The Fed has form. When it wants to take away the punchbowl, it usually telegraphs its intentions well in advance so partygoers have time to go buy their own moonshine. So it was with QE taper, signaled in 2013, executed in 2014. By the time the Fed stopped net purchases of bonds the market had

A number of themes frame the global economic and financial outlook. The world has been operating monetary and fiscal policy towards sustaining growth at a higher level than the unobserved long term trend rate. It may be doing this for a number of reasons. For one, it can’t observe the long term trend rate and

For decades the US has relied on emerging markets, especially China, for cheap production, and OPEC and the Middle East for a steady supply of oil. In order to safeguard its interests the US has engaged the world’s energy producers and exporters and manufacturing countries politically and strategically. Where America’s economic and commercial interests are

On Oct 30, the PBOC announced that it would study a trial scheme for QDII2 at the Shanghai Free Trade Zone, in a step towards capital account convertibility. The reaction of CNY and CNH was puzzling. CNY strengthened from 6.357 to 6.3175 with CNH in tow. One would have expected CNY to weaken if the capital

Raising interest rates is difficult when everyone is watching you. Its much easier to take the punchbowl away when people are not watching. Walking in on the party when it is in full swing and expropriating the punch bowl is likely to trigger all kinds of protest. And the withdrawal can be painful when you