Christian Manrique: 5 Country Risk Keys

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Christian Manrique’s new post

Christian Manrique unveils in this new post five country risk key performance indicators that any investor should keep in mind when selecting the most advantageous option among different possibilities.

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Christian Manrique, 5 Worst Economies to Do Business

Christian Manrique’s new video post

Christian Manrique unveils the five worst economies to do business with

CHRISTIAN MANRIQUE TOP 30 COUNTRIES FOR DOING BUSINESS

CHRISTIAN MANRIQUE NEW INFOGRAPHIC 

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Happy #FourthofJuly, Mr Trump

A Fourth of July celebration without fireworks is not a Fourth of July and North Korea’s ruler, Kim Jong-Un, seemed to think this way early in the morning, but with a slight different idea of fun. As North Korea regime threatens the USA on July 4, US Independence Day, testing a missile ‘capable of reaching Alaska’ a new a deliberate snub to President Trump adds to their bilateral relations. This nonsense will increase the sense of military crisis in east Asia, an issue I originally wrote about in Spanish on this post a few months ago, analyzing the relation between Putin and Trump. (Actually, the words that follow after this first paragraph are a translation initially entitled ‘Putin and Trump’s World 3’).

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#Makeourplanetgreatagain by Christian Manrique

Post by Christian Manrique

As the US withdraws from the Climate Change Paris Agreement, the world enters a new era of uncertainty about a better future for all. The worst predictions about Donald Trump’s presidency and new policies seem to become realities and therefore rough times are ahead of us, maybe for the next four years, perhaps eight, until he is either removed or finishes his mandate or mandates. He might be the dimmest President the US has ever had. The US is missing the target on Climate Change. Nonetheless, this is not a crisis, it’s just a setback and it can be fixed. Information has become essential for citizens. I’m trying to contribute here with these lines to spread light.

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Putin and Trump’s World (1)

Christian Manrique Valdor’s post

“Welcome to my world/ Won’t you come on in/ Miracles, I guess/ Still happen now and then/ Step into my heart/ Leave your cares behind/ Welcome to my world/ Built with you in mind/ Knock and the door shall be open…” Well, maybe, there is a slight chance, as Elvis Presley lyrics illustrate, to have and understanding between Putin and Trump, though the situation is quite tough right now.

Russia: relations with the new USA Administration

 

If the new American Administration, under Trump’s leadership, is able to accomplish its electoral promises, we shall get ready to manage huge social, political and economic changes. This situation will come up with a new situation never seen since World War Two. Vladimir Putin’s Russia might profit from this, seeing an opportunity to regain part of its geopolitical hegemony, no matter where the White House might draw the red lines of this relation, today ambiguous and out of focus. On the other hand, this situation can also generate global risks, creating a fall on world trade due to protectionist measures affecting all economies.

Trump’s slogan “Make America Great Again” has got an important social, political and economic slope. His two main electoral promises were these: economic nationalism defence and trade protectionism; in the diplomatic field laid regaining Russia relations. He has started to work on the first goal and, so far, it has affected free trade agreements. The second goal is becoming controversial in USA domestic politics. It’s becoming more real through Syria’s situation, counter terrorism and trying to change NATO’s role.

Regaining influence

The general trend about relations between Russia and the USA has been instability, as well as, mutual accusations, lack of trust and mutual respect, which has been increasing for the last years. Had both countries found a common space for understanding, their relations would have been different, despite USA’s polarization and Trump’s Administration instability. There is still chance for improvement. On this, Russian Government expects international sanctions to lift, respect to its Syrian interests and recognition of its influence in its western ex-soviet landmarks, against NATO and EU interests. Russia’s preferences are of a more Euro-Asiatic kind, its priorities economic and geopolitical, therefore its aim is a geopolitical equality among the USA, Russia and China. This is quite similar to the cold war situation held until the USSR collapse in 1991. Under these circumstances, China is a player that must be taken into consideration.

In the February meeting between the Russian and the USA secretaries of State, Serguéi Lavrov and Rex Tillerson, different issues were on the agenda and red lines were drawn as well: the Minsk Agreement fulfillment, cooperation between both countries if it had benefits for the USA interests and the fight against ISIS, though without military cooperation. From the Kremlin’s point of view this doesn’t look as what Russia understands as an improvement between both countries.

Russia will prefer a joint military action against ISIS in Syria. This will imply USA’s Moscow recognition as an international and equal player. USA support to political reassurance in Syria will be seen as a good gesture by Moscow. Nevertheless, Russia seems to be focused on its own Middle East strategies, oriented towards its own goals, as is going on with Iran, whose Putin’s aims differ greatly from Trump’s.

USA’s Press Secretary statements, pointing out that Crimea should go back to Ukraine, as well as Michael Flynn’s resignation as National Security Advisor, close to Russia, break any possible paths and makes Russia feel more excluded and harassed, specifically by the EU and the NATO, as Russians claim. Besides all these issues that have to be taken into account, the Kremlin follows with expectations the evolution of their relations seeking for an improvement or, at least, normalization. The Western World deceived Russia as a role model after USSR collapsed in the early nineties. Nowadays Russia hopes the situation with Trump will not be repeated, expecting he will help the country to overcome international conflicts and to regain its influence.

Encouraging Value Added Exports

Christian Manrique’s new post

As the IMF WEO (World Economic Outlook) report points out, after a lackluster outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging markets and developing economies. But let’s analyze 2016 activity. Economic growth was estimated in 3.1%. Nevertheless, World Trade Organization stated that world trade would be around 1.7% below world economic growth. In fact, this has been quite remarkable, as world trade, for the last fifteen years, hasn’t grown below economic rhythm.

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Economic Tectonics

Christian Manrique’s post

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Saint Andreas Fault

Besides forecasts by world organizations, the only certainty is that global economy is entering a laterality phase, which leads towards stagnation. Things will move again whenever the light comes back to show the path for the challenges the economy is facing today. This will take quite a long time, though.

Global context

On one side there are oil prices, fewer regulatory barriers and tax incentives. On the other side there are Brexit, China deceleration (probably under 6%) and low economic growth for commodities exporting countries, specially within Latin America). All these factors belong to the specific equation that turn economic growth a complete uncertainty.

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Trump and Putin’s new economy

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Donald Trump and Vladimir Putin. Source: NBCnews

“It’s the economy, stupid”. This sentence, coined during Bill Clinton’s successful presidential campaign, defines perfectly the scenarios that Donald Trump, as well as Vladimir Putin, will have to face on their own and as “preferred partners” for international affairs. Last events, like Michael Flynn’s resignation as security adviser for the White House, might appear, though it is quite blurry, as favoring the Kremlin. This political decision, Flynn’s ouster, comes after what it has been considered, for some informed sources, as a plot trying to undermine Obama’s policy by promising, through secret negotiations between Trump’s team and Moscow, removing sanctions on Russia. But what the whole situation really implies is that economy and money move the world, always. On this post, I give some tips about the Empire that Trump, as well as Putin, are trying to build.

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2017: NEW ECONOMIC RECESSION

United States

The United States Federal Reserve, although slowly, has started to rise interest rate. Increasing interest rates will become a reality.

On the other hand, the current expansive economic cycle is coming to an end, comparing it to the historic amount of time of other cycles within the country.

The CDS rate have gone up, this indicating high probability of financial default. This comes along with decreasing companies’ benefits, as well as inter-annual production rate, and CAPEX stagnation.

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Commodities

Commodities fares have had more than four years on the roll going down not only in emerging countries, but in developed ones as well.

Baltic Dry Index, although it cannot be linked to economy’s behavior, it is a very good indicator in times of economic upheavals, converging with world trade CPB index, right now is in 2012 rates.

On the other hand, Harpex Index is in 2009 rates, showing that situation is decelerating.

Singapore and China

In 2008, Singapore was the first world economy to announce its recession. Currently, that economy is decelerating, like global trade is doing, if its GDP is taken into account.

China’s stagnation is slowing down global growth. Commodities fares fall (with subsequent economic slowdown within commodities producing and exporting countries) and developed countries imports fall, along with China’s growth model change, is giving this stagnation. Its debt’s increase must also be added.

Forecast and solutions

In previous posts, Global Economy in 2020 and 2016: Uncertainty and Economic Deceleration, an analysis about a set of key facts that are taking place was made.

All analyzed factors previously seem to be indicating that the two most powerful economies, USA and China, are decelerating and suffering stagnation, one more conscious about it and another one not at all.

This could lead towards an early recession of both economies, it could become contagious and lead towards a global recession.

In 2007, few were brave enough to point out about entering a 5+5 complicated cycle. 5 years of deep recession and 5 years of stagnation, with the development of new growth models, recovering sooner or later.

Taking these previous indicators into account, that needed and urgent decision hadn’t had all the required development and has not been largely implanted. Therefore, getting out of the crisis will take longer indicating that 2017 will not be a good year.

International organizations aim at lower global growth rates, indicating that until 2020 we will not be ready to create a growing scenario.

Some macro solutions:

  • China should accelerate its economic pattern change, to recover faster and grow within previous rates between 8% and 9%.
  • Developing countries should start urgently a new path towards growth models to improve and strengthen their productivity and competitiveness (the USA expects growth rates up to 2.3% between 2016-2020, but Russia will still be under recession with a -0.7%, improving towards 1% in consequent years).
  • Emerging countries should adopt a model and leave behind being so dependent on basic commodities, so they could turn around deceleration to empower those economies that are growing.
  • Geopolitical tensions should diminish.
  • Restrictive cycle, with interest rate risen by Federal Reserve, should not slowdown growth.

These questions to improve the plain scenario which are being faced have all a common central strategy based on innovation, education and technology.

These foundations will make possible to face the upcoming world and operate within the international scenario in a more competitive way. If this does not take place, recovery will just take longer.