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Summer holiday reading for our 'fermeture annuelle'

The IMF released its update to the April World Economic Outlook last week. Here are some edited highlights: Global growth is forecast at 3.2 percent in 2019, picking up to 3.5 percent in 2020 (0.1 percentage point lower than in the April WEO projections for both years). Investment and demand for consumer durables have been subdued across advanced and emerging market economies as firms and households continue to hold back on long-range spending. Accordingly, global trade, which is intensive in machinery and consumer durables, remains sluggish. The pressing needs include reducing trade and technology tensions and expeditiously resolving uncertainty around trade agreements One might read the re

ASEAN and China grow closer on trade - Macro Macchiato 22/07/19

The American president’s trade war with China is beginning to have clear benefits for America’s competitors in the Far East. China has released trade data that show trade between China and ASEAN nations has grown to a level where ASEAN has overtaken the US as China’s second-largest trade partner. Chinese customs data show a 10.5% rise in trade with ASEAN in the first half of 2018 to RMB 1.98 Trillion (USD 288 Billion). This compares with a fall of 9.0% in China’s trade with the US in the first half of this year to RMB 1.75 Tn (USD 254 Bn). China’s Belt and Road Initiative continues to spread its influence in the region. Of particular note is the growth in trade between China and Thailand, wh

Summertime Blues or Take the Red Pill? (Macro Macchiato 15/07/19)

Wall Street enters its thundery summer earnings season this week in a stormy emotional state. More S&P 500 companies have issued negative guidance for the second quarter than have issued positive guidance. In fact, the negative:positive ratio is 3.8 to 1 as reported by Refinitiv (as Thomson Reuters is now called). That’s double the average for the previous four quarters of 1.9 to 1. All the major US stock indices hit records last week in anticipation of a cut in the US fed funds rate. That macro call only supposes that corporates’ borrowing costs will fall, not that their investment levels, productivity or profitability is rising. There is a growing anxiety that recent US economic growth can

Capesize Joy: As Usual, It's Because of China

It has been a funny old year in the bulk carrier market. The first quarter was dismal. The Baltic Dry Index ended Q1 at around 700 points. It closed last Friday at 1,740 points. Rates gently improved in the second quarter before rocketing in this month. What might the explanation be? Various ship broking reports point to a rise in Brazilian exports of iron ore after output slowed to inspect tailings dams at mines following the Brumadinho tragedy in January. Others report a recovery in Australian port activity following weather-related delays after Cyclone Veronica hit in March. Some point to a shortage of tonnage in one area or another following ballasting activity by ships looking for carg

LNG: the Ginseng Tea of Bunkering

The Marpol Annex VI fuel regulations prevent ship operators from using standard 3.5% sulphur content fuel oil in favour of a 0.5% sulphur content fuel oil which doesn’t exist in sufficient quantities to meet demand. On several occasions I have compared this situation to a government telling its citizens that from January 2020 they can still buy regular coffee, but they can only drink decaffeinated coffee, unless they purchase their own portable decaffeination equipment or drink something else entirely. Readers of Macro Macchiato should be concerned! An alternative which meets the sulphur (and nitrogen) requirements of the new regulations has been available for years. It is of course liquefie

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