Armada Intelligence » Global

What Options Does Draghi Have? $

karen — Wed, 01 May 2013 17:59:12 +0000

The meeting of the European Central Bank is taking place this week and the majority of analysts are in unusual agreement. They all concur that Draghi and the ECB governors as a whole have no real options left. It is pretty easy to see why the head of the German Bundesbank – Axel Weber – abruptly refused to accept the position and deferred to Draghi a few years ago. Who would want this job right now?

The real economy of Europe is in tatters. The unemployment rate in Spain is nearly 30% and France is now over 11%. The whole of the Eurozone is in recession and the chances for recovery in places like Spain, Greece and Italy may be decades away. The ECB is being pushed to reduce rates but nobody

IMF Adjusts Global Growth Forecast $

karen — Wed, 17 Apr 2013 14:29:17 +0000

Not surprisingly, the IMF has followed the lead of other international economic forecast groups in moving global GDP forecasts downward for 2013. Part of the drive is that we are ending the first quarter – and finally have a barometer of how various key markets are trending. So, an adjustment of some kind is normal, and it is not surprising that it went down a bit.

The IMF dropped the global GDP forecast from 3.5% to 3.3%. That might not sound significant, but

Three Global Trends that Will Hurt the US $

karen — Fri, 12 Apr 2013 19:32:38 +0000

It comes as no shock but the US is really a global economy now. To some extent it always has been but in the last ten to twenty years the economy has become ever more dependent on the export sector. That has been a good thing for the most part and the improvement in the US trade deficit is a testament to this. There are some negatives associated with that tendency as well. The US is far more sensitive to the economic activity in

When Does the Crackdown Start? $

karen — Fri, 12 Apr 2013 19:12:35 +0000

A few years ago the most arresting concept in the People’s Republic of China was that “to get rich is beautiful”. After decades of those little blue Mao suits, reeducation camps for the “capitalists” and a single minded effort to create the people’s state China reversed course and elected to become a nation of wealth and power. Many in the younger generation of Chinese have taken to this new mantra with all the enthusiasm that their elders saved for the little red book of their dear leader. How long will this Chinese brand of ostentation last?

As bold and brazen as the rich can get in the US or Europe they are no worse than the newly enriched Chinese. The young take pictures of their bank account and send them to friends and acquaintances alike. There is a never ending desire

Mexican Industrial Production Falls in February $

karen — Fri, 12 Apr 2013 18:16:56 +0000

In a report that surprised analysts, Mexican Industrial Output fell by 1.2%. This figure is an annualized estimate – and reverses what was a 1.7% increase seen in last month’s report.

Analysts are connecting this drop in the IPI to a slower global demand rate for products – and not the attractiveness of Mexico as a sourcing market. Companies are still increasing their production in Mexico as a whole – but the domestic

Fallout From Cyprus – Weaker Euro $

karen — Fri, 29 Mar 2013 19:03:35 +0000

This certainly comes as no shock but the mess in Cyprus has had some profound implications for the euro. It has been falling against the dollar, pound and yen and most of the currency traders are convinced that the decline is far from over. The decision to assess the large depositors a hefty fee made have made perfect sense to those rescuers that did not want to be on the hook for Cypriot sins but it certainly sets a precedent that will worry anyone with money in European banks. In case of another crisis the standard is now set – just raid the accounts of those holding large sums in Europe’s banks. A very good reason to take one’s money elsewhere and in some other currency.

The Dutch head of the Eurogroup may never be allowed to speak in public again but he has withdrawn his ill-advised comment that the Cypriot bailout could well become a template for the rest of the region. That remark alone caused the euro to falter and had he not retracted it there would have been a major exit from the currency.

Beyond these problems there is the fact that the US economy is showing signs of recovery and that will

What is So Terrible About Tax Havens? $

karen — Fri, 29 Mar 2013 18:54:04 +0000

The meltdown of the Cypriot banks has dominated the headlines in Europe and the coverage of the situation usually says more about the reporter than it does about the crisis itself. The dominant view is that the two biggest banks in Cyprus fell apart because they have become nothing more than a money laundering outfit for Russian mobsters. The reality is that their role as havens for rich Russians was not what brought these banks low. They got in trouble for the same reason that Greek banks got in trouble. They bought a large amount of what turned out to be worthless bonds. The acquisition of Greek bonds saddled the banks and

Dealing with “Showrooming” – Aussie Style $

karen — Thu, 28 Mar 2013 19:05:39 +0000

You may have already seen this – it’s making most media outlets today. But an Australian store is dealing with showrooming (the process of using a brick-and-mortar retail store to shop – and then purchase those items online elsewhere) in an extreme way. The store will charge customers a $5 “just browsing” fee. If a customer makes a purchase, they will deduct the $5 fee from their purchases.

Showrooming is a big problem for the brick-and-mortar retail segment. Just ask Best Buy and others about

Egypt, Port Said, and the Suez $

karen — Sun, 10 Mar 2013 01:09:31 +0000

Port Said sits on the Suez Canal and it provides a key link for crude oil and shipments that move through the venerable “tight” canal region.

Friday, military forces under the control of the Muslim Brotherhood led government of Egypt took over control of security for the port city. Police essentially have withdrawn after weeks of violent protests. Police have used strong arm tactics to try and put down protests in the cities that have turned violent – resulting in the shutdown of most businesses in the city. Today, army tanks and military equipment are replacing police to help control riots in the city.

What seems to be interesting is that the arrival of Muslim-led military commanders have helped pull a little of the speculation trade off of Brent North Sea Crude – for now. Unrest so close to the critical Suez Canal had added

French Unemployment Rises to 10.6% $

karen — Sat, 09 Mar 2013 00:25:23 +0000

We can forget some of the positive banter coming out of the ECB and others about how much better the Eurozone economy is getting. One of the headlines we saw out of the French press was that “France has yet to hit bottom – under Hollande“. Remember when the Socialist President imposed the wealth tax? And prominent rich French left the country? Remember also when Hollande reassured the public that this was the correct policy, that businesses would absorb the tax increases and do their “patriotic duty”, and that the job creation in the country would improve as a result of this government action? Well, we got the unemployment rate report today – and it was dismal.

The Unemployment rate in February moved up to 10.3% from 10% in January. Unemployment is now higher than it has been at any time since 1999 – that includes the period during which we went through the “Great Recession”. Because of France’s Socialist Government and years of worker protections, it is nearly impossible to fire a French worker and work rules are not flexible. Companies have simply left the country. And now that Hollande realizes that