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Greece, Greenspan and the perils of going

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  • The US employment report last Friday means that finally markets seem inclined to take economists and the Fed seriously when they signal that US interest rates are likely to rise earlier and more aggressively. The report was just one of a series of data point indicating labour strength.
  • Greece is still in the news, with impassioned speeches over the weekend, a credit downgrade (no one cares), and former Fed Chairman Alan Greenspan giving the benefit of his economic wisdom in suggesting that Greece should default and go.
  • Coincidentally, UBS published a report today suggesting that there is still room for a deal to be done between Greece and its creditors. However in the extreme event of a Greek departure the costs would be extremely high, politicians could lose control of the process, and Greece may not be alone in leaving.
  • China's trade data showed slower export and slower import growth. However three factors distort this: dollar strength reduces the value but not the volume of non-dollar exports; commodity prices reduce the value of commodity imports; the lunar new year distorts everything.