EconVue Spotlight

posted by Lyric Hughes Hale on February 6, 2017 - 3:02pm

Political events with major economic implications continue to swirl around us, centered on the change in leadership in the US. 

Key trends we are watching:

1. A labored return to global growth, more headwinds than tailwinds. 
2. A new US president who is doing exactly what he said he would during his campaign. The impact of domestic structural reforms is underestimated or is perhaps unquantifiable.  My article on FHA mortgage guarantees is an example of what could happen.
3. Inflation weighed down by lower energy prices post the Aramco IPO, stubbornly low wages, job automation and overall low demand.  If you don’t think this is true, take a walk through a mall or small town here in the Midwest, and count the number of stores that have closed or are going out of business. Did we wait too long to levy taxes on online sales?
4. A world divided into ideological camps, loosely categorized as globalists and nationalists, creating new alliances and transforming some of the old. 
5. China as a political football.  Some of you know that I brought the Super Bowl to China back in 1986. It was called Olive Ball then because of the shape of the ball. Hard to imagine that there was a time when the Bears could beat the Patriots.
6. Positive developments in Japan driven by a weaker yen, upsurge in manufacturing (9%) and improved corporate governance and enforcement.
7. A revolution in blockchain technology we have barely begun to glimpse. 

Here are some of the best stories that describe these trends in greater detail, including reports by our EconVue experts. This list is a selection we publish in Spotlight every few weeks. You will find more articles and continuous updates on our  Twitter,  LinkedIn and  Facebook pages, so please follow us if you would like to be updated on current fast-moving events.


Why Global Growth Is Still Feeble, in Eight Charts
Ian Talley 1/11/2017 WSJ

Eight very clear charts that show why global growth is so weak and will continue to be weak in 2017.

Momentum and risk: world economy enters 2017 with winds fore and aft
Jonathan Cable and Nichola Saminather 2/1/2017 Reuters

The Downturn in Agriculture: Implications for the Midwest and the Future of Farming
David B. Oppedahl Chicago Fed Letter, No. 374 2017

Prices for key agricultural products have fallen from their peaks in recent years, while input costs have not fallen as much. Consequently, many farm operations in the Midwest have had lower revenues and thinner profit margins—and some even losses. 

Are Americans kinder than Europeans?
Daniel J Mitchell 2/3/2017 CapX

Trump Shakes Up 2017 for China and Japan
Dr John Nilsson-Wright, Professor Kerry Brown 1/17/2017 Chatham House 

Beijing is No Champion of Globalization: The Myth of Chinese Leadership
Elizabeth Economy 1/22/2017 Foreign Affairs

China is a beneficiary of globalization, but not necessarily its champion.

Increased (China) Interbank Borrowing Causes Concern
Wu Hongyuran, Zhang Yuzhe and Wang Yuqian 1/25/2017 Caixin Global

Silently, India’s supreme court has set off a chain of events that could torpedo Modi’s demonetisation move
Shubhankar Dam 1/15/2017 Quartz India

Euro Is G-10’s Most Undervalued Currency by OECD Measure
Ven Ram 1/31/2017 Bloomberg

The euro is the G-10's most undervalued currency, according to at least four different measures.

Germany's Gabriel Says EU Break-Up No Longer Unthinkable
Paul Carrel 1/7/2017 Reuters

Will the EU or the euro exist in ten years?

Is Germany a Currency Manipulator?
Jeromin Zettelmeyer 2/1/2017 PIIE

Greece has three weeks to deal with 'potentially disastrous' debt
Helena Smith 1/29/2017 The Guardian

Failure of Greece and the EU to reach compromise by 20 February ‘would bring back Grexit with a vengeance.’

Bungled Intervention In Kosovo Risks Unraveling: A New Deal Needed For Peace
Doug Bandow 1/24/2017 Forbes

How Blockchain Technology Could Revolutionise Global Trade
Vivek Ramachandran 1/20/2017 City AM

Reducing friction: How blockchain technology could revolutionise global trade.

Automation: 47% of Jobs Will Disappear in the next 25 Years, According to Oxford University
Philip Perry 1/27/2016 BigThink


Russia in the World
Nikolai Tagarov

For a range of cultural, historical and geographical reasons Russia has often seen itself in opposition to the predominant world economic order. Russia has thus often stood beyond, or literally geographically above the world, and never fully or comfortably “in” the world.

(Please register if you would like to participate in the discussion panel.) 

FMI February 2017 Economic and Investment Outlook
Michael Lewis

Trump’s Hard-line Stance Will Provoke Conflict with U.S. Partners But Nothing Approaching Trade War. On Net, New Bilateral Deals Should Boost U.S. Exports.

Data Round-Up: Solid Jobs Gains in January; Wage Trend Still Looking Up
Michael Lewis

Is It Time to Abolish FHA Mortgage Insurance?
Lyric Hughes Hale 1/25/2017 Huffington Post 

Tsai Ing-Wen in Central America - Shoring up Defenses before the Collapse of the Truce
R. Evan Ellis

Even the most skillful diplomacy might not be enough to keep Central America in Taiwan’s corner if the PRC fully resumes its diplomatic offensive.

TOE Report January 2017
Richard Katz

Life in Japan would be far more enjoyable if Japan could regain the productivity growth it enjoyed not so long ago. This is one of the ostensible aims of the “third arrow” of Abenomics, an aim that has so far been completely unfulfilled.

Get Used to it: No Solid Ground in the Age of Accelerations
Banning Garrett

The biggest challenge will be not just to understand the accelerations and better forecast the future, but to adapt to a world with fewer dependable points of reference and less “solid ground.”  A world where constant change and frequent disruptions and discontinuities are the rule rather than the exception. 

India's Turn to Transform - Comment
Deepak Lalwani

Brief comments on the video of India's Turn to Transform. 

Changing Money
Collin Canright

Thought leaders continue to point to trends that banks and FinTech insiders need to pay attention to, ranging from the use of big data to FinTech firms like Stash and Betterment, which are reshaping wealth management. Faster payments, mobile payments, and blockchain systems will accelerate their development this year.