Week of January 29
BRAZIL POLITICS · Report · 29 Jan 2018

While the Constitution states that congressional work resumes on February 2, Senate President Eunício Oliveira has extended the recess through February 5. Two new presidential election polls (Ipsos and Datafolha) will be released this week. The government is expected to draft a decree on the budg...

The Monetary Council is expected to be more or less passive at tomorrow's meeting
HUNGARY · In Brief · 29 Jan 2018

The Monetary Council is scheduled to hold a rate-setting meeting tomorrow (January 30). Analysts unanimously expect the Council to leave interest rates untouched, and to do or say little new in general on this occasion. The widespread analyst expectation appears to be that the MNB is going to rem...

Economics: Mixed labor and industrial indicators amidst a structural side to a rising homicide rate
MEXICO · Report · 29 Jan 2018

Economic data over the past month shows that industrial activity slowed again in November by falling slightly on a sequential basis, and by an annual 1.6%, as growth in manufacturing and utilities were not enough to offset the continuing contraction in mining and construction. The picture is m...

Favorable international scenario
BRAZIL ECONOMICS · Report · 29 Jan 2018

The causes of Brazil’s fiscal crisis and weak economic growth are exclusively domestic. Only structural reforms can avoid further unsustainable growth of the public debt and maintain the rising confidence and low real interest rates. While waiting for these reforms, however, the Brazilian economy...

Pessimism notwithstanding, growth picks up
CHINA · Report · 29 Jan 2018

Growth was robust and stable throughout 2017, even as fixed asset investment and consumption kept weakening. Exports rose, after two years of decline. Producer prices were elevated, while CPI showed little volatility. Monetary policy returned to moderately neutral levels, from its previous tight ...

Continuity ++
PHILIPPINES · Report · 28 Jan 2018

​His job was going to be “the most important appointment” that President Rodrigo Duterte was going to make.That was what Finance Secretary Carlos Dominguez told the President, who was then less than a year in office, about his upcoming choice for the next governor of the Bangko Sentral ng Pilipin...

Enjoy it while it lasts
TURKEY · Report · 28 Jan 2018

The politics section of the Monthly advances the hypothesis that markets are underpricing Turkey’s political risk. In our heuristic approach, we assert that conventional measures of country risk, such as CDS spreads or TL option volatility are swamped by exuberant risk appetite, masking the long-...

The “Turkish Trilemma” and the Road to November 2019
TURKEY · Presentation · 26 Jan 2018

* On the global front, we have “growth euphoria”, with “synchronized” growth and “secular stagnation (possibly) morphing into secular expansion”? * But caution is advised -- sharp divergence between geopolitics and markets, long term productivity concerns, etc. Need to be watchful of, among oth...

Turkey Conference Call: Turkey in Syria: Understanding the bigger picture
TURKEY · Report · 26 Jan 2018

Afrin is just the start of Turkey's Syria ordeal. Why is Turkey in Afrin and what are the risks? How does "Operation Olive Branch" increase the potential for a US-Turkey clash, and what are the implications for the markets?

What to expect when you are expecting
CHILE · Report · 26 Jan 2018

Felipe Larraín is the future (and past) finance minister. During his previous term, asset-liability management was driven more by political — and to some extent populist — considerations than by economic rationale. Hopefully Larraín will not do the same thing he did at the beginning of the decade...

The high cost of political survival
PERU · Report · 25 Jan 2018

This administration has been thrust into permanent conflict, as its lack of a significant presence in Congress is forcing it to wrestle with a huge opposition. Though a motion to impeach President Pedro Pablo Kuczynski on the grounds of “permanent moral incapacity” failed, due to a fracture withi...

Prime rate up by 1.5 ppt to 16.0%
UKRAINE · In Brief · 25 Jan 2018

The Central bank increased prime rate by 1.5 ppt up to 16.0% from Jan 26. It was totally unexpected for the market: consensus was that prime rate will be unchanged. Such sharp increase in prime rate might mean that the Central bank sees inflation speeding up. Provisional estimates of January CPI ...

Once more on the MNB's interest rate swaps
HUNGARY · In Brief · 25 Jan 2018

Well, seems one can never be entirely up to date. Just as we were writing our previous note on the new interest rate swaps (MIRS) yesterday, the MNB put out a statement to announce an amendment of the rules. The amendment has to do with the with the sales procedure, and it came despite the fact t...

Brazil Politcs Conference Call: After the appeal - the next steps for Lula and the PT
BRAZIL POLITICS · Report · 25 Jan 2018

With former President Lula leading in the polls, the results of his sentence appeal will have strong repercussions on the country's electoral outlook. What choices will he have and how will they impact the country's politics going forward?

Trump-Erdogan phone summit: Lost in translation
TURKEY · In Brief · 25 Jan 2018 · 1 response

Turkish Forces, aided by Free Syrian Army (FSA) brigades are gradually encircling the Kurdish-majority Afrin province of Syria in Northwest. Clashes are getting fierce by the day with casualties mounting on both sides. Afrin invasion is only the beginning of Turkey’s long and arduous adventure in...