Category Archives: investing

Why are equities, gold, and the dollar surging?

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July 30, 2024 — The US stock market is on a tear.  Since the start of this year, January 2024, the Dow Jones , S&P 500, and NASDAQ have each repeatedly set new all-time records.  Indeed, the trend in stocks has been strongly upward for the last two or three years.   For instance, the S & P 500 is about 40 % above where it was  in January 2021, when Joe Biden became President [43 % higher].

The price of gold has also shown a strong upward trend, reaching $2,470 an ounce on July 17, the highest in history.  Why are these assets so elevated? read more

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The End of Zero Interest Rates?

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August 14, 2023 — What a difference a year makes!  In 2021, interest rates were close to zero in the US and the UK,  and slightly negative in the eurozone and Japan.  They were expected to remain low indefinitely.  Remarkably, as recently as January 2022, investors thought that the probability the interest rate would rise above 4.0 % within 5 years was only 12% in the US, 4 % for the euro-zone, and 7 % for the UK [p.45].  Those were short-term nominal interest rates.  Correcting for expected inflation, real interest rates were substantially negative and expected to remain so. read more

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Restructuring the Debt of African Commodity-Exporters

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April 28, 2023 —  An estimated 61 countries are currently in debt distress or at risk of it, which is almost one third of the membership of the IMF [32% of 190].  The G20’s Common Framework for Debt Treatment is supposed to facilitate debt restructuring for low-income countries.  But it has made only slow progress.

Many of these countries are in Africa.  Chad restructured its debt in 2021, the first to do so under the Common Framework. Zambia defaulted on its foreign debt in 2020, but has so far been unsuccessful in getting its creditors to agree on how to restructure its debt.  Reluctance of China to participate with other creditors in the traditional Paris Club process is a particular problem in the Zambian case.  Ghana, which defaulted on its external debt in December 2022, has apparently been better able to move forward with restructuring.  Rescheduling of the terms of Ethiopia’s debt was delayed by civil war, but may move forward now.  Angola received 3-year debt relief in September 2020, but remains in trouble. read more

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