Obama and Netanyahu: the friendship that never was

Originally published in Aspenia Online

By Roberto Menotti and Valentina Pasquali

It is well known that the nearly overlapping administrations of President Barack Obama in the United States and Prime Minister Benjamin Netanyahu in Israel have marked a low point in the relations between the two allies. Since coming to office within a couple of months of each other in 2009, Obama and Netanyahu have had profound disagreements on pretty much any issue under the sun, from the Israeli-Palestinian peace process to the aftermath of the Arab Spring to the Iranian nuclear deal.

Such tensions between them have resulted partly from their rather different temperaments and worldviews. But they should also be placed in the broader context of major realignments in the Mid East region and of what remains a highly volatile strategic environment. While Netanyahu was reconfirmed to another four years in his post in the early elections of March 2015, Obama’s time in office will conclude in January of 2017. If the ongoing campaign for the White Houseis any indication, chances are that we will see a shift in US-Israel relations come next year, one that is likely to benefit Netanyahu.

New Accounting Standard Shines Light On Leased Assets

A new international accounting standard that came into effect at the beginning of 2016 is already transforming how companies around the world think about their balance sheets.

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First, the London-based International Accounting Standards Board (IASB) and shortly thereafter its US equivalent, the Financial Accounting Standards Board (FASB), issued parallel, although not identical, rules about how corporates are to report lease obligations on their financial statements. “Leases are being brought into the bright light of the balance sheet,” explains Kimber Bascom, KPMG’s global International Financial Reporting Standards (IFRS) leasing standards leader. “They are no longer [to be] hidden in the shadows of the footnotes.”

Gordhan Gets His Turn To Heal South Africa’s Woes

Originally published in Global Finance MagazineSouth Africa: After burning through two Finance ministers in 18 months—with the second having held the job for less than a week­—South Africa’s president, Jacob Zuma, moved in mid-December to restore a measure of stability to the post.

Pravin Gordhan, South Africa’s new Finance minister

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Under pressure from investors and voters, he appointed Pravin Gordhan, who had already served in the position from 2009 to 2014 and is well respected. But, compared with his earlier go-round, Gordhan has an uphill climb ahead of him this time.

The Supreme Court and Bloomberg factors toward “Super Tuesday”

Originally published in Aspenia Online of the Aspen Institute Italia

As if this race for the White House wasn’t erratic enough already, the unexpected death of Supreme Court Justice Antonin Scalia – a staunch conservative – on February 13th threw yet another wrench in the works. Suddenly, at stake in 2016 is the entirety of the US government, each of its legislative, executive and judicial branches.

Coming as it does at such crucial juncture in this election season – when both party primaries can still go in pretty much any direction, and when even an independent candidate, Michael Bloomberg, is weighing the pros and cons of a run – the fight to replace Scalia is now bound to inject the presidential campaign with a whole new level of significance. It might also reshape American politics for the long run, since the balance of power in the Supreme Court seals the fate of some of the most consequential, and controversial, debates in America. Though the full weight of this event will take time to make itself felt, we should get at least some answers in the next couple of weeks, as American voters take part in the primary contests of Nevada, South Carolina and the dozen or so states of Super Tuesday (March 1st).

Two primary rounds and still many hopefuls

Originally published in Aspenia Online of the Aspen Institute Italia

With the first two election contests of 2016 now in the bag, the outcome of this rollercoaster of a race for the White House remains as hard to predict as ever. Those who were looking to the Iowa caucus and the New Hampshire primary for answers have been sorely disappointed. In the democratic camp, the fight between Hillary Clinton and Bernie Sanders is nowhere near a resolution. On the Republican front, a bloated field of candidates has not got any closer to slimming down. All in all, with his second-place finish in Iowa and resounding victory in New Hampshire, the least-likely frontrunner of them all Donald Trump has actually come out of the starting blocks well ahead of everybody else.

When voters have a say: Iowa and New Hampshire

Originally published in Aspenia Online of the Aspen Institute Italia

 After nearly a year of what already feels like a very long campaign season, the 2016 presidential election is finally about to get on its way in the United States. As voters in Iowa and New Hampshire gear up for back-to-back primary contests, respectively on February 1st and 9th, two big questions hover over the vote: will Hillary Clinton manage to fend off Bernie Sanders’ offensive? And will Donald Trumpe merge the winner in both places, possibly sealing the deal for the Republican nomination?

To be fair, Iowa and New Hampshire are not going to answer all the questions of this 2016 campaign. Voting will continue well beyond them and twists and turns should be expected. Nevertheless, the two “first in the nation” states should provide us with some more clarity as to the direction the country is taking.

The Fintech Revolution in FX: an Interview with Michael Curran, BNY Mellon

Originally published in Global Finance Magazine

Michael Curran, global head of foreign exchange, BNY Mellon Global Markets Group, sees blockchain technology as the FX market’s key innovation.

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Global Finance: What are the key issues on your radar?

Michael Curran: The issue we see overshadowing everything else is the set of extraordinary monetary policies being followed in Europe, and the impact these policies are having on currency and underlying markets. The impact hasn’t been fully comprehended yet, but, based on the available evidence, it is likely to ensure another eventful year for the FX markets in 2016.

 

GF: How is the renminbi’s liberalization impacting foreign exchange?

Curran: The announcement at the end of 2015 that China’s renminbi is to be included in the IMF’s Special Drawing Rights basket raises some interesting long-term questions. Not least of these will be whether FX reserve managers globally see this as a reason to significantly increase their exposure to the currency within their portfolios.  Time will tell.

To Hedge, Or Not To Hedge: An Interview with Marc Zaffran, Societe Generale

Originally published in Global Finance Magazine

Marc Zaffran, head of FX sales at Societe Generale Corporate and Investment Banking, says clients are looking more closely at how and why they hedge.

Global Finance: Describe FX trends for Central and Eastern Europe.

Zaffran: Higher volatility, both implied and actual, especially in so-called beta currencies like the Russian ruble and the Turkish lira, has been a key theme. As the carrying charge reached an all-time high in 2015 on these currencies, more and more clients were looking to hedge their FX risks. Concerns about whether the “floor peg” will hold between the Czech Republic’s koruna and the euro and other pegged or semi-pegged currencies, following moves in the Swiss franc against the euro in the first half of 2015, and in the Chinese yuan against the US dollar in the second half, have also been a big topic for corporates and financial institutions.

The 2016 State of the Union: Obama’s legacy and the future

Originally published in Aspenia Online of the Aspen Institute Italia

 In his final State of the Union address, an upbeat US President Barack Obama looked far into the future while circling back to the past, to his winning campaign message from eight years ago of “change we can believe in.” To do so, he largely, if not entirely, departed from the standard laundry-list format and stiff delivery style that are typical of the President’s annual speech to the joint session of Congress: “For this final one, I’m going to try to make it shorter” – he said. And then added, in the first of several more or less subtle references to the ongoing Presidential campaign: “I know some of you are antsy to get back to Iowa”.

Not that he forgot to mention the most important achievements of his last seven years in office. He peppered them throughout the speech, reminding the audience of the economic recovery, of his signature healthcare reform, of gay marriage being legalized across the country, of successful trade deal negotiations for the Trans-Pacific Partnership (TPP), and so on (as a result the speech ended up being longer than last year’s). With what many observers understood as a jab at Donald Trump, the President said, “Anyone claiming that America’s economy is in decline is peddling fiction.” And to those who attack him on national security, he retorted: “If you doubt America’s commitment — or mine — to see that justice is done, ask Osama bin Laden.”

Thinking beyond the BRICs and avoiding the acronyms’ trap

Originally published in Aspenia Online of the Aspen Institute Italia

Until it was all well and good there was general acceptance around the world of what the acronym BRIC meant. Coined by the then-chairman of Goldman Sachs Asset Management Jim O’Neill in a 2001 paper titled “Building Better Global Economic BRICs”, the term referred to Brazil, Russia, India and China (the capital S for South Africa was added in 2010). It stood for a small group of emerging market countries where growth roared at a time when developed countries started entering a prolonged slowdown. The Western financial community thought of it as a way of easily identifying newer and particularly promising investment prospects.