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82. 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
83. 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
84. Fighting the Fed
- Publication Date:
- 08-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- Since the US Federal Reserve signalled that a turn in the interest rate cycle may be on the horizon, UK and to a lesser extent Eurozone interest rates have tracked US rates higher. But the UK and Eurozone economies are less well placed than the US to cope with higher interest rates. Simulations carried out on our Global Economic Model show that higher rates would be particularly harmful to the UK economy's embryonic recovery. In an attempt to stem the rise in interest rates, the Bank of England and the ECB have introduce forward guidance but with little, if any, success. Markets do not seem convinced by the Bank of England's commitment to forward guidance and are testing its resolve. It seems likely that over time both central banks may have to strengthen their forward guidance, in the case of the Bank of England by augmenting it with further quantitative easing.
- Topic:
- Economics, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, United Kingdom, and Europe
85. If the Fed threshold changes
- Publication Date:
- 08-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- At the end of last week, there were rumours that the Fed may change its unemployment threshold from 6.5% to 6%, either at its 30-31 July meeting or, perhaps more likely, at its 17-18 September meeting. Such a move would confirm that the Fed funds rate is likely to remain in its current 0-0.25% range until 2015, which is in line with our baseline scenario. But while the change would be an acknowledgement that the US labour market has performed more strongly than expected, the change – if implemented – could still be a mistake as it may erode the value of forward guidance by moving the goalposts.
- Topic:
- Economics, Markets, Labor Issues, and Financial Crisis
- Political Geography:
- United States
86. 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
87. 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
88. UK housing market: bellows to a bubble?
- Publication Date:
- 06-2013
- Content Type:
- Policy Brief
- Institution:
- Oxford Economics
- Abstract:
- The housing market is recovering, according to recent price and activity data. Post-crisis price corrections were smaller in the UK than in the US and much of Europe, and demand is now being bolstered by the government's Funding for Lending and Help to Buy schemes. This has given rise to some worries that the UK is in danger of inflating another house price bubble. While housing supply is very tight, we are not convinced that these schemes will have enough impact on demand to cause prices to take off.
- Topic:
- Economics, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, United Kingdom, and Europe
89. 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
90. 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
91. 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
92. The American sequester - and us
- Author:
- Eva Gross
- Publication Date:
- 04-2013
- Content Type:
- Policy Brief
- Institution:
- European Union Institute for Security Studies
- Abstract:
- Following President Obama's budget proposal on 8 April, the US has embarked on another round of negotiations in attempts to reach a fiscal deal. Differences between the two sides (Democrats insist on taxing the wealthy whereas Republicans insist on spending cuts) have their roots in respective party doctrines, and the current gridlock displays the exceedingly partisan nature of the current US political process. Although the origins of this dispute are clearly to be found in domestic politics, they increasingly have foreign policy implications as well. They are likely to have an impact across the Atlantic - where fiscal austerity and budgetary cuts are equally underway, albeit for reasons that do not entirely coincide - and an effect on EU-US security cooperation.
- Topic:
- Security, Foreign Policy, Economics, and Politics
- Political Geography:
- United States
93. Banking on Growth: U.S. Support for Small and Medium Enterprises in Least-Developed Countries
- Author:
- Gayle Tzemach Lemmon
- Publication Date:
- 12-2013
- Content Type:
- Policy Brief
- Institution:
- Council on Foreign Relations
- Abstract:
- The United States has made economic development a central tenet of its national security policy, alongside defense and diplomacy. One of the best and most cost-effective avenues for furthering economic development is investing in locally owned businesses, and yet the United States currently has no means for effectively and efficiently doing so. Small and medium enterprises (SMEs) have shown great potential in spurring economies, but their owners—especially women—are often unable to acquire the skills, resources, and support necessary to grow and sustain their businesses. Promoting local programs and global initiatives that encourage investments in SMEs and women entrepreneurs in lower-income countries will strengthen growth engines, diversify economies, improve communal well-being, stabilize societies, and accelerate progress toward international development goals. All of these results are in the interest of the United States, and could be achieved more quickly with the creation of an American development bank that aims to invest in and direct technical assistance to entrepreneurs in lower-income nations—the next-generation emerging markets. This can be done by expanding on the work already under way at the Overseas Private Investment Corporation (OPIC). Though several multilateral organizations have tackled pieces of this work, the United States has a unique role to play: investing in entrepreneurialism that creates jobs, bolsters the middle class, and spurs economic growth.
- Topic:
- Security, Arms Control and Proliferation, Economics, Treaties and Agreements, and Counterinsurgency
- Political Geography:
- Afghanistan, United States, and Central Asia
94. Identifying Options for a New International Climate Regime Arising from the Durban Platform for Enhanced Action
- Author:
- Robert N. Stavins, Ottmar Edenhofer, and Christian Flachsland
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Belfer Center for Science and International Affairs, Harvard University
- Abstract:
- The goal of the Harvard Project on Climate Agreements is to help identify and advance scientifically sound, economically rational, and politically pragmatic public policy options for addressing global climate change. Drawing upon leading thinkers in Argentina, Australia, China, Europe, India, Japan, and the United States, the Project conducts research on policy architecture, key design elements, and institutional dimensions of domestic climate policy and a post-2015 international climate policy regime. The Project is directed by Robert N. Stavins, Albert Pratt Professor of Business and Government, Harvard Kennedy School.
- Topic:
- Climate Change, Economics, Energy Policy, Industrial Policy, International Cooperation, and Treaties and Agreements
- Political Geography:
- United States, Japan, China, Europe, and India
95. Financial Services and the Transatlantic Trade and Investment Partnership
- Author:
- Karel Lannoo
- Publication Date:
- 11-2013
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- It is still an unresolved question whether a process for financial services regulatory cooperation and convergence will be included in the Transatlantic Trade and Investment Partnership (TTIP).From a n end-user's perspective, it could be argued that its inclusion could be an opportunity not only as regards product choice, but also to improve the consumer or investor protection regulatory environment on both sides of the Atlantic. The inclusion would also be in line with the assessments made by both the EU and the US that the G-20 agenda has been incorporated in local legislation and that both regimes are thus 'equivalent'.
- Topic:
- Economics, International Trade and Finance, and Markets
- Political Geography:
- United States and Europe
96. Turkish and Iranian interests and policies in the South Caucasus
- Author:
- Evanthia Balla
- Publication Date:
- 04-2013
- Content Type:
- Policy Brief
- Institution:
- Norwegian Centre for Conflict Resolution
- Abstract:
- The South Caucasus, situated as it is at the crossroads of Eurasia's major energy and transport corridors, continues to play a vital role in the world's security affairs. After the end of the cold war the South Caucasus emerged as a key region in the geopolitical contest among regional and global powers. The South Caucasus states of Armenia, Azerbaijan and Georgia are constantly performing a balancing act in their relations with the U.S., Russia, Turkey and Iran. Armenia has developed strong political and economic ties with Iran in order to counter the Turkish-Azerbaijani axis. Azerbaijan seeks to reinforce its links with the West, especially the U.S., as its main extraregional source of diplomatic and economic support, while it remains cautious towards both Russian and Iranian ambitions in the region. Especially after the 2008 war with Russia and the loss of its provinces of Abkhazia and South Ossetia, Georgia has reinforced its links to Western powers and structures while strengthening its ties with Turkey. Both Turkey and Iran are trying to increase their influence in the region, while promoting their national interests in the international arena.
- Topic:
- Foreign Policy, Diplomacy, Economics, Islam, and Power Politics
- Political Geography:
- Russia, United States, Turkey, and Middle East
97. How to Promote International Religious Freedom
- Publication Date:
- 12-2012
- Content Type:
- Policy Brief
- Institution:
- Human Rights First
- Abstract:
- President Obama's 2009 Cairo speech and Secretary Clinton's 2012 speech at the Carnegie Endowment for International Peace persuasively argued for policies that promote international religious freedom (IRF), including links to national security, economic development, and democracy promotion, and as an antidote to religious extremism and terrorism. Unfortunately, current IRF policy--in place since 1998 and largely built around the threat of economic sanctions which no administration has been willing to use--is not up to the challenges or the opportunities that President Obama and Secretary Clinton so eloquently identified. To correct that, the White House needs to embrace a leadership role, building an infrastructure and providing the necessary resources for a reinvigorated policy of new tools and strategies to thrive. The need is pressing.
- Topic:
- Security, Democratization, Economics, Religion, and Terrorism
- Political Geography:
- United States
98. How to Protect and Expand Internet Freedom
- Publication Date:
- 12-2012
- Content Type:
- Policy Brief
- Institution:
- Human Rights First
- Abstract:
- The rapid development of the Internet presents profound opportunities and challenges for U.S. interests around the world, particularly around the promotion and protection of human rights. The Internet is the steward of our economic, social, and political activity, but clearly the Internet itself is not the advocate for its possibilities: governments are. How the U.S. government organizes itself and collaborates with the businesses in the information and communication technology (ICT) sector to create policies and priorities for the Internet will set the foundation of whether the Information Age will be a success story for human rights.
- Topic:
- Economics, Human Rights, Science and Technology, International Affairs, and Communications
- Political Geography:
- United States
99. Reshaping the Security Order in Asia-Pacific
- Author:
- Alain Guidetti
- Publication Date:
- 11-2012
- Content Type:
- Policy Brief
- Institution:
- The Geneva Centre for Security Policy
- Abstract:
- The international strategic landscape is evolving at an unprecedented pace. The widespread assumption is that the global balance of power is shifting from the West to the East (and the South), as a consequence of the convergence of two variables: the sustained economic growth of China and Asia over recent decades, and the Western economic downturn since the 2008 global financial crisis. Though interpretations differ on the meaning and magnitude of this power shift, the prevailing assumption is that it reflects the weakness, and for some the relative decline, of the US and the West against Asia's and primarily China's strong rise. The implications of these developments across the Asia-Pacific are deep and have already led to growing strategic competition between Beijing and Washington for preeminence over the Asia-Pacific and new uncertainties over global and regional governance.
- Topic:
- Economics, Human Rights, and Financial Crisis
- Political Geography:
- United States, China, Washington, Beijing, Asia, Australia, and Asia-Pacific
100. A new economic nationalism? Lessons from the PotashCorp decision in Canada
- Author:
- Sandy Walker
- Publication Date:
- 08-2012
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In its World Investment Report 2011, UNCTAD reported that liberalizing investment policy measures taken globally in 2010 outnumbered restrictive measures. Without the benefit of statistics, investors might have drawn the opposite conclusion, witnessing what appears to be a rising tide of national resistance to foreign takeovers: the Australian Foreign Investment Review Board's rejection of a takeover of the Australian Securities Exchange by the Singapore Exchange, Italian concern over a French company's takeover of dairy giant Parmalat and the US Government's requirement that Chinese company Huawei divest certain assets it had acquired from 3Leaf.
- Topic:
- Economics, International Trade and Finance, Markets, and Foreign Direct Investment
- Political Geography:
- United States, China, Canada, Australia, and Singapore