Diamond News Archives

As the International Monetary Fund prepares to reveal its semi-annual health check of the world economy this week, the noises coming from the Washington-based body of 189 countries are not as positive as they were six months ago. Investors are believed to fear that global growth is now starting to stutter after 2017- 2018 saw the best acceleration since 2011.

Christine Lagarde told an audience in Hong Kong last week that the rules that underpin global trade were “in danger of being torn apart” by protectionist forces in what the IMF managing director said would be “an inexcusable, collective policy failure”.

She is most concerned over the tariffs on imported steel and aluminium which were then followed by US action specifically targeting China.

Alluding to the tariffs, Ms Lagarde warned that although “the current global picture is bright… we can see darker clouds looming.”

The IMF has fired warning after warning in the 16 months since Donald Trump won the US presidency. However, over the past three months President Trump has started to act on his tough talk and Ms Lagarde is worried that Washington and Beijing will spark a trade war that triggers a global protectionist culture not seen since the 1930s.

Speaking at the University of Hong Kong, Ms Lagarde warned of the rapid rise in public and private debt around the world and the prospects of a trade war.

She said: “The multilateral trade system has transformed our world over the past generation. But that system of rules and shared responsibility is now in danger of being torn apart."

The IMF’s view is supported by a new tracking index compiled by the Brookings Institution think-tank and the Financial Times.

After a spell of...

Please join Greg Hunter as he goes One-on-One with financial expert David Stockman.

What Stockman sees is deflation, depression and financial Armageddon. Stockman says, “In the bond market, I don’t know any other way to describe it. . . . It’s uncharted territory, and we have never been here before. . . . The house of cards is so shaky and so fragile right now that there is the risk of the proverbial black swan event.  We don’t see something coming.  It shocks the system.  It triggers a panic, and the panic soon envelops itself and descends into some sort of doom loop.  That could very easily happen.”

Stockman says, “Gold and silver are the only safe investments to have . . . you can’t be safe in the stock market, and you can’t be safe in the bond market.”...

I love the memory failure of American investors where they always seem to forget about prior bubble bursts and bad behaviors by government. Like we are forgetting about Russia’s debt default and devaluation of 1998.

(Bloomberg) — The popularity of Russian bonds among foreign investors might seem to make them vulnerable if U.S. sanctions force a mass exodus. For the besieged nation’s debt chief, it’s Russia’s best insurance against any future penalties.

“Perhaps if our market were more isolated, the likelihood of sanctions on government debt would have been higher,” Konstantin Vyshkovsky, the head of the Finance Ministry’s debt department, said in an interview. “The latest events confirm it was correct to choose a plan several years ago to integrate the Russian market into the international one.”

For now, it’s a view largely shared by the U.S.

The Treasury Department has recommended not pursuing the so-called nuclear option of targeting sovereign securities because that would be too damaging to U.S. investors. Foreigners owned a record 34 percent of Russia’s outstanding ruble debt before a rout sent the bonds to their worst week in more than a year. Investors offloaded long positions on concern that the harshest U.S. sanctions to date leave all assets vulnerable.

The U.S. extended penalties on April 6 to include swathes of oligarchs and firms connected to the Russian state, barring investors from holding securities of such major public companies as United Co. Rusal. BlackRock Inc., Stone Harbor Investment Partners and JPMorgan Chase & Co. are the three biggest holders of ruble debt with investments totaling about $4.9 billion, according to data compiled by Bloomberg.

A veteran Russian strategist warns against buying Russian stocks are the selloff.

And the Russian Ruble is … rumbling?^[1]

Why? Well, it isn’t the first time that Russia...

TOKYO (Reuters) - The Bank of Japan can heighten inflation expectations by patiently maintaining its ultra-easy policy, deputy governor Masazumi Wakatabe said, in a sign the reflationist-minded newcomer won’t call for additional stimulus any time soon.

Wakatabe also said he was mindful that the risks of prolonged easing, such as the damage that years of low rates inflict on financial institutions’ profits, could accumulate.

“The merits and demerits of the BOJ’s monetary policy change over time,” Wakatabe told parliament on Monday.

“We need to be mindful of the danger, or risk, a prolonged low-interest rate environment would weigh on bank profits and that such impact could accumulate,” he said.

A former academic known as a vocal advocate of aggressive easing, Wakatabe had said in the past that the BOJ should act as consumer prices were not rising quickly enough.

That has led some analysts to speculate that Wakatabe, who joined the BOJ board last month, could propose ramping up stimulus in coming months.

During Monday’s appearance, however, Wakatabe said the BOJ’s current easing has already brought many benefits to the economy, such as creating jobs.

“Inflation has yet to reach our 2 percent target but price growth is on an upward trend,” Wakatabe said.

“By patiently maintaining our current policy, we can heighten inflation expectations” that will lead to a natural increase in longer-term rates, he said.

Wakatabe said the BOJ had the tools to either expand and dial back stimulus, brushing...