“Living with the Trilemma: Recent data from emerging and developed markets underscore the diverging outlook for these two economic hemispheres. While Emerging Markets (EM) have continued to show robust growth, data in many Developed Markets (DM) have disappointed, especially in Europe and Japan. Unsurprisingly, recent communication from the major central banks has been dovish, suggesting that an AAA (ample, abundant, augmenting) liquidity regime will remain in place for a considerable period of time. The Asia ex-Japan (AXJ) region, with its economic outperformance and ‘soft-pegs’ for some currencies, is the natural recipient of global capital flows that result from rising risk appetite and easy monetary conditions. As a response to the Great Recession, central banks the world over acted as one in slashing interest rates. Further down the road, however, the risk is that AXJ central banks might need to raise policy rates faster than others, which could attract even more capital and put upward pressure on their currencies – the Trilemma of a Sudden(ish) Start!” – Manoj Pradhan
FX Trading – Solid consensus still on the yellow metal and the buck
Over the weekend I had the opportunity to speak at an excellent conference in Vancouver, British Columbia—The World Outlook Conference (Ed Note: video HERE). It was a great venue and there were many nice people who attended. Thank you to the excellent team at MoneyTalks.net for inviting Black Swan and putting on yet another great conference.
….read more HERE.