How oil can get back to triple digits by 2017

With Goldman raising the spectre of a $20 crude price, here’s an alternative scenario from Ecstrat strategist Emad Mostaque…


After years of being too high, oil forecasts now appear too low. As supply rolls over we could see prices back at $100, with decade-high geopolitical risks shocking it higher. Read more

Guest post: Sizing up NPL risk in China

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World.

One of the major questions facing investors and analysts of the Chinese economy is how to size up credit… or more specifically the non-performing loan risk lurking in the system.

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Guest post: What Chinese rebalancing? Cash flow edition

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World. The TL;DR of this post might be that rebalancing the Chinese economy without a hard landing will be… difficult. Read more

Why the outrage over Carney’s climate speech?

This guest post is from Kate Mackenzie, a former Alphavillian who now works with The Climate Institute in Australia.


Anytime a public figure mentions climate change, you can guarantee a fierce response — and, sure enough, it happened again with Mark Carney’s speech on climate risk. Read more

How to choose the IMF’s next Managing Director

This guest post is from Peter Doyle, an economist and former IMF staffer.


As the International Monetary Fund readies itself for its Annual Meetings in Lima next week, perhaps the key issue in its governance—the end of Christine Lagarde’s term as Managing Director in mid-2016—remains largely off the radar screen. It deserves prominence now. Read more

The investment drought: Why football clubs aren’t alone in focusing on short-term goals

This guest post is from Simon Smiles, chief investment officer for ultra high net worth at UBS Wealth Management, and his strategist colleague Christopher Swann.


The latest transfer season in the UK was another record-breaker for the Premier League, with clubs shelling out £862m on players from other teams. That was over 10 times the annual sum that clubs have committed to the youth Elite Player Performance Plan – which aims to develop homegrown talent. This underinvestment may help explain why the Premier League is forced to import 67 per cent of players from abroad while the English team hasn’t won a World Cup in almost 50 years. Read more

Guest post: Trying to throw our arms around the (sick) Chinese economy

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World.

Throughout the Chinese stock market run up and subsequent collapse, the most fundamental question revolved around the robustness of the overall economy. Read more

Guest post: The importance of credibility in capital markets, China edition

By Christopher Balding, Professor of Economics at Peking University, HSBC Business School, and blogger at Balding’s World.

The job of the modern economic and financial policy maker is a difficult one. Markets are being created at breakneck pace to trade incredible varieties of financial products and the complexity of major modern economies is dizzying. Considering the constraints of managing enormous economies and financial products, the most important asset of the economic regulator is not perfect decision making but credibility.

As China has battled a variety of financial pressures this year — from a falling stock market to capital outflows pressuring its US dollar peg — Beijing’s lack of a credible coordinated policy response worsened their public reception. Rather than articulate a clear vision of how to address a falling stock market and slowing economy and proceed to methodically execute that plan, Beijing swerves between conflicting announcements and less than credible positions that the market discounts. Read more

How will the Fed react to contrasting domestic and international developments?

By Mohamed El-Erian

Data out of China, Europe and the United States highlight contrasting influences on Fed officials as they prepare for their September policy meeting. Domestic indicators are consistent with a September hike but international indicators are not. That tug of war makes this Fed much harder to predict than its predecessors. Read more

Why life insurers haven’t escaped the spectre of negative rates

This guest post is from Camp Alphaville speaker Themis Themistocleous, who is head of the European Investment Office at UBS Wealth Management

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El-Erian: Reaction to an insightful ECB press conference

The writer is Mohamed El-Erian, chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council.

Here are three quick takeaways from today’s press conference by the European Central Bank: Read more

IMF Debt Sustainability Assessments of Greece (and others)

In this guest post, former IMF staffer Peter Doyle castigates the institution’s flip-flopping over Greece…

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El-Erian: It’s about the ECB…again

The writer is Mohamed El-Erian, chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council.

Wondering why European peripherals are relatively well behaved while virtually all other risk assets have sold off this morning?

It need not be about irrational or misinformed markets. Instead, it is consistent with expectations of additional market intervention by the European Central Bank.

Concerns about China and Greece are fueling increased risk aversion. Equities are selling off, hard duration (including German and US government bonds) is rallying, commodities are getting crushed, and emerging market currencies are under pressure. Read more

El-Erian: The Graccident, as captured by the FT’s front page

The writer is chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council

Sensing that this could be “history in the making” for Greece and for Europe, I decided a few weeks ago to keep physical copies of the FT (yes, I still get a physical copy!). While the inside of the paper contained rich reporting and comprehensive analysis, the headlines on the front page ended up providing a great feel for what transpired in this horrific tragedy. Read more

On those creditor ‘red lines’ for Greece

In this guest post, former IMF staffer Peter Doyle argues that in pushing for pensions, VAT and labour reforms, creditors are only stoking the latent explosiveness of Greece…


Troika-Greek negotiations are reportedly down to the wire over early-retirement pensions, VAT, and labor reforms: the IMF says all are non-negotiable; Tsipras, perhaps inadvertently echoing Mrs. Thatcher, has, so far, responded “No! No! No!”

These three issues converge on those at the upper end of their working lives, the 50-74 year old cohort, and are reflected in its participation and unemployment behavior. So it is worth considering data on those and the associated implications for the negotiations. Doing so suggests that these creditor red lines lack foundation. Read more

Guest post: The Greek standoff is no Prisoner’s dilemma

This guest contribution, from Giles Wilkes, sprung from a fierce internal debate amongst the FT’s leader writing team on Wednesday…


The standoff between the Greeks and their European creditors has often been compared to a Prisoner’s dilemma. This foundational scenario for game theory – famously, the expert discipline of Yanis Varoufakis, the Greek finance minister – concerns two prisoners accused of a crime who are handled separately by the police. Each are given the choice either of ratting on their accomplice, or staying silent. Should just one of the prisoners choose to rat on the other, he will walk free with a reward while his mate languishes in jail. If both hold firm, they each walk free unrewarded, while if they each betray their friend, then both are thrown into jail. Read more

Guest post: Do IMF-set primary surplus targets for the EZ periphery pass the smell test?

Spoiler alert. In this guest post, former IMF staffer Peter Doyle, argues that some participants in the on-going Greek crisis might be suffering from anosmia…

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Just another case of the heebie-GGBies?

In this guest post, Gabriel Sterne, head of global macro research, Oxford Economics, looks at previous large drawdowns in Greek bond prices for clues about the future.

Greek Prime Minister George Papandreou “asked our partners to contribute decisively in order to give Greece a safe harbour” five years ago this week.

Since then, Greek government bond (GGB) prices have plunged by 37 per cent — or more! — four separate times, with one amazing long rally in between: Read more

Guest post: The Euro and the IMF Now

Here’s former IMF staffer Peter Doyle , with some bold advice from the wings of the IMF Spring meetings…

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Guest post: IMF Spring hubbub

Thousands of officials, journalists, academics and market professionals will soon be in Washington DC for the spring meetings of the International Monetary Fund and World Bank, from April 17 to 19. Former IMF staffer Peter Doyle advises attendees on what to really ask the IMF.


Another spring, another IMF Spring Meeting, another set of IMF platitudes—a two-, three- (or is it four?)-speed, variably geometric, or airline metaphoric world economy, making progress, more to do, notably for the poor, sundry complacencies and risks to beware. Even Occupy has been put to sleep by these rituals.

But much goes on behind this veil of blur. Here are five steps to get to what matters. Read more

IMF abdication on Greece

This guest post is from Peter Doyle, an economist and former IMF staffer


In an otherwise sound critique of Mr. Varoufakis’ list of proposals for Greek government policies last week, Mme. Lagarde’s letter to Mr. Dijsselbloem contains an additional, unremarked, but revealing element. After saying that, in the IMF’s view, the Greek list was sufficiently comprehensive to be a valid starting point for a successful conclusion of the review, she added:

… but a determination in this regard should of course rest primarily on an assessment by Member States themselves and by the relevant European institutions.

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The unwitting euro enforcer…

Peter Doyle, an economist and former IMF staffer, argues that for Greece continued emergency lending assistance is a necessity.

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Sovereign debt reprofiling: Ukraine’s lesson for the IMF

This week’s $40bn IMF programme announced for Ukraine will include some restructuring of its debt. Gabriel Sterne, head of global macro research at Oxford Economics, points out that it comes at an interesting time for the fund’s policy on restructuring.


The IMF’s proposals to change its policy on sovereign debt reprofiling have divided opinion, with FT Alphaville providing a debating platform between supporters (for example here and here) and sceptics including myself (for example here and here).

The proposals are motivated by the objective of providing a fund programme breathing space to work when it is unclear if debt is unsustainable. Read more

Michael Pettis and perverse monetary policy

A guest post by Simon Cox, Asia-Pacific Investment Strategist, BNY Mellon Investment Management

China’s weak inflation numbers, updated on February 10, underscore why the People’s Bank of China (PBOC) is now easing policy wholesale, after a long sequence of targeted tweaks. (It cut reserve requirements on February 5 less than three months after cutting benchmark interest rates in November.) But does monetary easing work in China the way it works elsewhere? Does it, indeed, work at all? Read more

Are we numb to silly valuations again?

This guest post is from Shane Leonard, CFA, CEO and co-founder of Stockflare, a financial data company. Previously he worked as a stockbroker at Citigroup and Credit Suisse.

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Eichengreen: Cassandras and currency wars

A guest post from Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley and author, most recently, of Hall of Mirrors: The Great Depression, the Great Recession, and the Uses — and Misuses — of History.

Economic analysis, it seems, is the art of recycling old ideas under new names. So it is with the debate over currency wars, which parallels exactly the 1930s debate over competitive currency devaluation. David Woo, meet Ragnar Nurkse.

Nurkse, in his 1944 classic, International Currency Experience, argued that reflationary policies following the collapse of the 1920s-era gold standard operated by depreciating the exchange rate. Countries that pushed down their exchange rates had the greatest success at preventing further falls in prices and output, insofar as they substituted external demand, in the form of additional net exports, for deficient demand at home.

But the policy was beggar thy neighbour. Read more

Bank of Canada rate cut necessary as pre-emptive strike

In this guest post, Alex Bellefleur, global macro strategist at Pavilion Global Markets, writes that the Bank of Canada was prudent to loosen monetary policy in response to the decline in oil prices.

Last week the Bank of Canada (BOC) surprised markets by cutting interest rates 25 basis points, leaving them at 0.75%. While some argue this move was unnecessary, we are of the view that the cut is needed as a pre-emptive manoeuvre to counter private sector deleveraging. Read more

The Bank of Canada’s Rate Cutting Folly

The Canadian central bank surprised markets this week by cutting its base rate by 25 basis points. Jon Hartley, co-founder of Real Time Macroeconomics, argues that the Canadian central bank’s decision to cut interest rates will exacerbate the Canadian housing bubble and wasn’t needed to offset the fall in the oil price.

Early this week, the Bank of Canada unexpectedly announced a change in its key benchmark interest rate for the first time in four years. However, rather than raising its benchmark interest rate as Fed has said it intends to do later this year, Canada’s central bank has lowered its overnight interest rate by 25 basis points to 0.75%. Read more

US shale revolution must force Davos energy rethink

This guest post is from the co-authors of UBS’s white paper for the WEF meeting 2015 in Davos, which started on Wednesday.

Note that one of the co-authors, UBS Investment Bank’s chief economist Larry Hatheway, will be fielding questions on the energy chapter on Friday at 11:30am during Markets Live. Read more

Davos must face up to life after ZIRP

This guest post is from the co-authors of UBS’s white paper for the WEF meeting in Davos, which started on Wednesday.

Note that one of the co-authors, UBS Global Asset Management’s head of asset allocation & currency Andreas Koester, will be fielding questions on the financial policy chapter on Thursday at 11am during Markets Live. Read more