On November 30, the 21st Conference of Parties (COP21) started in Paris. After almost 20 years of climate talks, it is hoped that the international community will finally agree concerted action to tackle climate change. A good COP21 will mean that the Sustainable Development Goals are taken more seriously.
Marc Chandler via Caixin | It is official. The yuan will be included in the International Monetary Fund’s special drawing rights (SDR). The 10.4 percent share is a bit more than I expected, but less than the 14 to 16 percent the IMF’s staff intimated a few months ago. This is a significant event, even if there is no short-term market opportunity.
The election of Mauricio Macri, the candidate for the Cambiemos (Let’s Change) coalition, as president has been welcomed as a potential turning point in Argentina’s financial, political and foreign policy outlooks. The country’s economic performance has been overshadowed by high inflation and isolation from global capital markets, and planned reforms will likely boost its exports and could accelerate investment in areas such as infrastructure and the nascent shale gas sector.
Huo Kan and Wu Hongyuran via Caixin | China’s banks are successfully managing 1.92 trillion yuan worth of non-performing loans, but tomorrow could bring a flood of bad debt.
BARCLAYS | We believe a further expansion in ECB QE will only have regional, and overall limited , effects on EM. Extending the discussion to the effect of BoJ QE, we come to similar conclusions.
Banks have made a massive effort to increase their solvency by sharply reducing risk exposure and boosting their own resources. They face rough times ahead as plummeting interest rates and profits leave them little room for comfort. Some big players, such as Deutsche Bank, have suffered huge losses while others struggle to keep pace faced with an adverse outlook.
BARCLAYS | In our view, achieving the FOMC’s target of 2% PCE inflation may require a substantial undershoot on the unemployment rate ( to 4% if not below ). Should the unemployment rate remain near current levels or should inflation expectations drift lower, the FOMC would be unlikely to hit its inflation target over the foreseeable future.
The main global central bankers have conveyed reassuring market-friendly messages following their last meetings. The Fed pictured a rosy outlook of home growth and employment paving the way for a moderate rate rise in December. The ECB on its side signalled its firm commitment to conduct a more flexible and accommodative policy by strengthening its QE stance. Yet good news is failing to stiffen market sentiment.
BARCLAYS | The Conference of the Parties (COP-21), the annual meeting of all countries which want to take action for the climate, will take place in Paris from 30 November to 11 December. There are reasons to think the summit can deliver a strong outcome and also reasons to be sceptical.
Craig Moran | Territorial spats between China and its Southeast Asian neighbors over Beijing’s infamous “nine-dash line” dotted across the South China Sea have substantially soured the mood of its allies.