; collapse in spending and trade; and enormous shifts in the exchange rates of new currencies.
.
Lord rothschild the new world order is at riskRuslan Kostyuk
Lord Jacob Rothschild, head of the famous banking family, has issued another warning about risks to the global economic order established after World War II. He points to the US-China trade war and Eurozone debt crisis as problems putting this order at risk. Rothschild also expresses concern about a lack of international cooperation, high stock valuations, emerging market debt issues, Brexit, North Korea, and the spread of populism. While remaining cautious, his family investment fund continues to perform well due to diversification and a shift away from US markets.
there will be 2 articles attached may you please summarize the artic.docxbarbaran11
there will be 2 articles attached may you please summarize the articles attached seperatley and add a bibllography and opinion to each (must be at least 2 pgs double spaced)
Japan’s Swinging Bonds — A Future Economic Crisis
ARTICLE
COMMENTS (1)
BONDS
JAPAN
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By Vincent Cignarella
The inability of Japanese government debt to stop gyrating wildly poses a significant threat to the country’s climb out of its two-decade economic mire.
In the past six months, Japanese 10-year bond yields have swung like a pendulum. The huge swings were never more prescient than Thursday, when the yield jumped over 1.0% for the first time in over a year.
That volatility poses a significant threat to Japan, specifically through the balance sheets of its banks. In a statement clearly acknowledging those risks, Bank of Japan Governor Haruhiko Kuroda said Friday that it is “extremely desirable” for the nation’s debt market to be stable.
When it comes to government debt, Japan’s biggest banks are all in. Consolidated financial statements of
Mizuho Financial Group
8411.TO
0.00%
and Mitsubishi Financial Group show they each hold 23% of total assets in Japanese national government and a variety of government agency bonds.
As that debt vacillates in price so do the banks’ Tier 1 capital asset ratios and presumably their ability to lend and create loans. Japanese banks would face 6.6 trillion yen in losses should interest rates rise broadly by one percentage point, according to the Bank of Japan.
One week into 2013, 10-year government bonds climbed in yield to nearly 0.85% from early December lows of 0.69%. They then fell dramatically to 0.44% in early April only to climb again violently to the 12-month high on Thursday. All that interest rate volatility and so far, no inflation in sight.
Recent gross domestic product figures from Japan showed growth of 3.5% on an annual basis but the GDP deflator, a measure of inflation printed at a decline of 1.2% from a year earlier. That is 14 consecutive negative quarters.
If these government bond yields continue to gyrate beyond the central bank’s control and no inflation comes, the government stands to lose credibility domestically.
That credibility is already somewhat in question given during his first term as prime minister, Shinzo Abe lacked the political power to follow central bank action with his own government reform. Without that reform, Abe’s goal of 2% inflation within two years is in grave peril.
If he has any doubts about the need for government action, look no further than U.S. Personal Consumption Expenditures, the Federal Reserve’s favorite indicator for inflation, was 2.5% in 2008 before the global financial crisis took hold. Now almost five years later and massive quantitative easing from the Fed, the PCE is just 1.1% because there has been no help from fiscal policy.
The importance of credibility is even greater in Japan, where local investors finan.
De acuerdo con el último informe difundido por Crédito y Caución, las insolvencias de muchas de las economías europeas se mantendrán muy por encima de los niveles de 2007 en 2014 y 2015.
El panorama económico mundial se ha deteriorado en los últimos seis meses. El ritmo de crecimiento en la zona euro y China ha sido más débil de lo esperado y la intensificación de la crisis geopolíticas referentes a Rusia y al Estado Islámico en Oriente Medio han minado la confianza internacional.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document discusses the ongoing debt crisis in the West. It describes how the US transitioned to a fiat currency in the 1970s and was able to accumulate large amounts of debt as other countries invested in the US to maintain economic demand. This capital outflow has caused stagnation in the EU. The debt crisis began with the 2008 financial crisis and Greece's debt problems threatened the EU's existence. Austerity policies have failed to solve the crisis as they slow economic growth and do not address the underlying lack of competitiveness and capital outflows from the EU to the US. Disintegration of the EU was also proposed but not described as a viable solution.
The document summarizes concerns investors have about Greece, the Federal Reserve's monetary policy, and China's economic slowdown. Regarding Greece, the author argues that while a default would be embarrassing, it would likely not trigger a global financial crisis. On the Federal Reserve, the author claims fears of an asset bubble are overblown and low rates remain warranted. Finally, the author asserts that while China's economy is slowing, it is transitioning in a managed way and is not a threat to cause a global financial crisis through its debt problems.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Global Economic Recession Essay
The 2008 Financial Crisis Essay
The Greek Financial Crisis Essay examples
American Bankruptcy Case Study
Essay on Russia Ukraine Crisis
Economic Crisis
Venezuela Crisis Essay
Essay about U.S. Economy
Economic Problem Essay
The document discusses the recent turmoil in global financial markets and argues that governments have failed to address the root causes of the economic crisis. It makes three key points:
1) Stock market declines show that the recovery is fragile and a double-dip recession may be on the horizon.
2) Governments have kicked the can down the road rather than fixing underlying problems, and the global economic landscape now has additional constraints making responses more difficult.
3) The US economy in particular remains weak with high unemployment, stagnant GDP, and a large budget deficit, showing similarities to Japan's "lost decade" raising the risk of prolonged low growth in the US.
The document discusses several economic and political issues:
1) European authorities have struggled to effectively address the escalating sovereign debt crisis, providing only temporary solutions while the problems get worse.
2) The US debt level has risen significantly due to tax cuts, spending increases, and the financial crisis, reaching nearly 100% of GDP.
3) Emerging markets saw large declines as investors fled to safe havens like US treasuries, though some emerging countries remain attractive long-term investments due to growth and demographics.
4) South Africa faces economic challenges including slowing growth compared to other emerging markets, while political risks also loom over policy and foreign investment.
The document provides an economic outlook for retailers globally. It discusses the slowdown in major economies due to the European debt crisis dragging down demand. While the US economy is expected to accelerate in 2013 if fiscal issues are resolved, growth remains tied to uncertainties in Europe. China has slowed but avoided a hard landing through stimulus. Long-term, China faces challenges of rebalancing its economy away from investment and managing demographic shifts. The outlook for retailers will be influenced by continued consumer spending in the US but greater dependence on exports and emerging markets globally going forward.
The Global Economy in 2014 – 5 Key Trends - Global Perspectives White Paper -...GECKO Governance
Every year Global Perspectives publishes its annual white paper covering the 5 keys trends we see impacting the global economy in the year ahead.
This year we will look the major global economies and examine the major trends that will influence them over the next twelve months.
Sign up for all our white papers on the site or email:-
shane@globalperspectives.co.uk
- Emerging economies face renewed financial turbulence as their currencies have depreciated sharply against the U.S. dollar in January 2014.
- The U.S. economy registered robust GDP growth in the fourth quarter of 2013, growing at an annualized rate of 3.2%.
- The economic performance of developing countries in the last quarter of 2013 was heterogeneous, with some facing currency pressures and others seeing stronger than expected growth.
Political risk quarterly update Q3 2016Graeme Cross
This summary provides an overview of political risk ratings changes and trends discussed in the Q3 2016 political risk quarterly report from Aon. Four countries saw deteriorations in their overall risk ratings - Azerbaijan, Djibouti, Kuwait, and Zimbabwe. Only Madagascar improved, being upgraded to medium-high risk. Deteriorations were driven by factors like increased political violence, regional conflicts, weakened fiscal situations, and instability. Asia was noted as seeing modestly improving ratings, while challenges remain around infrastructure investment programs in countries like India, Indonesia, and the Philippines. Risks in Latin America are also trending positively overall despite issues in Venezuela. The Middle East and Africa continue facing pressure from low oil prices and conflicts.
Similar to As the ‘sanctions war’ heats up, Will Putin Play his gold card ? (20)
The lack of visibility given to the counterparties by Gunvor is posing a major
obstacle for an investor à la ADNOC to determine the group value.
● Gunvor USA has closed $1.45B “uncommitted” credit: an uncommitted facility
loan that once signed, does not oblige the lenders to provide the funds to the
borrower… previously it signed a near $1B in off-balance sheet financing facility.
● *****Muriel Anouk Scwab, CFO is on “sabbatical leave”.
● Gunvor Group poses substantial risks to the Swiss banking and financing sector:
By the derivatives even if Gunvor survives, the debt to equity is now 11X.
● It is a less than $1B balance-sheet carrying billions of MTM derivatives contracts
84% of its cash is generated by a debt-inflow.
The document is an annual threat assessment report from the U.S. Intelligence Community. It identifies the most serious threats to U.S. national security over the next year. It analyzes threats from China, Russia, Iran, North Korea, and issues like health security, climate change, transnational crime, and regional conflicts. Regarding China, it notes China will continue efforts to achieve global influence and secure its territorial claims, while challenging U.S. influence and pursuing technological advancement through espionage. It also discusses China's growing military capabilities, including its expanding nuclear arsenal and development of hypersonic weapons. The report provides similar analyses of threats posed by Russia, Iran, North Korea, and additional transnational issues
The document provides frequently asked questions about Platts' Market-on-Close (MOC) assessment process for liquefied natural gas (LNG) derivatives. It describes how Platts gathers information from market participants throughout the day and publishes bids, offers, and trades at the MOC cutoff time of 4:30pm Singapore time. Platts uses reported derivatives market activity to help establish the value of physical LNG cargoes trading on a floating price basis linked to the JKM index. The document answers questions about how companies can participate in and report information to the MOC process.
AOT’s complaint plausibly alleges that ADM violated the CEA by engaging in a scheme to
manipulate the Chicago Benchmark Price. ADM has not demonstrated otherwise, and its motion to
dismiss should be denied in its entirety.
In three trading days BROYLES lost $3.6M. His losses accelerated the following week. On January 9 lost $2.2M and twice as much as on January 8. As his losses mounted, Smith tried to reach BROYLES on the morning of January 10. However BROYLES did not arrived until the afternoon and his portfolio lost more than $5.2 Million that day.
The Interim Judicial Managers were appointed by the High Court of Singapore to manage the affairs and property of ZenRock Commodities Trading Pte Ltd, which is currently under interim judicial management. The IJMs have identified over 200 questionable transactions dating back to January 2018 involving double financing arrangements, set-off agreements, and tripartite agreements. These transactions allowed ZenRock to obtain multiple letters of credit financing from different banks for the same cargo. The IJMs' review found that ZenRock used duplicate and misleading documents to obscure the true nature of deals and receive financing that it may not otherwise have been entitled to. The total liabilities to bank creditors from these questionable transactions amounts to USD175.3 million.
Gunvor boss attacks loose lending practices in singapore (1)GE 94
The document discusses a political bias against Singapore in the FT newspaper and harsh comments made about Singapore by the boss of Gunvor Group, an energy trading company. It suggests the boss is frustrated over losing the trust of authorities in Singapore and business from banks like BNP Paribas, as his former partner's company Novatek is now thriving, and recommends caution regarding comments and numbers from Gunvor due to their business model's reliance on cheap bank funding while criticizing banks.
CEMP USD Trade Flow Fund SP Tradeflow capital management pte risk report (2)GE 94
Tradeflow capital management pte risk report (1)
USD Trade Flow Fund SP Cayman Islands, Grand Cayman in the worst case is an outright fraud and in your very best case leverage is 75:3
Trade finance funds loaded up commodity sector transactional financing in the...GE 94
Trade finance funds loaded up commodity-sector transactional financing in the recent years have stopped redemptions to the investors
The damages have already been done. Some funds will cease unless they succeed to mash-out the losses into new funds.
The reality contrasts very much with the portrait brushed by INOKS and Scipion in trade finance.
Bao versus WTI: Shifting positions in the WTI and market manipulationGE 94
1) The document analyzes the extreme price drop in the May 2020 WTI oil futures contract in mid-April 2020, where the price went negative for the first time.
2) It suggests the root cause was a lack of liquidity as big financial players had exited before expiry due to risk policies, leaving retail investors and a gap without real buyers or sellers.
3) It raises concerns that some Chinese retail oil contracts may have been designed in a way that allowed the banks to retroactively force close positions if prices moved against clients, potentially profiting from the move.
Hin leong trading financial statements (unaudited) (1)GE 94
According to the Chinese Dao "reality is built from the beating of opposites". We can't fully comprehend the ocean of mysteries in the Hin Leong affair unless we understand "who hold the bag": the bigger risk, in all this is the banks.
- The document provides a history of cotton production and processing from fields to fabrics. It discusses key cotton producing and consuming countries and factors that affect cotton quality and pricing.
- International cotton merchants play an important role in buying cotton from producers and selling to consumers. They manage price risks, logistics, quality control, and contracts.
- Sustainability and traceability are increasingly important issues. Technology and data are transforming the cotton supply chain. The role of merchants may need to evolve to add more value beyond basic commodities trading.
Covered interest parity a law of nature in currency marketsGE 94
CIP is a cornerstone principle in international finance. First described by John Maynard Keynes in 1923, the idea that FX forward rates must reflect interest rate differentials between currencies has long been considered one of the best tested theories in financial economics. If a market participant is willing to swap a higher yielding currency for a lower yielding currency over some time horizon, he must be compensated for the difference in yield via an adjusted forward price. Otherwise an arbitrage opportunity arises until prices and interest rates align again.
The financial crisis and direct aftermath revealed cracks in the armour of CIP. In a market environment with scarce liquidity and high credit risks in forward markets, dealers were constrained in their ability to profit from what was previously regarded as an almost risk-free arbi¬trage trade. But as conditions in financial markets slowly normalised after the crisis, CIP deviations remained and cross-currency basis never returned to its pre-crisis levels. After narrowing for some time, it started to widen again across most G10 pairs since approximately 2015. Increasingly, FX forward markets seemingly do not reflect what would be expected given the observed interest rate differentials. Figure 1 illustrates these dynamics by depicting the magnitude of G10 cross-currency basis over time for an exemplary three-month tenor.
La région lémanique est l’un des sites les plus importants au monde pour le commerce des matières premières.
L’importance économique du secteur des matières premières
sur les rives du Léman est considérable. Sept des dix premières
entreprises suisses en termes de chiffre d’affaires sont issues de
ce secteur ou y sont fortement liées. Cinq d’entre elles (dont
Vitol, Trafigura et Cargill) sont basées à Genève, et une (Nestlé)
à Vevey. Près de deux tiers de toutes les entreprises de matières
premières en Suisse se trouvent dans les cantons de Genève et de
Vaud. L’industrie des matières premières ne comprend pas seulement des sociétés de négoce, mais intègre également des entreprises de secteurs qui y sont fonctionnellement liées comme
les banques, les compagnies d’assurance, les compagnies de
navigation et les groupes d’inspection de marchandises. Selon
les estimations| 1, ce cluster génère plusieurs milliers d’emplois
à Genève – dont un grand nombre de salariés hautement qualifiés – et 20% des recettes fiscales des personnes morales selon
l’administration cantonale. La région lémanique est le leader
mondial du négoce physique de matières premières (voir figure),
du financement du commerce et de l’inspection des marchandises. 22% des transports globaux de matières premières sont
organisés depuis la région.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the what'sapp number.
+12349014282
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the what'sapp contact of my personal pi merchant to trade with
+12349014282
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
As the ‘sanctions war’ heats up, Will Putin Play his gold card ?
1. THE AMPHORA REPORT
Vol 5, 19 November 2014
www.amphora-alpha.com
01
IN THIS EDITION:
AS THE ‘SANCTIONS WAR’ HEATS UP,
WILLPUTIN PLAY HIS ‘GOLD CARD’?
The topic of ‘currency war’ has been bantered about in financial circles since at least the term was
first used by Brazilian Finance Minister Guido Mantega in September 2010. Recently, the currency
war has escalated, and a ‘sanctions war’ against Russia has broken out. History suggests that
financial assets are highly unlikely to preserve investors’ real purchasing power in this inhospitable
international environment, due in part to the associated currency crises, which will catalyse at least
a partial international remonetisation of gold. Vladimir Putin, under pressure from economic
sanctions, may calculate that now is the time to play his ‘gold card’.
A BRIEF HISTORY OF THE CURRENCY WAR
"We're in the midst of an international currency war.
This threatens us because it takes away our
competitiveness." Brazilian Finance Minister Mantega
uttered these words in September 2010, about two
years after the spectacular global financial crisis of
late 2008. During and following the crisis, the euro
declined by around 25% versus the dollar. The pound
sterling declined by nearly 30%. And while the
Brazilian real also declined initially, it subsequently
regained these losses in less than a year, unlike
either the euro or pound. Dramatic swings in currency
values can have a material impact on relative rates of
economic growth. And when global economic growth
is weak, the temptation to devalue and take some
global market share from competitors is strong. "The
advanced countries are seeking to devalue their
currencies," claimed Mantega.
1
The decline in the value of the euro in 2008-11
was of special importance because it exposed a key
fault-line across the euro-area: That between the
competitive exporters of the North, such as Germany,
Poland and the Czech and Slovak Republics; and the
less competitive importers of the South, such as Italy,
Spain, Portugal and Greece. With the euro weaker,
the exporters’ economies were booming. Yet the
fallout from the financial crisis fell hardest on the least
competitive euro members, threatening the solvency
of their banks and, by extension, the sustainability of
their governments’ finances.
Thus there emerged a ‘civil currency war’ in the
euro-area, which is still being fought at the ECB in
Frankfurt and in the national capitals. The South is
facing default and multiple countries have considered
withdrawing from the euro, threatening the entire
project. The North remains reluctant to provide bail-
outs without a substantial quid-pro-quo in the form of
1
These comments were originally reported here. They were also a
topic of a previous Amphora Report, BEGUN, THE CURRENCY
WARS HAVE, vol. 2 (October 2010). Link here.
a meaningful restructuring of the chronically
uncompetitive southern economies.
Although the crisis remains unresolved to this
day, various compromises were reached in 2012 that
have bought an unknown amount of time. Whether
that time has been used wisely is highly debatable,
and one or more rounds of bail-outs and possibly
another acute crisis (or multiple crises) lies ahead.
A dramatic escalation in the global currency war
took place in Japan in 2012, following the election of
Prime Minister Shinzo Abe, who campaigned on a
platform of proposed radical measures to get the
Japanese economy moving again. Thus he wasted
no time in deploying the most obvious weapon:
currency devaluation. From October 2012 to
February 2013, the yen devalued by some 25%.
While this did have the result of providing some
short-term stimulus, the overall effect was smaller
and shorter-lived than hoped. Thus the Bank of
Japan took additional measures recently to weaken
the yen further. As of this writing, the yen has fallen
by a further 15%. And that’s not all: Abe is now
promising to halt a planned increase in sales tax and
has called a snap election as a de facto referendum
on his radical economic policies. Further yen
weakness following this announcement suggests that
the financial markets expect that Abe will prevail and
follow-through accordingly.
This large cumulative yen devaluation is an attack
on Japan’s competitors in the global export markets,
in particular those for technologically advanced
manufactured goods. Germany, Poland, South
Korea, Taiwan and Brazil are in this group and no
doubt the weaker yen is one reason why growth in
these countries has been slowing of late.
Germany and Poland, however, now find they are
fighting a three-front currency war: Versus Japan for
export market share; versus the US, EU and NATO
2. THE AMPHORA REPORT
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02
over the issue of economic sanctions against Russia;
and on the continuing front within the euro-area itself,
where recently both countries dissented from a
recent ECB quantitative easing (QE) initiative to
purchase asset-backed securities.
2
How Germany,
Poland and other countries caught in the crossfire of
the currency and sanctions wars react will in turn
have an impact on their trading partners, and so on.
The associated negative consequences for global
financial markets could be substantial.
RUSSIA, NATO AND THE ‘SANCTIONS WAR’
In recent years, there has been a series of
increasingly serious confrontations between US allies
and Russia, beginning with the Georgian war of
2008, continuing with the Syrian crisis of 2013 and
then, most recently, in Ukraine. While each of these
crises has been serious in its own way, not until now
have they had an overt international economic
dimension. This is because the Ukraine crisis has
unleashed a ‘sanctions war’ that has escalated to the
point of doing real economic damage not only to
Russia, but to Germany and Poland, two of Russia’s
largest trading partners.
So far, the Russian economy has held up
reasonably well, but recent developments suggest
that a deep recession is on the way. Lower prices for
oil—Russia is a huge exporter—will hit the Russian
economy hard. Moreover, with the Russian currency
plunging by over 30% in recent months, consumer
price inflation is going to rise sharply.
So what is Russia to do? Putin is rumoured to be
preparing a major programme to reduce corruption
and improve economic efficiency, but even if this is
successful, it is going to take time, and it can’t be
expected to fully offset the effect of sanctions. Unless
they are lifted soon, Russia is facing a period of
economic misery.
3
For the US and NATO, Russian economic misery
is precisely what the sanctions war is all about:
Cause enough pain, so the thinking goes, and Putin
will allow Ukraine to crush the rebellion in the eastern
part of the country and possibly re-annex the Crimea.
While I am not an expert in these matters, it strikes
me as highly unlikely that Putin will give in under the
pressure. He is popular in Russia, not only because,
up to now, he has overseen a prolonged period of
strong economic growth but also because he is
regarded by Russians as a strong leader standing up
for Russia’s national interests. Ordinary Russians
support their ethnic bretheren in eastern Ukraine and
Crimea. They would be horrified if Russia allowed
Ukraine to crush the rebels. Also, because of the
sanctions, Russians will blame the US and NATO for
the coming economic downturn, not Putin.
2
For geopolitical and historical reasons Poland has been more
openly supportive of economic sanctions against Russia than has
Germany. However, the Poles are increasingly distrustful of their
NATO allies, including the US. Recently, for example, one senior
Polish official used a crude sexual metaphor to describe Poland’s
subordinate relationship with the United States. The link is here.
3
Details of this programme can be found at this link here.
If I’m right that Putin stands his ground in Ukraine
and remains highly popular notwithstanding the
inevitable recession, then what does this imply for the
currency wars generally? First, it implies that
Germany, Poland, Slovakia and most other Russian
trading partners are going to face a sharp economic
deterioration as well. In all cases, this is going to
have some political effects. In those countries with
weak governments and unpopular leaders, the
opposition may support ending the sanctions as an
expedient way of gaining power. Indeed, in Slovakia
the government has already voiced opposition to
further sanctions.
4
Second, it implies that, rather than just sit back
and take the pain, Russia is going to seek to reduce
its economic dependence on the West. This is
already in evidence, with Putin having signed major
deals in the energy and defense industries with China
and India, among other countries. Stronger Russian
ties with the other BRICS, or other countries for that
matter, may be of some concern to the US, but in
most cases there isn’t much the US can do about it.
One crucial aspect of Russia’s dependence on
the West is the global use of the US dollar as the
primary international transaction and reserve
currency. It is thus no surprise that the recent
Russian energy deal with China—involving the
construction of a large gas pipeline between the two
countries—is to be financed and transacted in the
Chinese yuan rather than the dollar.
Not only Russia, but the BRICS in general have
regularly expressed their dissatisfaction with the
dollar-centric global monetary conventions, including
the Bretton-Woods legacy institutions of the IMF and
the World Bank.
5
Hence the BRICS have set about
building their own parallel institutions and have
signed a number of bilateral currency-swap deals
with each other and non-BRICS trading partners in
order to reduce dollar dependence. While all these
initiatives nudge the BRICS and, by implication, the
global economy generally, away from the dollar, the
process is slow and, absent an international
monetary crisis, is likely to take years.
For Russia, however, the need to shore up the
economy and the currency is exigent. It cannot wait
for the gradual evolution of the international monetary
system to reduce the impact of sanctions. So what
else might Russia do in the near-term?
A GOLDEN ROUBLE?
One intriguing possibility is one which Russia has, in
fact, contemplated before: Backing the currency with
Russia’s gold reserves.
6
In the late 1980s, as the
Soviet Union was breaking up, the rouble was in free-
fall and inflation was soaring. Russia had essentially
zero access to global capital markets and relied on oil
exports for hard currency with which to trade with
4
For details please see here.
5
This has been a topic of several Amphora Reports, including here.
6
James Rickards, in his 2011 best-seller CURRENCY WARS, has
also suggested this possibility.
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other nations. In 1989, Premier Gorbachev invited
two prominent US economists to Russia, where they
met with senior economic policy officials and
recommended precisely this as the best way to
stabilise the rouble. One of the two was former Fed
governor Wayne Angell; the other, Jude Wanniski of
‘supply-side’ economic fame. In 1998, Mr Wanniski
wrote that he “became alarmed about the financial
collapse in Russia,” and decided to “write a piece on
how to fix Russia right away, before it was in
complete chaos.” In the Wall Street Journal editorial
that followed, Mr Wanniski explained the longer
history of the gold-backed rouble idea:
In September 1989, the Soviet government
of Mikhail Gorbachev invited me to Moscow for
nine days to discuss my unorthodox views on how
the U.S.S.R. could make the conversion to a
market economy. I'd been arguing that the
process had to begin by fixing the ruble price of
gold at a credible rate of exchange, which I
believed then would be a relatively easy thing to
do. I still believe that.
Last week, the former U.S. vice-presidential
candidate for the Republican Party, Jack Kemp,
wrote a letter to President Bill Clinton. In it he
urged him to ask Mr. Yeltsin and his prime-
minister nominee, Viktor Chernomyrdin, to
consider the gold solution as the quickest and
easiest way to end the financial crisis without
more suffering by the Russian people.
But gold is preferable in this situation
because the Russian government could
announce that it will defend the ruble in terms of
gold at a rate of 2,000 rubles per ounce and
because it has control of the ruble but not the
foreign currencies of a currency board. That is,
Russia need not have gold ingots backing every
last ruble in circulation in order to keep the gold-
ruble price stable. It can do so by managing the
supply of ruble liquidity, which the government
can do easily by buying and selling ruble interest-
bearing bonds to Russian banks. It should also
make an unlimited amount of the gold-ruble
bonds available to ordinary people.
This is how Alexander Hamilton solved the
financial crisis that faced the administration of
George Washington in 1791. America's first
Treasury Secretary fixed the dollar to gold and
promised creditors they would be paid all they
were owed at par, with interest. In 1947, West
German Finance Minister Ludwig Erhard ended a
similar financial crisis by pegging the Deutsche
mark to gold. At these times, neither the U.S. nor
the German government had any gold. The gold
promise worked because their own people
understood that their governments were not
insolvent, but simply faced a short-term cash
crisis. In the same way, the Russian state today
has small liabilities, perhaps $200 billion,
compared to the assets it possesses, which easily
amount to $10 trillion. The state, after all, owns
almost everything in 11 time zones, which it
acquired in the 1917 revolution. All of these
assets can be used to back up the exchange rate
by converting them at the ruble price of gold.
On hearing that their government promises
to pay ruble debt at a 2,000-to-one gold price --
which implies a dollar/gold rate of 7 to 1 at the
moment — the Russian people would have to
decide if the promise was credible. Would they
rather have a gold-ruble bond paying interest at a
hard rate of 7 to 1, or a ruble note paying no
interest at a collapsing rate of 17 to 1? The
question suggests the people would rush to
convert ruble notes into ruble bonds.
As it is, the Russian people are transacting
among themselves using $40 billion in U.S.
currency, while the value of the ruble money
supply implodes toward zero. A government
gold/ruble peg would quickly bring the people to
their banks with dollars, asking for the now more
valuable rubles. In short order, the government
would have enough dollars to pay Western banks
the interest they are owed. As the Russian
government creates new ruble liquidity to meet
increased demand, the problems with insolvency
at Russian banks also are resolved. And as
domestic commerce now would flow through ruble
tax gates instead of dollar barter, Mr. Yeltsin
would be able to pay all back wages in tax rubles
instead of fiat money. By fixing to gold instead of
a currency-board basket, Russia would be able to
collect a bonanza in seigniorage.
If President Clinton wished to follow through
on his promise to help President Yeltsin, he could
ask his Treasury department to buy $3 billion to
$4 billion of the gold-ruble bonds from its
Exchange Stabilization Fund. If this happened
tomorrow, Russia could meet its dollar obligations
this week. If there were any further doubts among
Russians about the credibility of a gold ruble, they
would dissolve upon seeing the U.S. government
actually buying their sovereign ruble debt.
The Russian government would soon be
able to hasten an economic expansion through
supply-side tax reforms. But first things first. A
ruble as good as gold is what Dr. Angell ordered
in 1989 and it is what the doctor orders now.
7
The situation back in 1989 or 1998 was, thus, similar
to if even more serious than that faced by Russia
today. But if the sanctions war escalates? Things
could get worse. Is Mr Putin or his senior advisers
aware of what was contemplated above? That gold
could provide a workable solution to stabilise the
currency and economy? A distinct possibility. How
likely is it that they will make this move?
Well, let’s consider the international context. Were
Russia to back the rouble with gold today, this would
7
Mr Wanniski’s WSJ editorial can be found at this link here.
4. THE AMPHORA REPORT
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04
be a far more credible policy than it could ever have
been back in 1989 or 1998, when Russia’s
government was less stable and less popular, and
Russia’s economy was less well-integrated with
those of China, Germany and other major
economies. Moreover, in recent years Russia has
amassed a huge amount of gold reserves.
8
Indeed, at
current market prices, Russia’s gold reserves would
back a whopping 27% of the narrow rouble money
supply! That is a high ratio, far in excess of any other
major country and also in excess of the US Fed’s
original stipulated gold coverage minimum. Moreover,
Russia is a large net exporter, notwithstanding the
sanctions, so Russia’s gold reserves, by implication,
are likely to continue to grow, rather than decline.
This credibility is also reinforced by the Russian
economy’s relatively low debt. Without a large debt to
service, there is little temptation or need to inflate the
currency. Indeed, Russian interest rates are currently
around 10%, implying a generous relative return on
rouble cash balances. Imagine the rouble were to be
convertible into gold, AND rouble interest rates
remained at 10%. This implies a nearly risk-free
arbitrage of 10% between the rouble and gold. You
can bet than a large number of international investors
would quickly sell some gold, dollars, or other
currencies, and acquire some roubles, pocketing the
hefty interest rate differential. That would support the
rouble, possibly leading to a large re-appreciation vis-
à-vis the dollar and other currencies left unbacked by
gold. Rouble interest rates could then decline,
perhaps to quite low levels, where an equilibrium
would eventually be reached. It could have worked in
1989, or 1998. It is far more likely to work today.
COULD A GOLDEN ROUBLE CATALYSE A
GLOBAL REMONETISATION OF GOLD?
There is another aspect to consider, however, which
is the possible impact this policy would have on the
dollar and the international monetary system. Recall
that, as the primary global reserve currency, the
dollar circulates in vast quantities abroad, where it
forms the bulk of the monetary reserves of central
banks. This is in part what allows the US government
and economy generally to finance themselves at
such low interest rates. But other factors equal, if the
dollar suddenly faces competition from a credible,
gold-backed currency, it is likely that, at a minimum,
central banks are likely to diversify at least some of
their dollar reserves into interest-bearing, gold-
backed roubles. Countries importing oil from Russia
would have an additional incentive to do so as they
would be able to pay for Russian oil imports in
roubles and avoid sanctions. Speculators (or
investors) anticipating an eventual internationalisation
of the rouble would front-run these developments,
pocketing a nice return over time.
The implied upward pressure on US interest rates
would be perhaps small initially, but even a small rise
8
For a discussion of Russia’s gold accumulation please see here.
in US interest rates would spell trouble for a US
economy that is so highly leveraged to low rates.
Growth would slow. The Fed could try to offset this by
engaging in renewed QE, but that could add fuel to
the fire, resulting in aggressive selling of dollars in the
foreign exchange markets. In an extreme but hardly
impossible scenario, the dollar could lose reserve
status entirely, something that would be devastating
for the US economy. While a sharply weaker dollar
would help US competitiveness and exports over
time, it would crush the dollar’s effective international
purchasing power (eg for oil and other resources)
and result in soaring consumer price inflation. The
combined negative impact of higher interest rates on
growth and rising consumer prices on inflation would
make the stagflationary 1970s look like a picnic.
As I argue in my book, THE GOLDEN
REVOLUTION, a loss of reserve status for the dollar
would have vast repercussions for the international
monetary system.
9
While a gold-backed rouble could
challenge the dollar to a certain extent, it is unrealistic
to think that an economy the size of Russia’s could
back the dominant global reserve currency. No, as
the dollar’s share declines, most probably multiple
alternative currencies begin to serve as reserves.
This is where things get interesting, however. Other
factors equal, as a currency is used as a reserve, it
strengthens that currency. That might be unwelcome
in some economies heavily geared toward exports.
Thus dethroning the dollar does not end the
currency wars but rather could escalate them further
instead as one country after another tried to offset
dollar weakness by weakening their own currencies.
This sort of ‘race to the bottom’ was seen in the
1920s and 1930s, culminating in US President
Roosevelt’s executive decision to devalue the dollar
by some 60% in 1934. In that instance, however, the
dollar remained backed by gold and by what was by
far the largest global economy at that time.
Not so today. The global economy has become
increasingly multipolar, with both the euro-area and
China roughly as large as the US. Moreover, the US
has a huge accumulated and external debt, implying
a growing risk of debasement and devaluation in
future. As it stands today, only 2.3% of the narrow US
money supply is backed by gold. Thus the US is
simply no longer in a position to be a ‘monetary
hegemon’, providing the global reserve currency.
But as all large economies have their own debt or
other financial issues with which to deal, no major
currency is in a position to replace the dollar as the
pre-eminent reserve. This implies that the global
monetary system is highly unstable. The dollar is
hardly the only currency at risk of debasement and
devaluation. Game theory implies that a race to the
bottom is distinct possibility and it is unclear whether
the dollar would lead or follow in that race.
As I further argue in my book, this combination of
economic multipolarity and the instability of the
9
THE GOLDEN REVOLUTION can be found on Amazon here.
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current global monetary equilibrium is highly likely to
result in at least a partial if not full remonetisation of
gold, with an associated, large rise in price. Gold is
the ideal way for countries to settle their trade
imbalances in a world in which trust in currency
stability is lacking. Accumulating reserves that can be
summarily devalued by trading partners in a currency
war is not a rational policy. Yet something must
function as a reserve asset if trade is to take place at
all. Gold provides that ‘something’ as supply is stable
and it cannot be arbitrarily devalued. Backing
currencies by gold would thus greatly increase trust
and, thereby, facilitate international trade.
Those familiar with the 1870s will note that there
are now strong parallels with that important decade.
Following German unification and the US recovery
from the Civil War, both of these economies were
catching up rapidly with Britain. Japan had begun to
industrialise. Under these multipolar conditions arose
spontaneously, absent formal diplomacy, the
classical gold standard system that would underpin
decades of arguably the fastest sustained global
economic growth ever experienced in history.
10
SO, WILL PUTIN PLAY THE ‘GOLD CARD’?
Let’s now return to Russia and leave aside a biased
western perspective for the moment. Putin has
arguably accomplished more for Russia than has any
other contemporary leader of a major country. Yes,
he may be something of an autocrat, but please show
me one major developed country that has never been
ruled by an autocrat. (The USA began its life under
George III and borrowed the bulk of its legal code
and political culture from the UK.) Under Putin’s
leadership, Russia has maintained its territorial
integrity, something that had been left in question
following the collapse of the Soviet Union, and
Russia retains a formidable military capable of
defending its vast frontiers (although not capable of
policing the world). The economy has grown rapidly
and, while still resource-dependent, has begun to
diversify in various ways. (Keep in mind the young
USA was regarded by Europeans as a largely
resource-dependent economy.) Russia has built
strong economic and political ties not only with the
BRICS but also many smaller economies in Eurasia
and elsewhere around the world. Russia has only a
small accumulated national debt, implying that this
will not be a drag on future growth, as is likely to be
the case in the US, EU and Japan. Russia also has
an advantageous tax system, with a top 13% rate of
income tax. Yes, Russia remains an economically
unequal society, but we know what has happened to
inequality throughout the developed economies in
recent decades, not just following the 2008 global
financial crisis.
10
The classic historical work on how the gold standard system arose
is that by Giulio Gallarotti, THE ANATOMY OF AN INTERNATIONAL
MONETARY REGIME, THE CLASSICAL GOLD STANDARD 1870-
1914. It can be found on Amazon here.
Given these achievements, Putin is not a leader
to be taken lightly and we should pay attention when
he says it it his desire to end the ‘dictatorship of the
dollar’, as he did just this week.
11
Perhaps he will
indeed play the gold card he has hidden up his
sleeve and thus kill two birds with one stone: shore
up the rouble and Russian economy on the one
hand; dethrone the dollar on the other. A period of
international monetary and associated economic
chaos might ensue, but with Russia suffering already
under unwelcome sanctions and thus with relatively
less to lose, Putin might calculate that now is the time
to make his move. He may have already achieved his
place in the Russian history books but imagine how
he will be regarded in world history books if he sets in
motion that which culminates ultimately in the return
to some form of global gold standard.
MY RECENT CALL ON GOLD
In my most recent Amphora Report, from October, I
wrote that:
On multiple occasions over the past year
gold has fallen to and found support around
$1,200/oz. This has now happened again. There
is widespread evidence of strong physical
demand around this level, which I believe is long-
term and strategic in nature, associated with
official institutions, such as emerging economy
central banks, and wealthy investors seeking a
hedge against a future financial crisis. That said,
a new forward hedging programme on the part of
major gold mining firms could send the price
lower. Once this was completed, however, I am
confident prices would recover quickly to above
$1,200 again. The flow of produced (or forward-
hedged) gold is tiny relative to the strong
underlying physical demand over a multi-month or
longer horizon.
12
I stand by those words. Gold is putting in a floor here.
Amid the escalating global currency war and
associated monetary instability, there is much
potential for it to rise in price, in particular if (or when)
it becomes remonetised. Anyone accumulating gold
below $1,200 will consider themselves lucky in future,
or perhaps just smart.
If you would care to comment on this report or to
learn more about Amphora, please feel free to
contact me at: john.butler@amphora-alpha.com
Follow me on twitter! @butlergoldrevo
11
Putin’s comments were translated and reported here.
12
COMMODITY SIGNALS FLASHING RED, Amphora Report vol. 5
(October 2014). Link here.
6. THE AMPHORA REPORT
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06
Find THE GOLDEN REVOLUTION on Amazon HERE. And on Facebook HERE.
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