The same theme stayed on the markets: EM lagging behind DM and most core indices continued the rebound from local bottoms while USD seems strong.

One of last year`s main story was the cost of funding for Italy and Spain (sovereign debt of course) and as I was reading this short note from an UniCredit research I realized that I can`t recall this topic from recent discussions – “So far this year, the cost of funding with BOT instruments has been 0.87%. This compares very favorably with the 2.13% registeredĀ  in 2012.” The ample liquidity is working but the yield is limited on the downside as investors are burning money with negative real rates.

Two articles drew my attention today:
Prof. Rodrik`s paper is a prime example that with the proper environment and some laissez-fair attitude the market dynamics do the growth. Education and health, improved regulatory frameworks and better governance – these are the essentials for a well working economy and the countries with the highest standard of living more or less follow this dogma.
I cannot make up my mind how a single country can consume almost as much aluminium as the rest of the world and in the same time shoo the bubble noises in my head. However if the growth rate slips or godforbid turn into the negative zone then the effect will be spreading and sets back the second highest growing region.


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