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Global Economic Weekly - January 9, 2017

Let’s start with something that always gets me wound up – possibly because I have never been invited, and couldn’t

possibly afford to go on my own dime... This year’s meeting of the World Economic Forum (which takes place in Davos

on January 17-20) has as its theme “Responsive and responsible leadership” – which, I guess, is a boring and tone-deaf way of

saying that the global elite must try harder to understand why the ‘Brexit’ vote and the Trump phenomenon happened, and

why “ethno-nationalism” seems to be sweeping through Europe and the US. More than ever, “Davos-man” appears to be

completely out of touch with the forces that are driving contemporary social, political and economic events. Nevertheless,

although Merkel and Hollande have declined (and the US delegation will be thinned by the Trump inauguration), China’s

Xi Jinping will attend – along with 3,000 other politicians, business leaders and celebrities.


Xi’s appearance may tilt the meeting towards Asia. However, it will also have to look at ‘Brexit’ (PM May has apparently

not yet decided whether to attend), the series of elections that are due this year in the EU starting with the Dutch on May

15 (and, depending on a court ruling on January 24, perhaps including Italy), the impact of the recent OPEC/non-OPEC

agreement, President Trump’s economic and financial agenda, the increasing divergence between the Fed and the ECB on

interest rates, and, perhaps most important, the widening of income and wealth differentials that appears to underlie the

appeal of populist and nationalist political parties. It is quite an agenda, and it is bound to prompt a lot of hand-wringing

from the FT and BBC journalists who have been lucky enough to wangle a stiffie. But I doubt very much will change.


The global economy: In the US, ‘Team Trump’ continues to take shape, and Senate confirmation hearings will begin this

week. However, the only significant nominations on the economic side that have been announced in the last week are:

- Robert Lighthizer to be US Trade Rep. He is a trade lawyer with the ‘white shoe’ firm of Skadden, Arps who

served as Deputy Trade Representative under Reagan. The FT has called him an “advocate of greater

protectionism”, which seems to me to be unfair, in that he has only been doing his clients’ bidding. However,

he has generally advocated a tougher line with China, which is probably no bad thing. (That completes the new

Administration’s trade team, which consists of Wilbur Ross, Peter Navarro and Lighthizer – a pretty aggressive


- Walter ‘Jay’ Clayton to replace Mary Jo White as chairman of the SEC. He is another senior lawyer, this time

with Sullivan & Cromwell, who is known to favour a limited rollback of US financial regulation.

It is also being reported that David Malpass – the former chief economist at Bear Stearns (which shouldn’t really be in his

favor), and an adviser to Trump during the election campaign – will become Treasury Undersecretary for International

Affairs. This is the key position (previously held by people like Paul Volcker and David Mulford) that handles relations

with the G7, G20 etc. He is known as a critic of Quantitative Easing and of the IMF’s austerity packages. Surprisingly (for

a US economist), he does not have a doctorate – though he studied international economics at Georgetown’s School of

Foreign Service.

On the other side of the ledger, one of Trump’s key national security advisers, James Woolsey, a former CIA director, quit

last week – citing differences with the National Security

Adviser-designate, Mike Flynn, presumably over Russian cyber-hacking. (The US foreign policy elite seems trapped by an

outbreak of anti-Russian hysteria – completely forgetting that Russia’s GDP is just about the same size as Spain’s, for

God’s sake. One of the more sensible things that Trump has said is that anyone who doesn’t want better relations with

Russia is ‘stupid’; I couldn’t agree more.)

In the meantime, Trump’s campaign to “bring jobs home” continues to score small victories – most recently, forcing Ford

to cancel a US $1.6 billion plan to build a new car plant in Mexico. He is now turning his attention to GM, threatening it

with a special tax of 35% on imported cars that it manufactures in Mexico; it will be important to see if he and his trade

team are serious about this kind of “border tax”, which has some support among US trade experts (including the eminently

conventional Martin Feldstein).

The unresolved (and perhaps unresolvable) issue continues to be Trump’s own business empire.

He has still not settled how he is going to handle conflict of interest issues or conflicts with the ‘emoluments’ clauses in

the Constitution. But it is more than that. Last week, the WSJ claimed that over US $1 billion of Trump Organization debt

has been securitised and sold on to more than 150 different institutions around the world; much of that debt is, apparently,

underwritten by a personal guarantee from Trump himself – which would put the President (and the Presidency) in a very

difficult situation if things went wrong.

As for the US economy, however, nothing much seems to be going wrong at the moment. Indeed, last week it was


- that the ISM’s manufacturing Purchasing Managers Index (which is considered the best proxy for the overall

health of the economy) rose last month from 53.2 to 54.7, while the services PMI was unchanged at a very

strong 57.2;

- that Markit’s composite PMI rose from 53.7 to 54.1;

- that construction spending was up 0.9% in November, following a rise of 0.6% in October;

- that initial jobless claims fell 28,000 in the latest week; and

- that the ISM’s NY business index jumped in December from 52.5 to 63.8.


In addition, it appears that sales of cars and light trucks were at a record high, both in December and for 2016 as a whole.

The only negative news was Friday’s non-farm payrolls figure for December, which saw a weaker-than-expected increase of

just 156,000. However, the November increase was revised up from 178,000 to 204,000 (and October was revised up also),

and the rise in average hourly earnings accelerated from 2.5% year-on-year to 2.9%. That said, the headline increase was a

bit disappointing – as was the fact that the unemployment rate (calculated separately) edged up from 4.6% to 4.7%.


It seems most unlikely that that will stop the FOMC from continuing to nudge US interest rates higher. However, the

minutes of the latest FOMC meeting do show that the Committee remains uncertain about the economic impact of a

Trump Administration – and particularly about whether his attempts to boost growth will require the Fed to push up

interest rates even more quickly.


As for the markets, the DJIA still hasn’t broken 20,000 – though Nasdaq closed at a record on Thursday and Friday.

Through the close on Friday, the Dow was up 1% for the week at 19,964, the S&P500 was up 1.6% at 2,277, and the

Nasdaq Composite was up 2.6% at 5,521. Press comment has focused on the fact that the 12-month forward P/E ratio

for the S&P is now at its highest since Spring 2015, and there is a sense that the ‘Trump trade’ may be starting to lose its



As for US bond markets, however, they have had a very strong week. Notwithstanding the general expectation that the

Fed will continue to ‘normalise’, the yield on the benchmark 10-year Treasury fell last week from 2.46% to 2.41%, while the

long bond yield dropped from 3.07% to 3.0%. That might make HSBC’s fixed income division look clever; almost alone,

they are arguing that US interest rates will continue to fall this year – with the 10-year rate at only 1.37% by year-end. The

rationale for this projection is:

- that, Trump notwithstanding, there will be no fiscal stimulus package in 2017; and

- that China’s economic problems will begin to impact negatively on the global economy.

On this, HSBC is an outlier. Almost everyone else expects at least a 50 basis point increase in the US funds rate by mid-
year. But the uncertainties over Trump mean a wide range of possible outcomes.


Equally, the political uncertainties right across Europe make any predictions this side of the pond hazardous.



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Politically, 2016 was (it would seem) a triumph for ‘people like them’ over ‘people like us’, in that both the ‘Brexit’ vote

and Trump’s triumph were victories for largely-ignored sections of society (the ‘white working class’ here in Britain and,

rather quaintly, the ‘middle class’ in the US) over metropolitan elites. Given that a substantial percentage of those who

voted to ‘Remain’ are still unreconciled to the idea that Britain will ever leave the EU, and that a roughly equal percentage

of those who voted for Hillary still believe that Trump’s election was somehow unconstitutional (either because he lost

the popular vote by two million, or because the election was swayed by Russian hacking of DNC emails), it is not clear

that elites on either side of the Atlantic have actually learned anything from the events of the last year – which makes 2017

potentially extraordinarily significant.

Although many Trump supporters are now starting to get angry about what they claim is an attempt by the Obama

Administration to tie the new President’s hands by pushing through hundreds of last-minute (‘midnight’) regulations, the

key developments are likely to come in Europe.

Leaving aside the (serious) possibility of a new crisis in Greece, or of a chain banking collapse in the Eurozone prompted

by the problems of the Italian banks, there are at least three elections coming up across the Channel that could do

irreparable damage to the ‘European project’. The first is in The Netherlands, where the fear is that Geert Wilders’s anti-
immigrant/anti-EU Freedom party might well emerge with a plurality. The second is in France, where it is no longer

unthinkable that Marine Le Pen could beat whoever emerges as her main challenger in the second round of the

Presidential elections. (That said, she has just suffered an unexpected blow with the collapse of a small Russian bank that

was to have lent her party the money to run its campaign, forcing her to turn to the Bank of Dad since no self-respecting

grandes ecoles Parisian banker is going to lend her the loot and risk exclusion from the best dinner parties.) The third is in 

Germany, where anti-immigrant sentiment is running exceptionally high, and where Ms Merkel’s CDU is increasingly at

odds with its Bavarian sister party, the CSU. The likelihood is still that, unless there is another terrorist spectacular, she

will win another term – but both the far left and the far right are almost certain to pick up votes at the expense of the

CDU and the SPD. Add to that Italy, where PM Gentiloni is expected to step down at some stage, and 2017 looks like a

difficult year all round for our European friends.


And not too clever here either, where we are going to face a tricky by-election in Copeland. True, it voted 60% to Leave,

and the rather cavalier assumption is that (despite the fact that Labour has held the seat for 90 years) Mrs May will walk it;

but is oop North, and Notting Hill/Islington pollsters don’t read us Northern folk very well. 

Looking further afield, there are very obvious problems in Latin America – particularly in Brazil (where the ‘car wash’

anti-corruption drive is continuing against the backdrop of a 3.5% fall in GDP and a sharp rise in unemployment) and

Venezuela (where it is hard to imagine how things could get worse for what used to be one of the wealthiest democracies

in the Western hemisphere). And then there is Asia – where Obama’s much-vaunted ‘pivot’ seems to have run up against

China’s more powerful push to assert itself in the region. An early test of Trump’s resolve seems likely. (Over the

weekend, I heard an interesting – if paranoid – interpretation of Trump’s foreign policy tweets: to cozy up to Putin in

order to gang up on Xi.) Plus, there is South Korea, where I still think President Park will have to step down.

And all of that ignores both Russia’s more belligerent stance vis-à-vis its former satellites in Central Europe and the endless

problems of the Middle East – epitomised last week by the UN Security Council vote on Palestine, the unusually blunt

speech by Kerry (which, for once, acknowledged that at least part of the blame for the failure of every peace initiative for

the last 50 years must lie with Israel), and the near-hysterical reaction which that the speech provoked in the mainstream

media, among US politicians of both parties and (sadly) even from UK PM May. When it comes to the Middle East at

least, the prospect of a Trump Administration (with policy apparently being set by his son-in-law, whose father had to

buy him his way into Harvard, and his bankruptcy lawyer) is pretty terrifying.

On the economic side, however, I think that things are looking basically OK – at least in the short to medium-term.

In the FX markets, for instance, the dollar appears fairly stable – despite a hiccup on Friday morning that saw the euro

briefly spike 1.6% as a result of what is being put down to an algo ‘blip’ prompted by thin trading in Asia. For the year as

a whole, it was up close to 3% against the euro – though it is up a rather more impressive 9% since November 8. True, it 

was down 2.5% against the yen for the year, but it was up 20% against sterling, which took a beating after the ‘Brexit’

referendum. Opinions on 2017 are split; UBS, for instance, is predicting a significantly weaker dollar. However, the

general expectation that the FOMC will continue to nudge US interest rates higher (and, therefore, to widen the interest

rate spread vis-à-vis the euro) should underpin the dollar. As for sterling, there are those who argue it will fall to parity with

the dollar if/when Mrs May presses the Article 50 ‘button’. Equally, there are those who look at the astonishing resilience

of the British economy post-referendum (at least, so far), and say that the pound is already undervalued. Not surprisingly,

I subscribe to the latter view – though I concede that it would be folly to look much beyond mid-year.

What seems clear, to me anyway, is that US interest rates are headed up – while European rates may even fall further.


As for equities, 2016 was a very strong year – the best, on a global basis, since 2013 at least, with the MSCI Global Index

up 5.7%. Even though the DJIA has (so far) failed to break the 20,000 barrier that it has been testing for the last couple

of weeks, it is still up almost 14% for the year, with the S&P up nearly 9%. True, the Nikkei-225 is up less than 1%,

which reflects the problems that Abenomics has faced in jump-starting the Japanese economy (though things may be

looking up). But – despite the scares over ‘Brexit’, Greece, banking crises, immigration etc. – Europe has had a decent

year. The FTSE100, for instance, was up 14%, the Xetra Dax was up almost 7% and the CAC40 was up 4%. True Italy’s

MIB was down 10% (largely because of the banks), but even Greece’s AEX was up – albeit less than 1%. And – against

all odds – Russia’s RTS was up over 50%, which rather undermines the assumptions behind the sanctions that the US and

Europe have applied. (The rouble has also been the best-performing emerging market currency over the last year.)

And, of course, there is oil. At the beginning of 2016, it seemed that nothing could turn the market around. Both WTI

and Brent were trading around US $36/barrel – and both were widely predicted to go substantially lower, as they did.

However, having hit a bottom in late January, the markets have recovered sharply – in part thanks to the recent

OPEC/non-OPEC deal. For the year as a whole, both marker crudes were up around 50% - which was a major

turnaround from the previous two years.

One can make the case that global stock markets are now overvalued, that a correction is due, and/or that a bond market

bubble will burst as US interest rates ‘normalise’. And some scepticism is certainly in order over the rise in the oil price,

given the level of stocks and the likely resurgence of tight oil production in the US. However, despite the political

uncertainties, money supply growth is fairly strong, austerity seems to be on the way out, and there is a modest amount of

optimism on the economic side.


The global economy: Let’s start with what I see as the bad news... There are a few wild-eyed optimists who still

believe that Trump’s nomination of David Friedman as US Ambassador to Israel and his over-the-top attack on Kerry’s

speech are some sort of ‘misdirection play’ to win the support of key Congressmen on both sides of the aisle, and that –

when push comes to shove – he will revert to his earlier position, that the US should be ‘even-handed’ between Israel and

the Palestinians. Unfortunately, that seems unlikely. Middle East policy under a Trump Administration appears to have

been captured by a small group of hard-line ideologues who really, genuinely believe that Israel has a God-given right to

the whole of the Palestinian mandate. (That will, of course, eventually raise the issue of whether the US can support an

Israeli government that deprives what will inevitably be a majority of its population of their civil rights – but that is some

years off.) I desperately hope that the Trump Administration is not held hostage by this one issue – which may be

important to Bible Belt evangelicals and a couple of Senators, but which the vast majority of those who voted for The

Donald couldn’t give a damn about.

Fortunately, in other areas, Team Trump (as it is emerging) is a good deal more pragmatic and less controversial. The

only senior appointment announced in the last week or so was that of Thomas Bossert, 41, to be the Adviser to the

President for Homeland Security, Terrorism and Cybersecurity (on a par with the National Security Adviser, Mike Flynn).

Since he was Deputy Homeland Security Adviser to Bush 2, this was not a particularly contentious choice. It will,

however, be important when it comes to a possible ‘reset’ of relations with Russia – particularly given Trump’s public

scepticism over the allegation that the Kremlin was responsible for hacking the DNC.

As far as the US economy is concerned, most recent releases have been generally positive. In particular, it was reported

last week:

- that the Conference Board’s consumer confidence index rose in December from 109.4 to 113.7, far better

than the 109 that was expected;

- that the Richmond Fed’s manufacturing index rose in December from 4 to 8, while the Dallas Fed’s business

index rose from 10.2 to 15.5;

- that initial jobless claims fell 10,000 in the latest week; and

- that the Case-Shiller home price index was up 5.1% year-on-year in October, a slight acceleration from the

5.0% rate the previous month.

On the other hand, it was also reported that pending home sales were down 2.5% in November, and by 0.4% year-on-
year. And the trade deficit on goods rose 5.5% in November, which will be a drag on the fourth quarter growth rate.

As far as the markets are concerned, the recent equity rally has taken a pause over the last week. Through the close on

Friday, the Dow (which had hit a high of 19,945 on Tuesday) was down 0.7% at 19,762, the S&P was also down 0.7% at

2,239 and the Nasdaq was off 0.5% at 5,383.

More significant, perhaps, was the bond market. Over the last month or so, interest rates across the Treasury curve have

increased sharply. Last week, however, there was an abrupt reversal – which some have put down to second thoughts

about the speed with which the new Administration will be able to put its infrastructure spending plans in place.

Whatever the reason (and others suggest it was simply a result of thin holiday trading), the yield on the benchmark 10-

year Treasury Note fell last week from 2.54% to just 2.44%, while the 30-year yield dropped from 3.11% to 3.07%. This is

well worth watching.


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No surprise that the FOMC cut US interest rates by 25 basis points when it met last week. That had been well-trailed in

the media. No surprise, either, that the BofE left UK interest rates on hold – or that the Swiss National Bank and Norges

Bank did the same. However, there was some surprise at how aggressive Fed Chairman Yellen was – suggesting that there

will be three more quarter-point increases in 2017, and that the Fed funds rate should be 1.4% by the end of next year

and 2.1% by end-2018. As she put it, this is “a reflection of the confidence we have in the progress of the (US)



  • Written by admin


Friday’s report that China’s PPI was up 3.3% year-on-year in November (compared with just 1.2% in October) has

convinced many previously skeptical observers that inflation is back. True, the ECB (whose Council met last week)

extended its self-defeating bond-buying programme for another six months, though it did trim the monthly purchases.

But the FOMC is pretty certain to increase the US funds rate when it meets tomorrow and Wednesday, and there is a

fairly general sense that interest rates (and prices) around the world are finally ‘normalising’.

Reflecting this, it was reported at the beginning of last week that the stock of global debt with negative yields has

fallen from US $13.4 trillion in mid-August to around US $10.8 trillion. Across the board, yields are rising. Since

their Summer lows, 10-year US Treasury yields, for instance, are up around 65 basis points (to 2.47%), 10-year

German bunds are up 57 bp (to 0.36%) and 10-year JGBs are up 33 bp (to 0.05%). Same, in spades, for gilts, with the

10-year note now yielding 1.45%.

Whatever one might think about inflation in the past, that has to be positive.

However, while concerns about a prolonged period of ultra-low interest rates may be abating, concerns about trade

are increasing – particularly in the wake of Trump’s Presidential victory. As the former US Treasury Secretary,

Larry Summers, observed last week, populism on trade has gone mainstream. Although (IMHO) that is not

necessarily a bad thing, there is a clear danger that a sensible rebalancing of trade arrangements could deteriorate into

a drift towards outright protectionism.

The Trump Administration: Whether that happens depends, to some extent (though perhaps not quite as much as

this week’s Economist suggests), on The Donald – who is continuing to assemble his Administration at a fairly rapid

clip and to drop hints about key policy shifts (particularly on China). As far as personnel are concerned, the jury is

still out on whether it will be a radical or conventional mainstream Republican Cabinet – which means whether he

will upset those who voted for him or those who put up the money. Among the key appointments last week were:

- Ben Carson for HUD. This is fine; it upsets no one – and HUD has traditionally been headed by an


- Retired General John Kelly for Homeland Security. This is also OK – except that concerns are now being

raised about the number of military people in the Administration (which makes it less likely that David

Petraeus will be offered State).

- Scott Pruitt for the EPA. This is a highly controversial appointment, since Pruitt (the Attorney-general in

Oklahoma) is very close to ‘Big Oil’ (and to ‘little oil’ as well) and was a leader in attacking Obama’s

climate policy. He may have trouble winning Senate approval.

- Iowa Governor Terry Branstad for Ambassador to China. This is a shrewd appointment since Iowa is a

major food exporter to China, and since Branstad, 70, has (apparently) developed a good personal

relationship with Xi Jinping. However, as noted, Trump seems to want a much tougher line on trade with


- Andrew Puzder (crazy name) for Secretary of Labor. As the CEO of a fast food chain (Hardee’s) Puzder

has upset the unions by being vocal in his opposition to minimum wage legislation. He may also have a

tough time.

This week could be at least equally important, with the key nominations being State and the Office of Management

and Budget.

For State, the ‘big name’ candidates continue to be Romney, Petraeus and Sen Bob Corker; however, Rex Tillerson,

64, the CEO of ExxonMobil, may well have reeled them in in the home stretch. If so, it would be an interesting

choice – albeit another (like Pruitt) bound to piss off the Greenies. What makes it intriguing is that Tillerson has done

a lot of business in Russia – and, indeed, with Putin, who awarded him the ‘Order of Friendship’ a few years ago.

Given the latest reports that the CIA shares the Democrats’ conviction that the Kremlin’s cyber-hacks went to bat for 

Trump during the election, which may mean Tillerson will have problems getting Senate confirmation. That could yet

tip the choice to Bob Corket – who would certainly be the least contentious.

For OMB, the two top candidates were Goldman Sach’s No 2, Gary Cohn, and the former Bear Stearns economist,

David Malpass. However, over the weekend, it was reported that Trump may offer Cohn chairmanship of the

National Economic Council – which would be a slightly lower profile slot. Mustn’t have too many Squidlets in the

top team...

There are also a couple of appointments to the Fed Board to be made, as well as one immediate vacancy on the

Supreme Court. However, they can probably wait. In the meantime, Trump’s popularity rating (according to

Bloomberg) has nearly doubled since August. He must still be doing something right.

The future of the ‘European project’: Over the last few weeks, there has been growing recognition that the EU

faces a potentially existential problem that includes – but goes well beyond – “Brexit”. That was picked up (and

exacerbated) on Thursday by comments in NY from our own former PM, David Cameron, who publically blamed the

euro for a ‘decade of lost growth’. (Bit late, I would have thought – but there is always space in Heaven for a sinner

who repents.)

True (to my surprise, at least), Austrian voters gave EU supporters a rare victory last weekend by choosing the crazy

ex-“Green” Independent, Alex Van der Bellen, as President over the (far right) Freedom Party’s Norbert Höffer.

However, the Freedom Party still leads in national polls for legislative elections. And, much more damaging for

European elites, Italian PM Renzi suffered a crushing 60/40 defeat in a referendum that would have sharply reduced

the ability of the Italian Senate to block legislation. Renzi had promoted this as a pro-European reform; the

Opposition parties (notably 5Star and the Northern League) attacked it as, in some way, a capitulation to Brussels and

Berlin. Whatever, despite a bit of African-style prevarication, Renzi eventually did the decent thing, and resigned –

though there is more than a mild suspicion that he hopes to be back in the saddle by the middle of next year, courtesy

of his hand-picked replacement, the outgoing Foreign Minister, Paolo Gentiloni, who is currently trying to cobble

together some kind of coalition.

In the meantime, the Italian vote prompted an immediate panic in the domestic banking sector, where NPLs are said

to be at least €360 billion. However, the very sharp sell-off did not last; indeed shares of Monte Paschi di Siena (by

far, the worst of the big Italian banks) actually rose almost 3% through Thursday – only to plummet again on Friday.

The reason is that the ECB remains very reluctant to extend the period during which Monte Paschi is trying to raise

an additional €5 billion in capital. If it fails, the alternative would be a politically devastating government bail-out –

which (paradoxically) would require a so-called “bail in”. That would mean (as in Cyprus) that retail depositors and

bond holders would lose. In the end, I still don’t believe that the ECB has the cojones to precipitate a crisis in the

eurozone’s third largest economy, but it is trying to take a tough line – at least initially.

In the meantime, the situation here in the UK with regard to “Brexit” becomes ever more complicated.

As I see them, the main developments last week were:

- The opening of formal (televised) hearings before the Supreme Court on whether the government has the

legal right to negotiate Britain’s exit from the EU without the further approval of Parliament. It appears

that the government side put up a better show than before the High Court, but I still cannot see the First XI

overturning the original ruling – particularly since the whole issue has become so deeply politicised.

- Two (non-binding) votes in the House of Commons, one demanding that the government reveal more of

its negotiating strategy and the other endorsing the beginning of negotiations by the end of March. I think

the emphasis has to be on the ‘non-binding’ nature of these votes; they will be quickly forgotten after the

Supreme Court has ruled.

- A story over the weekend that those same mysterious forces that bankrolled the High Court case have now

decided to launch a flank attack on the referendum via the Irish Courts – making the case that any recourse

to Article 50 must be approved by the ECJ. I can only gasp in awe; nifty thinking.

- A story today suggesting that, whatever Article 50 says, die-hard Remainers will argue that we also have

to face a Parliamentary vote on Article 127 of the EEA Act. This could go on forever.

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  • Written by Nikki Tacata

Global Economic Weekly Report - Dec 5, 2016

It has been a pretty tough week – economically and politically. Although the euro-elite caught an unexpected break on

Sunday night, when it transpired that the crazy ex-Green, Alex Van der Bellen, had held on to defeat the unappealing

ultra-nationalist, Norbert Höfer, in the rerun for the Austrian Presidency, the mood quickly turned nasty when it

transpired that Italian PM Renzi’s quixotic decision to call a referendum on constitutional reform had backfired

spectacularly. The eurozone is back in crisis mode – just ahead of an ECOFIN meeting that was supposed to focus on

conditions for the next phase of Greece’s bailout. Potentially at least, we now have a much bigger problem on our hands.

On the economic side, the key development of last week was clearly the OPEC Ministerial meeting – which has given a

big boost to the spot oil price. However, as discussed below, that boost is not quite as big as oil producers had hoped,

and there are real concerns that the agreement may not hold.


  • Written by Nikki Tacata

Government Australia Advisory Board

Simon Crean MP

John Brumby 

Kristina Keneally

Mark Vaile

Nick Greiner

Alexander Downer

Peter Charlton

Trevor Rowe

Warwick Smith


Bob Carr