• Current Reports  

    Published on November 20th, 2014

    Since mid-July the price of silver has slumped by -25%. These days silver is mostly an industrial metal. But down the decades it has retained some of its monetary characteristics. What’s more, for more than a century silver has traded freely in the market, unlike gold which only started to float in the 1970s. So the question I am trying to answer is very simple: Is there a relationship between variations in the price of silver and variations in the US inflation rate? In simple terms: does a big move in the price of silver foreshadow big moves in either the US consumer price index or producer price index? Even more simply: within the price of silver, are there any embedded ‘inflation expectations’?...
    Published on November 20th, 2014

    China’s investment-heavy and energy-intensive model of economic growth has meant that it accounted for about two-thirds of global oil demand growth over the past decade. This frenzy of building, manufacturing and freight movement resulted in an extra 450,000 barrels of oil, on average, being consumed each day. But as China’s economy eases into a lower growth trajectory and energy-efficiency policies are toughened, oil demand growth could halve from its peak. Indeed, the rout in oil markets since June was partly driven by a realization that Chinese demand growth has topped out (see Oil Markets On The Brink). Oil markets are rattled by the uncertainty surrounding China’s growth trajectory and are further unnerved by disagreement among key energy-focused forecasting agencies; predictions for China’s oil demand growth for 2015 range from 250,000 bpd to 400,000 bpd. The difficulty of making short-term forecasts has been shown by the acute volatility in China’s monthly oil usage...
    Published on November 19th, 2014

    With Japan in the middle of a triple-dip recession, and Japanese households suffering a significant contraction in real disposable income, it might seem at first that Prime Minister Shinzo Abe has chosen an odd time to call a snap election. But that conclusion would ignore the two iron-clad rules of investing in Japan that we never tire of repeating...
    Published on November 19th, 2014

    Since the sudden eruption of Mt Ontake in September which killed 57 hikers, the potential for disaster in Japan has become a subject of morbid press fascination. The journalistic hysteria culminated with a recent Daily Mail headline “Japan could be destroyed within 100 years in giant volcanic eruption”. Well, yes, but then we could also get hit by an asteroid or wiped out by simian flu and the apes might take over...
    Published on November 18th, 2014

    Summit meetings of APEC, the Asia-Pacific economic cooperation talking shop, rarely produce much of interest beyond a funny group photo of 21 heads of state struggling to look comfortable in ersatz local dress of the host country. But last week’s summit in Beijing, the companion state visit of President Obama, and the subsequent G-20 summit in Australia produced a surprisingly substantial feast of positive news. The deal flow was a testament to Xi Jinping’s diplomacy. Xi looks well on his way to reshaping the Asian political-economy equation in China’s favor. The announcements fell broadly into two baskets: one set that underscores China’s desire to play a bigger, and essentially cooperative, role within existing global governance systems; and a second that makes clear China’s intent to build a parallel set of multilateral institutions that it can dominate...
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