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Fundamental Global Macro Manager
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  • Weaker Growth In Mexico Makes Reforms Critical

    Investors were flush with optimism for Mexico even before Enrique Pena Nieto was elected in July of last year. The promise of economic reforms to accelerate growth simply amplified the volume of capital that had already been pouring into Mexico in search of higher yields. Market observers (and economists) were also part of the Mexico euphoria. From November to April, there were very few audible notes of caution regarding Mexico's immediate economic outlook or the fully valued equities market.

    Mexico will undoubtedly benefit from several key structural advantages over the medium term, such as:

    1. A wage-adjusted highly productive labor force
    2. Close proximity to both the US and 'fast' growing South America
    3. Sound macro policies, the absence of capital account controls and highly liquid FX and sovereign debt markets.

    There are other factors, however, which introduce risks to stability:

    1. The amount of foreign portfolio inflows over recent years has been massive: investment increased by almost 80% during the last three years, from $200 billion at end-2009 to $355 billion in mid-2012.
    2. Financial markets have nearly fully anticipated passage of key legislation such as energy and tax reform which are both likely and necessary, but not guaranteed.
    3. Although Mexico has 12 free trade agreements involving 44 countries (more than any country in the world), it is still primarily reliant on its US links.
    4. Mexico's productive capacity is heavily weighted toward auto manufacturing--one of the most cyclical industries on the planet.

    Please review Dashboard - Mexico in which we analyze the recent economic trends in Mexico and their impact on broader activity: Dashboard - Mexico (Fall 2013)

    Disclosure: I am long MXNS.

    Oct 14 2:08 AM | Link | Comment!
  • The Eurozone Escapes The Clutches Of The Great Recession....Finally!

    It was bound to happen sooner or later...Europe finally returns to growth. Here, we present the notes to our recent Open Market-Eurozone podcast in which we discuss the impact of the turn-around on portfolio strategy.

    Iron Harbor Open Market - Eurozone Podcast

    Disclosure: I am long FEZ, ITLY.

    Aug 13 11:35 AM | Link | Comment!
  • Canada's Uncertain Road Ahead

    Canada is struggling to maintain economic momentum now that the key drivers of the recovery (household consumption, residential investment and exports) are turning lower.

    To make matters worse, the Canadian real-estate market appears to be overextended, with prices and construction activity divorced from the underlying fundamentals.

    The road ahead for Canada is choppy. Low inflation and retreating domestic demand make easier monetary policy appropriate in most situations. A booming real-estate market, however, makes further accommodation unlikely. At this point, Canada's only option is to be patient and wait.

    Please review our Dashboard-Canada in which we analyze the recent economic trends in Canada and their impact on broader activity.

    Jul 22 2:15 PM | Link | Comment!
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