Chrystia Freeland

The January/February issue of The Atlantic features Chrystia’s cover story, “The Rise of the New Global Elite.” The piece discusses the rise in income inequality over the past few decades, how today’s tycoons are more likely to be self-made and cosmopolitan than the plutocrats of the past, and how the new elite have more in common with the nouveau riche in emerging markets than with their own countrymen.

Chrystia was on Morning Joe this morning to preview the article along with James Bennett, The Atlantic‘s editor-in-chief. Here’s the video of their conversation:

And, here is an excerpt from Chrystia’s piece in the Atlantic:

Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.

But the financial crisis and its long, dismal aftermath have changed all that. A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.

Through my work as a business journalist, I’ve spent the better part of the past decade shadowing the new super-rich: attending the same exclusive conferences in Europe; conducting interviews over cappuccinos on Martha’s Vineyard or in Silicon Valley meeting rooms; observing high-powered dinner parties in Manhattan. Some of what I’ve learned is entirely predictable: the rich are, as F. Scott Fitzgerald famously noted, different from you and me.

What is more relevant to our times, though, is that the rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.

You can read the whole article here.

Posted by Peter Rudegeair.

Though the ongoing crisis in Europe dominated Chrystia’s interview with Dominique Strauss-Kahn last Thursday, the IMF head has much to say about the economic outlook for the United States. He believesthe biggest issue facing the U.S. right now is growth — not deficits — although he added that America needs a medium-term plan for fiscal consolidation.

Last week’s passage of the tax compromise should raise America’s growth prospects, but in response to a question about whether the tax cuts on high-earners are stimulative, Strauss -Kahn said, “of course not”.

When asked about the Federal Reserve’s latest round of quantitative easing, Strauss-Kahn endorsed the move, saying it will restore growth both outside and inside the U.S.:

That the American economy is so one quarter of the global economy. And has a role, which is bigger than this 25%. So what’s going to happen in the American economy in 2011 and 2012 has a lot of consequences on the rest of the world. So we have to look the kind of policy which is implemented here not only having in mind the effect of the US economy itself but also the spillover under rest. And that’s why people may have sometime the mixed view. They say, oh, it may help the US economy but on the other hand this can quantitative easing, number two, creates problems to the others because there’s too much liquidity in the world and so on, which is true. But the other hand, what’s the alternative, if the US economy doesn’t grow enough then the consequences under the rest of the world are also very, very bad. So I think that what the authorities are doing goes in the right direction.

QE2 has been fairly unpopular outside the United States. Perhaps more worryingly, Strauss-Kahn thinks the coordination between the major world economies that was fostered at the depths of the financial crisis has now faded away:

Cooperation was incredible and precedent during the climax of the crisis, and that’s certainly the reason why we’re able to avoid a crisis as big as the great depression. The problem is that the momentum for cooperation is now a bit smaller because as people believe rightly or wrongly, I think, whether wrongly that the crisis is over, they have the temptation to go back to their domestic problem and to forget about their consensus and their coordination, you know, in April 2009 in London, even in September 2009 in Pittsburgh, people were scared. That’s good, because when they’re scared they want to work together. Now, the less scared, maybe wrongly again, but the less scared, and so everybody is going back to his own domestic political problem, which I can understand, but that’s not good for the global economy.

Chrystia later asked if Strauss-Kahn was worried about a currency war between China and the U.S. He said that the renminbi is  “substantially undervalued” but dismissed any claim that a one-off revaluation would rebalance the global economy overnight, calling the idea a “dream”:

[T]o believe that there is a kind of silver bullet that will solve all the economic problem in the planet just because the Chinese currency will go back on its appropriate value is a bit of a dream… But the question is, how can we convince the Chinese, and I think we are in the process of convincing them, that it’s in their own interest to shift their policy from a totally export-led growth model, which was the model before the crisis, to a model of a growth which is more based on the domestic consumption. And they agree with this. And they shifted in this policy, of course, it’s uncertain and million people economy doesn’t happen overnight. But in the process while they’re doing this they will- it will be consistent with higher value of the renminbi because the shift can be origin of inflation and higher value of the currency will have fighting inflation because to have more consumption at home they will need to have more purchasing power and higher currency will help this.

To reinforce his point, Strauss-Kahn observed that over the past six months, U.S. trade has not improved even though China’s trade surplus has decreased.

Posted by Peter Rudegeair.

Yesterday,  IMF Managing Director Dominique Strauss-Kahn sat down with Chrystia at the Newseum in Washington, D.C., for an hour-long Newsmaker interview. The European sovereign debt crisis dominated most of the conversation. The IMF chief admitted that the situation “worried” him and that he wanted Europeans to find a more “comprehensive” solution:

Well, I’m worried. And that’s why I’m urging the Europeans — I just attended the Euro Group meeting, which is the group of the finance minister of the eurozone — two weeks ago. I’m urging for the European Union to provide a comprehensive solution. Because this piecemeal approach, which the deal with Greece — as was Ireland after, and maybe another country later on — obviously doesn’t work. And the markets are just waiting for what’s next …  The institutions are still thinking too local when they’re facing global problems.

A more comprehensive solution will require better coordination among national European governments.  As Strauss-Kahn said, “You can’t have a single currency, especially in times where you have troubles, without having more coordination in economic policy.” Two concrete proposals the managing director endorsed were stronger stress tests for the banking sector and an increase in resources for the European Financial Stability Facility, the European bailout fund.

Although the euro has fallen in recent weeks on speculation that some battered members of the eurozone might be forced out, the IMF chief assured Chrystia that the euro is a resilient currency that will survive this period of panic:

It’s a strong currency, which behaved during the last ten years better than even the deutschemark in the previous decade. I see absolutely no reason — I see many reasons why there may be a problem in the eurozone in terms of growth — unemployment, even beyond unemployment, social problems, because the question is a very difficult question to solve in the coming 10 years. But that doesn’t mean at all that I see any threat to the euro. Any solution other than the euro would be worse for the eurozone members.

When Chrystia asked whether the EU-IMF rescue package for Ireland would work, Strauss-Kahn replied with an emphatic “yes:”

He did concede that the austerity conditions of the rescue package will make the lives of many Irish citizens more difficult. While the alternative solution — forcing the creditors of Ireland’s crisis-stricken banks to shoulder more of the bad bets which are weighing down the economy — is popular, Strauss-Kahn said such proposals were “not responsible” because they would invite contagion:

The role of Ireland in the shadow banking system, also in the official banking system is much bigger than the size of its economy. The Irish economy is more or less one percent of the union’s GDP, which is not that much. But the consequences of what’s happening to the Irish bank has a lot of influence and spillover in the rest of the world, including German banks, including French banks, and obviously [the] U.K.  So I wanted absolutely to say that when some are messing up in the banking sector … the losses of the bank should not be totally paid by the taxpayer. Fair enough.  On the other hand, if you don’t take into account the possibility or the risk of contagion, how about putting in some place some haircut that will have to go to other countries, and, finally, put the other countries which are somewhat at risk in a situation where it will be impossible for them to find any funding. If you don’t take this into account, it’s just not responsible.

Posted by Peter Rudegeair.

No man is a hero to his valet. That caution seems more true today than ever. Indeed, in the age of WikiLeaks, the stubborn indelibility of e-mail, and a democratized, 24/7 cybermedia that are avid to feed what turns out to be our insatiable appetite for details of the private behavior of public figures, you could take that proverb further and say all of us now know what the valet did, and that’s why there aren’t any heroes any more.

And yet Richard Holbrooke, who died so tragically and so abruptly this week, was a great man even in this WikiLeaks age. As I have been reading the public and private tributes to him, and talking about him with his many, many other friends, I have realized that he turned the old aphorism on its head: Described by the U.S. President as “a giant” and remembered in a front-page obituary in The New York Times Mr. Holbrooke was even more beloved and admired by those closer to him. If he had had a valet, I suspect he would have mourned and respected Mr. Holbrooke the most of all.

If I hadn’t known him, I’m sure that assertion would have surprised me because, as you can divine even from the glowing public tributes, he was no pussycat and he wasn’t Mother Teresa either. He was a bully, and not only when negotiating with Bosnian and Afghan warlords, but also in his dealings with less exotic (though in the view of some people, equally noxious) creatures such as journalists. In a beautiful appreciation of him this week, veteran diplomatic writer Carla Anne Robbins captured this quality with her recollection of Mr. Holbrooke as “one of the most unapologetic spinners” she had ever known. He had a powerful sense of his own importance and a theatrical view of the world—with himself, of course, usually cast in a central role.

In today’s pasteurized and homogenized professional world, we are suspicious of the larger-than-life character he so easily inhabited. If he had been sent to a “leadership coach” or to a PR adviser, I am sure he would have been urged to tone it down, to be less intense, less aggressive, less vivid. That is not just a suspicion. Barack Obama was unstinting in his posthumous praise, but before Mr. Holbrooke’s aorta tore, his lion-sized approach to life was creating strains with the “no drama Obama” White House: He didn’t get a seat on Air Force One on the President’s last two trips to Afghanistan, and struggled to make his voice heard in Mr. Obama’s inner circle.

But Mr. Holbrooke’s unapologetic pugnacity was central to his effectiveness in the world. In this age of milquetoast leadership in business, as in public life, he offers a powerful counter-example. As a tribute to a man I am honored to have called my friend, I’d like to suggest three lessons in leadership from one of the most accomplished statesmen, and finest men, of our time:

Believe in what you do, and do what you believe: The day after Mr. Holbrooke’s death, another mutual friend called me for help with a beloved project he has long yearned to do, but delayed. One of Mr. Holbrooke’s great strengths was his determination to commit his life to big problems he cared about deeply. Time and again, he threw himself back into what Teddy Roosevelt described as the arena. That is why what would have been intolerable arm-twisting and self-promotion in someone else was part of his charm and effectiveness—he deployed those big guns in the service of big causes and ones to which he was totally dedicated.

Kick up and kiss down: Appeasing the boss, then coming home and kicking the dog is how most of us live our lives, even if we aren’t proud to admit it. Mr. Holbrooke did the opposite. His bellicosity with some of the scariest guys in the world is legend. But he could be disarmingly humble, even about things that mattered to him a lot, in private. A small but telling example: He and his old friend Leslie Gelb debated Afghan policy at a lunch I attended not too long ago. Mr. Gelb, a fierce critic of the administration, spoke more convincingly than Mr. Holbrooke—a fact he instantly and gracefully conceded.

Be a hero to your valet: Few people lived a more public life, or one more dedicated to the big issues of our times, than Mr. Holbrooke. Yet he always found time to care about the relatively trivial problems of his friends: He was indefatigable when he pitched a story, but the times he sought me out the most energetically were when he thought I needed his help as a person. No one mattered more to him than Kati Marton, his brilliant, beautiful and wise wife. And I have rarely seen a more compelling example of uxoriousness than Richard flacking for Kati when one of her books was published. Afghan President Hamid Karzai had it easy compared to an editor being harangued about the virtues of Kati’s latest (and usually award-winning) book.

The ultimate lesson is authenticity. He really was a giant: He had a giant’s voice, a giant’s impact and a giant’s heart. Whether you were his valet or his president, those things added up to a heroic impact because they fit together so well.

Canadian Finance Minister Jim Flaherty stopped by the Reuters studio this morning to chat with Chrystia about the impact of Europe’s debt crisis on Canada. He said the situation in Europe “poses a danger” and that if it gets out of control, the crisis could lead to a repeat of what happened to the financial markets in 2008. He urged the Europeans to follow the course America took in 2008 and substantially increase the amount of capital in the stabilization fund:

Jim Flaherty: They should imitate what the Americans did quite frankly in 2008 and create a situation where the markets regain confidence in sovereign debt and banking situations. And that means a substantial fund put together or they could do it with bonds and that’s been another suggestion, but a substantial pool that would make it clear that they would be able to defend and protect sovereigns and banking systems in Europe.

Chrystia Freeland: And that pool should be bigger than the one they have now?

Jim Flaherty: Yes

Chrystia Freeland: How much?

Jim Flaherty: Well, I’ll leave that, you know, for them to decide but it needs to be such that the markets would have full confidence, so substantially more than it is right now.

Flaherty also said President Obama’s recent tax-cut compromise was “positive” for the Canadian economy. He did add, though, that the stimulative effect of the tax cuts in the U.S. will be  “questionable” given that the wealthy will be the primary beneficiaries and that they are less likely to spend the money.

As for his own country, the finance minister expects the strength of the Canadian dollar to continue, saying that Canada will have to get used to the fact that “we are a strong resource-based economy, [and] commodities prices are relatively strong.” He defended the Conservative government’s rejection of BHP Billiton’s bid for Potash, saying this was a special situation in which the acquisition was not of net benefit to Canada. In Canada, he says, “we rarely say no” to foreign direct investment. Finally, he told Chrystia that he expected the Canadian government would divest its stake in GM “over the course of the next few years.”

Posted by Peter Rudegeair.

Chuck Schumer, the senior Democratic senator from New York, already has one of his talking points for 2012 — he plans to lambaste the Republicans for their “tax cuts for millionaires,” a reference to the right’s refusal to end the Bush tax breaks at the upper-end of the income distribution.

That’s a big deal, because for much of the post-war era, class has been a forbidden subject in U.S. politics. Americans were sold on the idea of living in the land of opportunity — their country, after all, was the one huddled masses fled to for the chance to build a better life. That self-image was so appealing and so powerful that politicians ran against it at their peril—Morning in America played better on the campaign trail than class war.

Schumer is a centrist whose constituency includes many of America’s plutocrats —he has sometimes been called the Senator from Wall Street. He is also one of the country’s savviest politicians. So his judgment that “millionaires tax break” will make a good bludgeon for Republicans says a lot about how deep the chasm has become between America’s super-elite and everyone else, and how worried middle-class Americans are that the old promise of social mobility is no longer delivering.

Liberals concerned about this divide have focused on the ways in which it has been created by pro-rich tax policies, a concern documented in Winner-Take-All Politics by Jacob Hacker and Paul Pierson, and further stoked by this week’s tax deal. That’s a legitimate gripe.

But the two Americas are moving further and further apart for another reason, too, and it is one over which U.S. legislators and U.S. voters have little control. After a century when succeeding in America was the surest route to commercial success, the country’s best businessmen and women have realized that the way to win is to go global.

A favorite complaint of foreigners has been to point out that Americans, for all their international might, are actually rather parochial. That slightly smug assertion is true: to take one example, according to research by head-hunter Elisabeth Marx, in 2007, nearly one third of British FTSE 100 CEOs were foreign nationals; in the U.S., just 10 per cent of Fortune 500 chiefs were foreigners.

Now that the American century is over, however, America’s business leaders are catching on fast. One sign of the times was the recent decision, first reported by my Reuters colleague Megan Davies, of Stephen Schwarzman, the trend-setting boss and co-founder of private equity group Blackstone, to move to Paris for three to six months next year. Another major New York private equity house hopes to send one of its partners to Hong Kong.

Nor is this shift limited to finance. In a speech at Stanford business school this year, GE CEO Jeff Immelt said that when he was an up-and-comer at the industrial giant in the 1980s, developed nations accounted for 80 per cent of global economic growth. In the coming decade, he said, that equation is expected to flip, with 80 per cent of international growth coming from emerging markets. Like Blackstone, GE is moving its chiefs to where the action is: last month John Rice, a GE vice-chairman, was reassigned to Hong Kong, where he will oversee non-U.S. sales, marketing and operations.

Or consider McKinsey, the premier management consulting firm, founded in Chicago in 1926. Today, McKinsey’s managing director is a Canadian, Dominic Barton, who lives in London, but whose assistant is based in Singapore. “There are more and more global CEO meetings in the emerging markets, especially China,” Barton told me over breakfast in midtown Manhattan late last month. He was due to see Schwarzman later that day, but recalled that “the last time I saw Steve was in China” where Blackstone held a meeting this fall. Barton himself was traveling to Chile later in the week, then on to Sao Paolo, where McKinsey was holding its own board meeting.

The Luddites and isolationists in both parties are already starting to argue that this globalization of American business is a bad thing. They are wrong — surely America would be even worse off if its brightest businesses leaders were missing out on globalization and the rise of the emerging markets. But the shift of American capital and American capitalists outside the U.S. will further polarize an already bitter national debate. By 2012, Americans won’t just be arguing about tax-breaks for millionaires, they’ll be targeting the millionaires who spend 6 months a year in Paris or Hong Kong. That will be dangerous not just for the global super-elite, but for the entire world economy.

Nouriel Roubini is #12 on on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. Over the past few years, the economist at New York University says he’s been thinking most about why financial crises occur and whey they are occurring more frequently than we have expected.

Contrary to the conventional notion that crises are random and infrequent events, Roubini has been arguing for the better part of a decade that financial crises can be predicted based on macroeconomic and policy mistakes. In fact, they occur every few years in some country around the world, he says. Roubini characterizes these financial crises as a “white swan” event. He emphasizes their regularity in his recent book Crisis Economics. Roubini says the pattern of crises is always the same: initially there is an economic boom, which drives up asset prices, leading to an excessive build-up of debt and leverage, which eventually leads to a downturn and then a market crash and bust.

The co-founder of Roubini Global Economics, Roubini credits his 20 years of experience studying financial crises in emerging markets — he published a book about their causes and consequences in 2004 — for enabling him to spot the risks for a crash. He also notes that others who foresaw the crisis, such as Morgan Stanley Asia’s Steve Roach and then-Merrill Lynch economist David Rosenberg, share a global view of economic dynamics, intellectual courage and a certain outsider status, a characteristic that fellow FP Global Thinker Mohamed El-Erian said was vital for his own success.

Looking ahead, Roubini worries about the balance of power in a world in which the U.S. is no longer a superpower. Global governance has shifted to the G-20 from the G-7, which was really a G-1, with the United States playing the role of the global hegemon and provider of global public goods. As America’s power declines, there is no country stepping in to be the world’s leader. Instead, emerging powers like China, Brazil, and India are all free-riding on America’s contributions to international order. Roubini fears that the world will go from a G-20 to a “G-0″, where there will be political and economic disorder.

Foreign Policy says Roubini deserves his high rank on the list “for seeing the roots of the next crisis in the current one”:

Being a global economic Cassandra isn’t a cheerful job, but someone’s got to do it — and Nouriel Roubini acknowledges that he fits the role perfectly. He has even embraced the moniker “Dr. Doom,” a name derisively pinned on him before the 2008 crash that showed his pessimism was warranted. And so while everyone’s still trying to figure out how to overcome the last financial crisis, Roubini has his sights set firmly on the next one — which, Dr. Doom assures us in his book, Crisis Economics, won’t latest be too far off.

Roubini argues that the United States is at serious risk of heading back into a recession, and unlike other talking heads, he puts a number on his prediction, saying there’s a 40 percent chance of the United States hitting the dreaded “double dip.” Why? He thinks the root causes of the current malaise have only been covered over and that unhealthy levels of debt are once again piling up around the world — though this time on government accounting ledgers. It’s only a matter of time, he says, until we start seeing national bankruptcies — perhaps even a cascade of them across Europe that sparks the dissolution of the euro. If Roubini has one message, it’s that crises aren’t unforeseeable “black swan” events, but “white swans” — the culmination of long trends that are perfectly intelligible to anyone who takes the time to examine the data. We may not like Dr. Doom’s advice, but we can’t say he didn’t warn us.

You can read a Q&A with Roubini in Foreign Policy.

Posted by Peter Rudegeair.

Raghuram Rajan of the University of Chicago Booth School of Business is #26 on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. His big idea is: “capitalist economies work well when everybody has access to the basic conditions they need to compete: access to education, access to health care, and access to finance.” In the absence of these conditions, Rajan argues that a capitalist society will be beset by income inequality, political frictions, and rent-seeking behaviors that subvert healthy competition. Capitalism is at its best when it creates equal opportunity:

If we all started off at age 21, 22, somewhere there, with all the education we needed, all the access to finance we wanted, and reasonable health, and we were told, ‘Here’s a level playing field. Go out and compete.’ And 25 years later some did very well, some did not so well, I think we would all be reasonably satisfied with that outcome. And that’s really the ideal of capitalism. But we’re very far from that ideal. Where you’re  born matters a lot. Of course, what you make of it also matters, but to the extent that you can reduce the impact of where you’re born, what conditions you’re born under, and what kind of impediments that creates, I think capitalism is better for it.

Rajan’s recent book, Fault Lines — the most recommended book on FP’s survey of the Global Thinkers — looks at the recent financial crisis through this lens. In the lead-up to the crisis, many citizens of the United Stated lacked access to higher education, a prerequisite for many of today’s jobs. Median wages stagnated as a result, and the government faced pressure to do something about it. Washington responded with the short-term fix of expanding cheap credit, notably through Fannie Mae and Freddie Mac, which temporarily masked the rise in income inequality but ultimately did nothing to address the structural issues of the U.S. economy.

For his next big idea, Rajan looks to examine the evolution of corporate responsibilities and objectives. In the earliest days of the corporation 400 years ago, Rajan observes that there was a sense that profits were dirty and that people shouldn’t earn more than a certain, predetermined level. Contrast that with the sense in some boardrooms today that a corporation’s guiding principle should be maximizing shareholder value. Rajan wants to find a happy medium between the two which is “less fuzzy than corporate social responsibility but is something which reflects the sense that corporations do have some responsibilities in some areas.”

Foreign Policy anointed Rajan a Global Thinker jointly with Paul Krugman for “their spirited debate over the roots of the global financial meltdown”:

In invariably stinging tones, Nobel laureate Paul Krugman uses his influential New York Times column to place himself at the center of international debates. In the United States, he has held the banner for unabashed deficit spending, ripping Barack Obama’s administration for not pushing for a bigger stimulus package, while excoriating Republicans for demanding austerity. His advice may be predictable, but it never lacks a certain power — or a certain provocation for economists who think differently.

Chief among them at the moment is Raghuram Rajan, former IMF chief economist and now a finance professor at the University of Chicago’s Booth School of Business. This year Krugman and Rajan have fought a running battle across the pages of a half-dozen publications over the causes of the financial crisis.

Rajan … argues that Krugman understates the role mortgage giants Fannie Mae and Freddie Mac played in the crisis because their culpability is inconvenient for Krugman’s big-government liberalism. “U.S. policies encouraged over-consumption and over-borrowing,” he wrote on ForeignPolicy.com, “and unless we understand where these policies came from, we have no hope of addressing the causes of this crisis.” Krugman disses Rajan’s thesis as “a structure built on foundations of sand” and places the brunt of the blame on imbalances in the global economy. Pass the popcorn.

Foreign Policy has Rajan’s recommended reading list and more.

Posted by Peter Rudegeair.

Reuters editor-at-large Chrystia Freeland interviews international investor Jim Rogers, as part of the 2011 Reuters Investment Outlook Summit.

Part 1

Part 2

Part 3

Part 4

Part 5

Chrystia interviewed currency maven John Taylor this morning to kick off the Reuters 2011 Investment Outlook Summit. Taylor is the chairman and CIO of FX Concepts, the largest currency hedge fund in the world, with around $8.5 billion in assets under management.

Taylor led Chrystia on a tour of world currency markets and offered his predictions for 2011, including:

–The euro will sink to parity with the dollar, thanks to a debt crisis in Spain.
–Switzerland, which is a “little Brazil,” will see the franc rise against the euro as capital leaves the eurozone.
–The Australian dollar will depreciate by 15 or 20% due to a fall-off in commodity and housing prices.
–The Canadian dollar will depreciate to C$1.15 vs. the dollar on lower commodity prices and lower growth in the U.S.
–Sterling will appreciate against the euro.
–The Brazilian real is attractive but its outlook is uncertain given the Brazilian’s government’s determination to tame appreciation. On the other hand, investors like Taylor who are bullish on Brazil may have more ammunition than the government, thanks to the Federal Reserve and the resurgence of the carry trade.

Posted by Peter Rudegeair.