user bar first menu

Boeckh Investment Letter

Investment and economic commentary by J.Anthony Boeckh and Robert Boeckh

Global Tensions and the Market Correction

The G20 meeting in Seoul has highlighted the intractable divisions between surplus and deficit nations. As the closing communiqué so bluntly put it,  “uneven growth and widening imbalances are fuelling the temptation to diverge from global solutions into uncoordinated actions (i.e. QE2 in the U.S. and currency manipulation by China). Uncoordinated policy actions will only lead to worse outcomes for all.”

An amicable resolution to these problems is about as unlikely as a return to the gold standard. Nevertheless, limited rebalancing of the global economy is occurring. The question is, will it be enough to head-off a damaging currency and trade war and support Europe during its restructuring? Already, excess dollar liquidity in China resulting from its dollar purchases to hold the RMB down artificially has pushed China’s inflation rate up to 4 ½% (much higher in key urban areas) and triggered global fears of the consequences of  a tightening of China’s monetary policy (Charts 1-3).

....Download report to read more....