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Econ Grapher currently publishes the Econ Grapher blog. He previously worked in markets, trading, investment management, and corporate strategy. He has also set up two internet research businesses in stock research and economic research.
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  • Investment Ideas follow up - Exchange sector
    Just thought I'd do a quick follow up to my Asia-Pac exchanges article.

    For those interested in the sector more generally, here's some resources. The chart below is from the November FTSE Mondo Visione Exchanges Index Monthly Analysis report (here). It shows the index as well as som key events in the exchange sector.

    Also from the report is the table below which shows the constituents, their country of listing, market capitalisation, and some performance figures. This is useful for drilling into index performance and forms a quick way of finding the major listed exchanges (there are a handful of other smaller ones).

    Constituents of the FTSE Mondovisione Exchanges Index

    Mondovisione is also useful as a news source on the exchange sector. Another very useful website on the exchange sector is the World Federation of Exchanges website. This is useful for getting just about any exchange statistic you want, and can actually be quite handy for general financial market/economic research.

    Hope this helps.

    Disclosure: "No positions"
    Jan 06 12:28 PM | Link | Comment!
  • Canada Data Added to Article: "Developed Economies: Fiscally Sustainable?"

    A commenter on Seeking Alpha pointed out the omission of Canada as being unfortunate given the example that it sets in terms of sustaining a surplus and showing fiscal discipline. To see the article on Seeking Alpha go here:

    The purpose of this article was to point to the key risk areas and inform strategy. But the comments are worthy of thought and I include the charts below with the Canada data added:

    Chart 3. Fiscal Balances (G7)

    Chart 5. Spending/Borrowing Gap

    Canada: Fiscal Balance (IMF Data)

    This chart shows that Canada has broadly speaking run surpluses through the better part of the past decade. IMF forecasts are for a significant turnaround to deficits (likely driven by implications of the recession/crisis). The impact on Canadian government borrowing can be seen in the next chart...

    Canada: Government Borrowings (IMF Data)

    Unsurprisingly Canada's government debt peaked around the time that it started generating fiscal surpluses, and since then has been on a steady downward track.

    Ultimately the other developed economies probably want to find themselves on a similar path - and to a certain extent the borrowings/deficits will be somewhat self limiting in that at a certain arbitrary threshold it will become a hot political issue - then doing the right thing will become fashionable and there may be some short-medium term action towards it. Ultimately also market forces will weigh in on fiscal profligacy!

    Originally published here:

    Disclosure: "No positions"
    Dec 30 4:33 PM | Link | Comment!
  • Econ Grapher's Top 5 Graphs of the Week
    Econ Grapher's Top 5 Graphs of the Week.

    This week the focus is on monetary policy. Over the past week we saw four central banks hold interest rates steady (UK 0.5%, Canada 0.25%, South Korea 2.00%, New Zealand 2.5%)... Pretty much all well below their "neutral" levels. UK also kept its asset purchase plan unchanged at GBP 175 billion. The Chinese also released their key monthly economic metrics, including - in mon pol context - inflation (deflation) and money supply growth. The reason for focusing on monetary policy is two-fold: 1. There were a few interesting releases in this area, and 2. It's worth contemplating the impact of globally unprecedented loose monetary conditions both on the recovery and the bit that comes after the recovery...

    1. Central Bank Balance Sheets
    I took this chart from the OECD economic outlook update, simply because it stuck out to me (though not surprising). It charts the balance sheets of the central banks of the US, Japan, and Euro Area. It shows a drastic build up in US and EU, which is somewhat justified given that the financial markets froze up around that time, and it has gone someway into thawing them out. Questions this raises I think are: what are the next steps? How does it get unwound? What are the unintended consequences or side-effects of these measures?

    2. China Money Supply
    It's no secret that banks in China are lending like there's no tomorrow, and that monetary conditions are purposefully loose to match the large fiscal stimulus package. So too then can we see a marked up-tick in the growth of money supply. I'm interested in the implications of this in terms of asset price speculation and inflationary pressures (which leads to the next chart).

    3. China Inflation
    Inflation in China has been driven hard by the commodities boom and bust. With both the crash of commodity prices and the global recession China has seen a few months of deflation. The August figure of -1.2% was less than -1.8% in July (dis-deflation?), which paired with hyper-stimulatory conditions could certainly herald a bottoming out of deflation/inflation in China. If pinned down, considering the large fiscal and monetary stimulus in China, I would pick that this will start moving upwards soon - and that the Chinese authorities may be hard pressed to do anything about it given the socio-political need to avoid the risk of a down economy (if winding back stimulus).

    4. BoE Monetary Policy
    The UK's Bank of England kept both it's key rate, 0.5%, and Asset Purchase Plan, GBP 175 bil, unchanged this time after keeping the rate steady last time and increasing the purchase plan last time (when the governor apparently wanted a larger increase to it). The UK probably needs this, and more if possible, given how hard it has been hit and the structural nature of its recession.

    5. RBNZ Monetary Policy
    The land of the Kiwis left their interest rate unchanged again at 2.5% after dropping it from around 8%. The statement pointed towards it remaining unchanged until mid 2010, given that the country is still in recession and that its currency is often targeted by carry traders it's probably a good thing for the export-reliant island-nation. The next move is probably up for this country and probably later rather than sooner (in spite of arguments for a decrease to try pull the currency down).

    -Econ Grapher

    1. OECD Interim Assessment:
    2. People's Bank of China
    3. National Bureau of Statistics
    4. Bank of England
    5. Reserve Bank of New Zealand:
    Sep 13 2:19 AM | Link | Comment!
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