Financial Markets

Real economies and financial markets: Outlook for 2019

G20

Financial markets are hesitant, as many sources of concern pile up on analysts’ desks. This report argues that the future of the world economy depends on three sets of variables: policymakers’ ability to adjust to the end of generous monetary policies and profligate fiscal practices; their willingness to recognise the need to engage in structural reforms and act accordingly; the possibility that significant shocks occur – such as a crash in China or an all-out trade war.

From regulation to supervision – the trajectory of MiFID II

European Union

The European Union’s ambitious attempt to re-regulate the financial industry (MiFID II) took effect this year. Companies are struggling to meet its complex disclosure requirements, which can only be met by powerful and costly IT solutions. Early experience suggests MiFID II is so unworkable that it may soon have to be replaced; but the bigger worry is that it may be the precursor of a real-time, global surveillance apparatus.

Opinion: The OECD’s problematic global tax ‘standard’

Global

The OECD’s global standard for the Automatic Exchange of Information (AEOI) in tax matters is far less global, standardized and automatic than its name suggests. It is structured so that countries tend to apply the rules bilaterally, leading to a complicated web of regulations that the “standard” was designed to avoid. This is leading to higher costs and troublesome legislation.

Opinion: Conventional measures give false reassurance on global risk

North America

Conventional measures could be the wrong ones to gauge the risk of a financial shock to the global economy. Imbalances created by cheap money are building up in the economy. A close look at market capitalization, share buybacks, and interest-rate spreads presents a troubling picture.

Loose monetary policy could be on its way out

Europe

In March, the United States Federal Reserve kept its main interest rate on hold, while the European Central Bank cut its main interest rate to zero. The moves confirmed what investors already knew: the American and European economies still have plenty of weaknesses. But despite appearances, the Fed and the ECB are on track to end their expansionary monetary policie...

Argentina’s new president will find it hard to make a fresh start

Central & South America

Let’s Change – Cambiemos – led by former Buenos Aires Mayor Mauricio Macri, won Argentina’s presidential run-off by less than 3 per cent of the popular vote. Headlines in Europe, the United States and Latin America heralded the opposition coalition’s victory as marking a reversal of the ‘pink tide’ – the swing to the left that has dominated South American politics ...

Productivity trend suggests policymakers should stop obsessing about GDP

China & Northeast Asia

Economic growth around the world is below expectations. In particular, the Western economies are not generating the kind of recovery needed to solve the problems accumulated over the past decades. Yet despite missing forecasts, the gross domestic product figures themselves are not dismal. In 2015, GDP growth will be better than 2 per cent in the United States and w...

US Fed will show its true colours only after next rate increase

North America

The US Federal Reserve Board has finally made up its mind and will probably tighten monetary policy in the United States before the end of 2015. Will this be real monetary tightening or just a gradual retreat from the previous easy credit approach? This report argues that the Fed still has too much faith in Keynesian the...

VIDEO: A European view of the US debt ceiling crisis

North America