Better Economic News Out of Greece Masks Clouds on the Horizon

The latest GDP number out of Greece looks more promising than in the past (assuming it is to be trusted). The GDP contracted by only 0.2% (SA) from the previous quarter and 4.6% on a year-over-year basis.   Source: Eurostat                                […]

Brazil’s Central Bank Under Pressure as Demand for Resources Slows and Foreign Capital Exits

Brazil is facing a situation not to dissimilar to India (discussed here). In order to stem the recent currency declines, the central bank (BCB) has raised the benchmark rate. Unfortunately raising rates at this stage in the cycle is absolutely the wrong thing to do for Brazil’s economy – although given the currency declines BCB had little […]

Janet Yellen vs. Larry Summers. Who will be the next Fed Chairman?

Within the next few months the Obama administration is expected to announce a nominee for Ben Bernanke’s replacement. Two names have been bounced around recently:  Janet Yellen and Larry Summers. According to Google Trends, here is what Google news searches look like over time for these two candidates. Source: Google Trends Not surprisingly, researchers at Credit […]

RBI’s Battle With Currency Weakness Inverts the Yield Curve; Will Cost India’s Economy Dearly

The Reserve Bank of India decided it has had enough of rupee weakness and capital flight out of the country. The central bank is dealing with the problem by tightening liquidity conditions in the domestic money markets. By making it more expensive to borrow rupees, it reduces investors’ ability to short the currency. Reuters: – […]

India’s Foreign Reserves Declining

Barclays Capital had a sobering update on India today. Apparently June saw the largest outflows on record from India bonds and equities portfolios. Source: Barclays As a result, declines in India’s foreign reserves are becoming material. Source: Barclays Moreover, India’s gold holdings constitute a significant portion (more than other countries) of the nation’s reserves. And […]