• The disappointing details in the jobs report lowers rate hike expectations.

    Now about that September Rate Hike

    The US grew 151k jobs last month and when coupled with the 20k upward revision to the July figure the net job creation is not far from the 170k-180k median expectation. 

    However, the details were more disappointing.  Average hourly earnings rose 0.1%.  The 2.4% year-over-year increase compares with a revised 2.7% (from 2.6%) in July and is the weakest pace since March.

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  • The jobs report is always important, but it comes with good news from the UK.

    Jobs Report, and more about UK Data

    The US dollar is little changed ahead of the job report.  Our near-term bias is for a lower dollar.   Sterling is flat and is holding on to about a 1% gain this week.  The Japanese yen is about a 0.3% lower and is off 1.7% this week.  The euro was coming into today for the week.

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  • Protectionism push-back is crimping China's growth model.

    Globalization Meets Protectionism

    Globalisation has contributed to the growth of China for decades but the rise of protectionism in Western economies could curb Chinese trade and investment.

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  • There is disagreement on Hugh White's view of 'No First Use'.

    'No First Use' Fallout

    Hugh White’s views on the dangers of the United States moving to a ‘No First Use’ nuclear posture are inherently unpersuasive. The virtues of a ‘No First Use’ policy have been crisply spelled out by Ramesh Thakur, for instance, in recent pieces in The Strategist and Bulletin of the Atomic Scientists.

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  • As G20 leader, can we expect China to help reverse global protectionism?

    Can China Mitigate Rising Global Protectionism?

    As China assumes G20 leadership, the prospect of global “protectionism” is on the rise and the stakes could not be higher for cooperation and major structural reforms. Without continued investment and trade, secular stagnation in advanced economies and growth deceleration in emerging economies will continue to broaden.

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  • The dollar waits around for jobs data.

    First its the Jobs Estimate, then the Data, while the Dollar Waits

    The US dollar is a little softer against most of the major and emerging market currencies.  The exception is the Japanese yen, where the greenback has moved above JPY103 for the first time in a month.  The tone is consolidative as the market awaits assurances that the jobs growth this month has been sufficiently strong as to keep the prospects of a September meeting still alive. 

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  • Low-skilled workers are being left behind in a globalized world.

    With Globalization, You'll Need Skills

    Concern over the employment consequences of globalisation is again driving political debate. Look no further than the United Kingdom’s exit from the European Union and the rise of protectionism in American and Australian politics to see the disenfranchisement of low-skill workers with the effects of international trade. Judging by the dramatic change that has occurred in the global distribution of manufacturing output in the past 25 years it’s easy to see why these workers should be so concerned.

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  • Analysts breakdown r* (r-star) for growth and inflation answers.

    Decoding the R* (R-Star) Mystery

    The market recognizes that the indication by the FOMC at the end of last year that four rates hikes in 2016 may be appropriate was far from the mark.  At the same time, investors are coming around to the prospects that the Fed is not one and done either. 

    A key issue for investors and policymakers is the terminal rate for Fed funds.  This terminal rate is what economists call the natural or neutral interest rate.  It is the rate that is consistent with full employment, capacity utilization and stable prices. 

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