My Daily Column – Confusion in Emerging Countries

There is confusion currently on markets and mainly on emerging markets. This implies sometime strong and brutal adjustments.
Last night, such an adjustment has been seen in Russia when the central bank of Russia has increased its main interest rate from 10.5% to 17%. It was a response to the deep and dramatic drop of the ruble.
On a more general ground, we’ve seen strong movements on emerging debts and emerging exchange rates. Equity markets volatility was not restricted to emerging countries. On all these issues, the oil price issue is major. On the equity market in developed countries, short-term uncertainty hides the positive story associated with lower oil price: lower investment in the oil sector today but more consumption in the future and more investment in other sectors. Continue reading

World Economy – A slight improvement in 2 charts

The two charts at the bottom of this post give a synthetic vision of the world economy. They present the synthetic index of the PMI/Markit surveys made throughout the world. It is specific to the manufacturing sector. The main reason is that world trade is based on manufactured goods. This can give an intuition of how world trade could behave in the coming week or months.
The first chart put together large developed countries, a BRIC(*) index and the Markit emerging index. The second chart gives details for BRIC countries. Continue reading

To be read this week

Writing on a blog is a good way to discuss ideas. But a blog is also a link to what is written by others. This post shows what I consider as interesting links in English. You can find different links in French on the French part of my blog (here)

Crimes and Punishments (Menzie Chinn on Econbrowser.com) and
The impact of economic sanctions on Russia (Linda Yueh on bbc.com) Continue reading