Second Set of Gray-Swan Shocks To Watch in 2018

Second Set of Gray-Swan Shocks To Watch in 2018

In my previous piece, I examined five gray swans that are already in view, but could fly in to roost in the year ahead. That’s the first half of the list of 10 ugly goslings that the Japanese investment bank Nomura sees as potential surprises in 2018.

Black swans are completely unexpected, and therefore can’t be predicted. Gray swans are a little different, neither hidden nor invisible, just largely ignored.

The investment bank has sought to identify situations that are a little out of the ordinary. We know that Donald Trump will be unpredictable — what he does is a known unknown. These birds fall into the camp of the unknown unknowns.

Here’s how cryptocurrencies, Bitcoin, house-price declines, war in the Middle East, oil prices and central banks may shock us in 2018.

Continue reading

5 Gray Swan Shocks On the Horizon In 2018

5 Gray Swan Shocks On the Horizon In 2018

The Japanese investment bank Nomura (NMR) has 10 “gray swans” to watch out for in 2018. Unlike their cousins the black swans, which simply pop out of nowhere and therefore can’t be predicted, gray swans aren’t hidden or invisible, just largely ignored. At our peril, it seems.

They are topics that aren’t widely discussed, the bank says — not the question of what to do over North Korea, or whether nationalists will triumph in the Italian elections.

I’ll tackle the first five in this story and revisit the gray-swan family by addressing the other five in a second piece.

Continue reading

Trump Takes on China in Trade, but Is Wrong With His Attack

Trump Takes on China in Trade, but Is Wrong With His Attack

U.S. President Donald Trump stood side by side with Chinese President Xi Jinping on Thursday, despite the fact that Trump continues to depict — wrongly — the China-U.S. trade relationship as toe-to-toe.

That relationship is “one-sided and unfair,” Trump said in a joint address in Beijing. There’s the “shockingly high” trade deficit to consider, he explained. There’s also the $300 billion in the theft of U.S. intellectual property and forced technology transfer that the United States suffers every year, per U.S. government figures.

Trump has, to be fair, delivered on this, the most-important trip of his presidency. He has conveyed more precisely in person his message that the United States is disadvantaged by its trade with China and Japan. He’s wrong, but he’s right to express himself so clearly when he previously fudged the point when meeting the leaders of those countries on home soil.

At least he won applause from the assembled Chinese and U.S. executives in attendance to hear the two leaders speak. It was for a back-handed compliment.

“I don’t blame China,” Trump conceded, pausing when clapping began. “Who can blame a country for being able to take advantage of another country for the benefit of its citizens? I give China great credit.” Cue more applause.

Continue reading

Fukushima Operator TEPCO Approved to Re-Start World’s Largest Nuclear Plant

Fukushima Operator TEPCO Approved to Re-Start World’s Largest Nuclear Plant

The word “nuclear” has a lot more power in Japan than it does elsewhere.

Tokyo Electric Power, or TEPCO as it is better known, has just won approval to re-start two reactors at the world’s largest nuclear power plant. Its shares got a jolt of 3% at that announcement.

Nuclear-linked stocks will be worth watching as the company pushes on with that attempt. TEPCO is, after all, the company that responded so badly to the disaster at the Fukushima Dai-Ichi power plant in 2011.

The only country to have been hit by an atom bomb nevertheless embraced the technology behind nuclear power. Around one-fifth of all electricity is intended to be produced that way.

Then came the disaster at Fukushima. The March 2011 earthquake unleashed a tidal wave that ultimately killed 15,894 people, causing ¥21.5 trillion ($191 billion) in damage. Only the nuclear disaster at Chernobyl in Ukraine was worse.

Continue reading