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102. The equity market will climb a wall of worry
- Publication Date:
- 09-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- The equity market has had a tough few months due to a combination of concerns, including fears that a US-led attack on Syria might lead to a wider Middle East conflict and threaten oil supplies. Of greater concern for equities are worries that a turn in the US monetary policy cycle could eventually kill off the US recovery. However with valuation not looking like a barrier to further gains, this four-and-a-half year equity bull market will in all likelihood climb the wall of worry and set another new high before the year is out.
- Topic:
- Economics, International Trade and Finance, and Markets
- Political Geography:
- United States, Middle East, and Arabia
103. Attack on Syria: the danger is in escalation
- Publication Date:
- 08-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- It is now looking all but certain that the United States will launch some form of attack on Syria. What is unclear is the severity and duration of the attack. Leaving aside the political ramifications, the immediate economic effects are likely to be limited (and are mostly already factored in). Opposing impacts on inflation and activity means that changes to central bank policy could be postponed. A prolonged campaign could have wider ramifications, not least if there is a risk of a geographical widening of the conflict.
- Topic:
- Foreign Policy, Economics, International Trade and Finance, Markets, and War
- Political Geography:
- United States, Middle East, Arabia, and Syria
104. US recovery on track
- Publication Date:
- 07-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- Recent US data have been uneven. An improving manufacturing ISM survey was offset by non-manufacturing data being worse than expected. Last week a strong consumer credit number was balanced by weaker small business confidence. The US economy almost certainly went through a soft patch in Q2. However, on balance the recovery–unexciting as it has been–remains on track, with some possible further mileage to be had from equities. This is consistent with the recent dovish statement by Fed Chairman Bernanke, suggesting that the tapering of quantitative easing is still some way off.
- Topic:
- Economics, International Trade and Finance, Markets, Global Recession, Labor Issues, and Financial Crisis
- Political Geography:
- United States
105. Our bond market, your problem?
- Publication Date:
- 06-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- Comments from the US Federal Reserve aimed at signalling that monetary policy cannot stay at historically low levels indefinitely have caused bond yields and credit spreads to rise both in the US and abroad. Higher borrowing rates are particularly inappropriate for the Eurozone which, unlike the US, is still struggling to emerge from recession. This tightening of financial conditions will place pressure on the ECB to act. Although surveys show that investors' bearishness on US government bonds is at an extreme level, suggesting that in the coming weeks bond yields are more likely to fall than rise, the longer-term trend in bond yields is now upwards. But we do not expect the rise in yields over the next two or three years to kill off the US recovery. Consequently, we believe that the US equity market is still on an upward uptrend, albeit one that will experience regular spikes in volatility as the Fed gradually moves away from its ultra-loose policy.
- Topic:
- Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States and Europe
106. The case for rising US corporate capex
- Publication Date:
- 05-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- Shifts in financial balances between sectors of the economy are worth watching because they can signal broader cyclical changes. The US household financial balance turned negative in Q1. But that was mainly due to distortions in income related to tax increases in 2013. Taking the average of Q4 2012 and Q1 2013, households still have a positive balance. More importantly, the conditions are in place for a rise in capital expenditure (capex) by the corporate sector. This would allow both household and public sector savings to increase. It would also mean an upside risk to our main scenario for the US economy.
- Topic:
- Economics, International Trade and Finance, Markets, and Financial Crisis
- Political Geography:
- United States
107. Toward a New Paradigm of Sustainable Development: Lessons from the Partnership for Growth
- Author:
- Jeri Jensen
- Publication Date:
- 09-2013
- Content Type:
- Working Paper
- Institution:
- Center for Strategic and International Studies
- Abstract:
- The Obama administration has the opportunity to achieve more sustainable development solutions with a new model of development relevant in a world where private investment is the primary driver of economic growth.
- Topic:
- Development, Economics, International Trade and Finance, Markets, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- United States
108. Templates for Trade: Change, Persistence and Path Dependence in U. S. and EU Preferential Trade Agreements
- Author:
- Ali Arbia
- Publication Date:
- 09-2013
- Content Type:
- Working Paper
- Institution:
- The Kolleg-Forschergruppe (KFG)
- Abstract:
- Over the last two decades, Preferential Trade Agreements (PTAs) proliferated through the international trading system. PTAs created a web of rules paralleling and extending the system of the World Trade Organization (WTO). PTAs are an increasingly dominant feature of the international trading system, adding to a steadily increasing complexity. Their content is rarely studied systematically across agreements, and the mechanisms leading to their genesis are little understood. It is typically assumed that actors like the European Union (EU) and the United States (U. S.) work off a template when negotiating PTAs. Some argue that this allows them, amongst others, to impose a regulatory regime. This working paper attempts to put this claim to the test. Using diffusion theory as framework, it analyzes PTAs signed by the EU, the U. S. and their regional trading partners. Understanding the use of templates will help negotiating parties to assess the margin of maneuver when negotiating PTAs with the EU and the U. S. as well as the rigidity of their mandate. The analysis is conducted on a regional and a domestic level using aggregated data on PTA content and a qualitative assessment of selected PTA provisions (anti-corruption, environment and cultural cooperation). The study finds that the flexibility of these mandates is considerable and that templates, if used at all, can change substantially over time.
- Topic:
- Economics, International Trade and Finance, Treaties and Agreements, and Governance
- Political Geography:
- United States and Europe
109. Iceland and Europe: Drifting further apart?
- Author:
- Baldur Thorhallsso and Alyson J. K. Bailes
- Publication Date:
- 09-2013
- Content Type:
- Policy Brief
- Institution:
- Finnish Institute of International Affairs
- Abstract:
- Iceland applied for EU membership in 2009 at the height of the economic crisis. Four years later, a new government has put the application on hold: the majority of Icelanders are opposed to entry, but want to continue the accession process and put the results to a vote. Iceland's longer-standing problems with European integration stem from the issue of sovereignty in general, and maintaining control over fisheries and agriculture in particular. Since 2009, anti-European feelings have been stoked by the 'Icesave' dispute, while the prospective benefits of entry (including use of the euro) have been tarnished by witnessing the fate of other small states during the euro crisis. The new government proposes remaining a member of the EEA and developing relations with other world powers. But the US commitment to Iceland has weakened over the years, and 'rising' powers like China are unable, as yet, to solve the country's core problems. In terms of both its security and its standing within the global economy, Iceland is becoming more rather than less dependent on Europe over time. The question raised by the latest political turn is whether it will have to maintain that relationship from a distance, with limited control and with no guaranteed goodwill.
- Topic:
- Economics, International Trade and Finance, Political Economy, Regional Cooperation, Treaties and Agreements, and Financial Crisis
- Political Geography:
- United States and Europe
110. Lehman Died, Bagehot Lives: Why Did the Fed and Treasury Let a Major Wall Street Bank Fail?
- Author:
- William R. Cline and Joseph E. Gagnon
- Publication Date:
- 09-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Five years after the Federal Reserve and the Treasury allowed the investment bank Lehman Brothers to fail, their actions (or inaction) remain a focus of debate. Some argue that it was an inconsistent policy to have let Lehman fail while making emergency loans to save other large financial institutions in the same time frame. In this Policy Brief we present evidence that the Fed and Treasury had a sound reason to have bailed out other institutions while letting Lehman fail. Simply put, Lehman was insolvent—probably deeply so—whereas the other institutions arguably were solvent. In addition, the other institutions had abundant collateral to pledge, whereas what little collateral Lehman had to pledge was of questionable quality and scattered across many affiliated entities. Thus, federal officials, at least in hindsight, appear to have followed the dictum of Walter Bagehot (cited above), which has guided central banks for almost 150 years.
- Topic:
- Debt, Economics, International Trade and Finance, Markets, and Financial Crisis
- Political Geography:
- United States