By Bilal Hafeez 15-09-2019
In: top-picks, Other

Top Picks: Politics


2nd November

Yesterday, the Fed cut rates for the third time this year. The persistent low rate environment seems to be a cause of bubbles forming after all. The least central bankers can do is help reduce carbon emissions – ‘Green QE’ is all in.

When Yields Talk, Sectors Listen (Advisor Perspectives) Low interest rates impact not only bonds but equity valuations too. And some sectors are more rate sensitive. Financials suffer whereas Utilities, Consumer Staples, and Healthcare outperform. [Bullish these latter sectors]

Herd Behaviour in Asset Markets: The Role of Monetary Policy(VOX) Argues against economist Robert Shiller’s findings that bubbles are random and unpredictable and instead finds they are closely linked to loose monetary policy. [Bearish stocks]

Jens Weidmann: Climate Change and Central Banks(Jens Weidmann)Discusses ways in which central banks can be involved in transitioning to a low-carbon economy. Heavy focus on green finance or ‘Green QE’, however, might distract from the main policy objectives and hinder bank independence. [Bearish green bonds]

26th October

We looked at how populism is turning left-wing in one of our specials this week. This might be holding true for Eastern Europe too, as some excellent Brookings analysis points at. Elsewhere, we picked out a curious list of the financiers attending “Davos in the desert”.

Is the Tide Turning Against Right-Wing Populism and Nationalism in Central Europe? (Brookings) Argues that the uniting of opposition parties is a key strategy to the diminishing power of right wing in European politics. Could support rise of left populism = less business friendly = lower stocks

The Grandees Headed to Saudi Arabia’s “Davos in the Desert” (Axios) Axios compiles the list of guests who will attend the Future Investment Initiative in Riyadh later in October – heads of state, high-profile Trump administration cabinet members, executives of the world’s largest financial institutions and will.i.am all made it to the list. Saudi unaffected by human rights issues.

U.S. Military Could Collapse Within 20 Years Due to Climate Change (Vice) A Pentagon research report highlights several climate-trigged factors that could be detrimental to the US Military in the upcoming two decades: a collapse of the power grid, disease epidemic and geopolitical tensions stemmed from climate-related population displacement.

19th October

Trump is likely to get away with it this time. At least, according to a great piece comparing his impeachment process to that of Nixon’s . Meanwhile, with Extinction Rebellion protests globally, we re-cap the negative externalities of climate change and how to tackle them.

Trump and Nixon: Three Key Differences Between 2019 and 1974 (The Conversation) Differences include Nixon’s impeachment process started in the Senate not the House, Republicans and Trump loyalists dominate today’s Senate unlike Nixon’s time and the media is more fragmented than earlier.

Anti-globalisation Bias and Public Policy (Project Syndicate) Argues that a number of anti-globalisation negative biases, most commonly nationalism, self-interest, and lack of economic understanding, result in misguided public policies.

The Necessity of Climate Economics (Project Syndicate) Re-visits the main economic concepts of negative externalities as ways to tackle climate change.

12th October

Geopolitics has taken a centre stage recently, especially with the climate movement across major cities. A few insightful pieces exploring how to try and respond to it.

High Finance is Wrecking the Economy and the Planet – but it Won’t Reform Itself(Prospect Magazine) Criticizes FT’s new campaign that aims at resetting rentier capitalism as meaningless and toothless. It does agree, however, that capitalists are searching for new ways to revamp capitalism as political insurgencies, protectionism and authoritarianism all threaten globalisation.

Free Trade is Expanding, Just Not With the US(Council on Foreign Relations) Highlights that despite countries accounting for more than a third of global output signing more than a dozen trade agreements in the last two years, the US chooses to stay on the sidelines

The Climate Risk You May Not be Thinking About (McKinsey Global Institute) Argues that the most significant risk of the current climate change predicament is not weather itself but our lack of adaptation to today’s volatility. Plenty of examples of one extreme event such as a storm significantly disrupting output.

Greta Thunberg’s Moment(Project Syndicate) Explores the mass movements of civil disobedience started by Thunberg and criticizes the failure of Governments to react.

4th October

Impeachment is all the focus now, bringing us back to the years of Clinton. It’s unlikely to lead to much, however. We compare how Republicans are performing in light of re-election hopes and how Trudeau lost his reputation – slowly, then all at once.

The Impeachment Trap (Project Syndicate) Argues that Democrats have made a mistake to call for Trump’s impeachment, hoping to follow Clinton’s experience. Trump retains the loyalty of his base supporters and enjoys majority support in the Senate. It’s been a info-leaky administration – nothing new was learned about Clinton after the Starr Report was issued, and nothing new will be learned about Trump.

Looking at America’s Two Economies (Econlife) Analyses the state of the economy in the Republican states in comparison to Democrats. In 2008, the Republican median HH income, at $55,000, was higher than the Democrats. By 2017, Democrats were up to $61,000 and Republican voters were down to $53,000. Argues that this is because with Democrats increasingly clustered in affluent coastal urban areas, they also represent a bigger share of productivity, education and better paying jobs than their opponents.

Justin Trudeau’s Spectacular Self-Destruction(Foreign Policy)Gives an insight into Justin Trudeau’s stunning fall from grace, with approval ratings of just 31% down from more than 60% in 2016. Not only has he been underdelivering on his promises, (despite millennials favouring his legalisation of cannabis) but he also backtracked from his pledges to revamp the electoral system. Far from his initial appeal of being a change maker, he is now seen as a run-of-the-mill politician.

Europe Needs a Migration Reset (Project Syndicate) Argues that Europe needs a rethink on how to handle the floods of migrants as camps are overflowing. Four actions – better secure external borders, handle economic and asylum migrants separately, repair the migrant distribution system to member states and forge stronger ties with countries of origin.

Political and Economic Drivers of Pogroms (VOX) – Analyses the interaction of political and economic factors to drive pogroms in an anti-semitic environment. The authors find that massacres occurred when economic downturns coincided with political upheaval. One of their key findings also indicate that occupational segregation between Jews and the mass played a significant role in triggering ethnic violence.

28th September

Six Small Facts About Globalization That Are Really Big (econlife) Highlights six key ingredients for globalisation: 1) refrigerated containers, 2) WTO, 3) Low non-tariff barriers , 4) FDI, 5) Services are important, 6) Mexico becoming important.

Companies Are Using a Depression-Era Law To Escape Trump’s Tariffs — And It’s Costing Them (ProPublica) An old law that allows free trade zones with the US is being revived

The Growing List of U.S. Government Inquiries into Big Tech (Axios) Lists the number of inquiries against Facebook (5), Google (4), Amazon (2) and Apple (1)

Why Global Trade Imbalances Could Get Worse Before They Get Better… (CFR) Argues that europe’s demand deficit and Asia’s excess savings are driving trade surpluses against the US. Their trends are not positive. Could keep trade wars in the headlines.

Tracking Global Corporate Tax Avoidance (Big Picture) 40% of multinationals profits are shifted to tax havens each year. This surely will be attacked by politicians.

20th September

US foreign policy has been changing since the height of interventionism during the Bush years. Now Trump may be setting the tone for years to come. Meanwhile, the UK may need to focus on trade deals with the US, Aust, Canada and NZ and we shouldn’t forget Ireland is key for Brexit.

How Trump is Remaking Republican Foreign Policy (Defense One) Out: neoconservatism and noninterventionism. In: a reactionary style that may outlast his administration.

Beyond Brexit – What a US-UK Trade Deal Will Really Look Like (CAPX) Argues for UK to focus on US and the broader 5 eyes alliance (Canada, Australia, NZ)

A Repeat of The Turmoil of 1914-1922? (Progressive Pulse) Compares the current dilemma of the Irish Backdrop Plan to the 1914 Crisis of the UK, where Ireland sought to break away from UK control and regain its sovereignty.