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David Keohane

David Keohane

(Spending some time as FTAV’s Bombay wallah. Noticeably sweatier but not much else has changed.) David studied economics, politics and journalism before joining the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012. In between his degree and masters he wandered into the real world of business where he learnt how to manipulate a spreadsheet and organise meetings where nothing gets decided.

Articles by David Keohane

Further reading

2 days ago

Elsewhere on Friday, – Damodaran on Uber’s bad week: Doomsday scenario or business reset?– Kristin Forbes saying goodbye to the MPC (she completes her term on June 30):This is not an economy that is too weak to support an increase in interest rates. Instead, it appears to be an economy that is “overstimulated” and where monetary policy has been set too loosely.– Toby Nangle on the underestimated perils of deglobalisation.–Daniel Drezner: The good, the bad and the ugly aspects of Thucydides in the Trump administration.– Ryan Avent: The Federal Reserve risks truncating a recovery with room to run.– Stanley Pignal on Modi the supposed-reformer: “The fear is that, if the economy falters, Mr Modi will try to maintain his popularity by stirring up communal tensions.”– Fascinating look at the

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Snap AV: Brexit optimism/pessimism charted

2 days ago

Apparently “64% of respondents believe that the probability of an orderly Brexit negotiation is less than 50%”.Is that… high?From Barclay’s survey of 642 global investors, with our emphasis:Digging into the details of the responses, we find that the majority of investors believed that the most likely outcome would involve a series of delays in the negotiations which may in turn weigh on market sentiment. Almost 70% of responses were taken before the UK election result, although comparing the results before and after we find that the responses were very similar…Our economists look into the potential timeline and structure of talks between the EU and the UK. They categorise the potential outcomes into the following categories: an orderly Brexit, either a) ‘soft Brexit’, where the deviation

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Further reading

3 days ago

Elsewhere on Thursday, – Let’s get some Uber out of the way:HBR gets punchy: Uber can’t be fixed — It’s time for regulators to shut it downVox: Lyft spent years preparing for Uber’s cultural crisisLongreads: In Silicon Valley, transportation innovation is a flat circle– New Haldane on work, wages and monetary policy. Includes a turn hawkish you might not see coming and a bonus long run UK Phillips curve chart.– Relatedly, Simon Wren-Lewis to those three MPC members who voted to raise rates: You can’t be serious?– Atlantic longread on what’s wrong with the Democrats, including bonus Furman/Warren shot at index funds.– From Scott Alexander: To understand polarisation, understand conservatism’s failure.– In this paper, the Bundesbank investigates “the link between credit default swap (CDS)

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Further reading

4 days ago

Elsewhere on Wednesday, – Cooling the tube – Engineering heat out of the Underground.– The BoE, tracking the views of British business… now with more Brexit.– “BuzzFeed News can reveal that Puncher is among at least 14 people US intelligence officials suspect were killed in the UK by Russian mafia groups or secret services, two forces that sometimes work together, since Putin’s rise to power.”– Guardian longread on Uber’s drivers:To some labor activists, the major ethical failing that should be inspiring bold promises of change at Uber is not so much the treatment of its well-paid tech workers, but the plight of its impoverished drivers…– Uber’s path forward – from Garrett Camp, co-founder.– Lyft Shuttle and the return of the jitney.– Barnejek returns: The Fed raises the stakes.– JP

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Snap AV: Fantasy investing

4 days ago

Exactly what it says on the tin, from Citi in a note entitled “Living the Dream; Owning the FANTASY”.Yup:In our opinion, the powerful growth stories centered on software, social media and the spread of technology into all aspects of daily living have blossomed and captured investors’ imaginations. The Street has become enamored with what we have dubbed the FANTASY stocks, which have added about $380 billion to the S&P 500’s market cap (ex-Tesla) thus far this year, accounting for roughly 23% of the market cap gain of the index. But, it is not a fair statement since other names like Exxon have dropped meaningfully dragging down the index while Wynn Resorts has pulled it higher. Note that more than half of the S&P 500 constituents have beaten the market year to date and 30% have generated

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Further reading

5 days ago

Elsewhere on Tuesday, – Ben Thompson on Amazon’s new customer. Also… sorry… this from Bloomberg is close to NSFW:During the town hall, Mackey repeatedly compared the deal with Amazon to a romantic relationship. At the meetup in Seattle six weeks ago, the executives spoke with Amazon for 2 1/2 hours, Mackey said.“We could have talked for 10 hours,” he said. “We just had these big grins on our faces, like, ‘These guys are amazing.’”He said the two companies are now “engaged,” but still need to wait until the transaction gets regulatory approval and is made official. It’s expected to be completed in the second half of the year.“Like an old traditional marriage, where there are all kinds of rules and chaperones, we can’t consummate the marriage until we’re officially hooked up,” he said. “This

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Further reading

6 days ago

Elsewhere on Monday, – Why May’s “Bloody Difficult” approach to Brexit negotiations is so wrong.– From a recent LSE study on London’s housing market:There was almost no evidence of ‘buy to leave’– certainly less than 1% of new homes bought by overseas buyers were left entirely empty. Those units that are rented out have very high occupancy rates and indeed some are ‘over-occupied’ e.g. by students. Some second homes, on the other hand, may be occupied for only a few weeks a year, although most are used more frequently. In between, many units are lived in by owners’ family members, especially students, who may occupy them for most of the year.– How much are people making from the sharing economy?– Adam Ozimek: Sorry advocates, the min wage debate is not over.– From the WSJ:Research

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Snap AV: Debt ceiling still a thing, says world, wearily

8 days ago

From Credit Suisse, who expect cash to run out in early October:For those who like their nostalgia served with more depression than the word normally assumes:We think markets may well be able to continue without too much consternation through most of July, but if it becomes apparent that Congress will head out on its August recess – which lasts the entirety of that month – having made no progress, then fears of a delayed or missed payment should start to build. While some market swings are going to be difficult to position for until closer to any perceived deadline, some expressions – such as switches out of coupons with mid-September to mid-October payments and into those that should be better insulated – are relatively limited risk ways to position early, in our view.…Amid what is

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Dystopian trading amid the eroding value of the ‘salt of the earth’

9 days ago

Jeez Macquarie, tell us what you really think:Although economists argue that as in the First and Second Industrial revolutions, new jobs would be created (and undoubtedly this is true), at least initially the new jobs are not much more than ‘warehousing’ labour pending their final disposal in some form. Also, this time around, degree of disruption is far more profound than in previous cycles. Technology is creating a world of almost no scarcity, unlimited scalability and where value of conventional labour inputs is rapidly eroding. Essentially, AI is replacing IQ while automation and robotics are replacing ‘muscle power’. This places a great deal of value on EQ and ability to think ‘outside of the box’. However, as Maslow as well as Myers Briggs (MB) framework and other studies showed,

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Further reading

9 days ago

Elsewhere on Thursday, – Evergreen Pettis: Can China really rein in credit?– Krugman: A finger exercise on hyperglobalisation.– What we know— and don’t know— about FinReg in the second half of 2017.– Your Fed statement then and now.– Maybe Janet Yellen doesn’t want to be Fed Chair anymore?– Israeli watchdog head as a new bill edges towards reality: “Binary options are like blood diamonds”.– In continuing Uber news… “Three New York Uber drivers and “others similarly situated” have been deemed employees for unemployment purposes.”– Is America encouraging the wrong kind of entrepreneurship? – Harry Markopolos – who exposed Madoff – has (allegedly) uncovered a new fraud.– “A massive click-fraud farm has been raided in Thailand by police and army troops, who seized nearly half a million SIM

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Further reading

11 days ago

Elsewhere on Wednesday, – A longread from Reuters (via Levine) on how Wall Street’s self-regulator blocks public scrutiny of firms with tainted brokers, including:At Long Island-based Joseph Stone Capital, 71 percent of the firms’ 59 brokers had FINRA flags on their records, according to the Reuters analysis.Joseph Stone was investigated by the state of Montana after one of its sales representatives, Lawrence Sullivan, TFW on January 15, 2016, according to a report on the incident by the regulator.– Nina Shapiro on the hidden costs of privatisation: “Public-private partnerships conflate public and private interests, and in conflicts between them, the private interests win out.”– Leaked audio of the Uber meeting includes one cringe inducing sexist joke, a direction from HR that everybody

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I’m shocked, shocked… Indian farm loan waiver edition

11 days ago

From the Times of India:NEW DELHI: Expectation of loan waiver has prompted farmers across states to stop repayment of money owed to financial institutions. This adds pressure on banks that are already grappling with a record pile of bad corporate debt.Several bankers TOI spoke to confirmed that there was a rising trend of farmers refusing to clear dues, an issue that was also flagged at a meeting on Monday convened by the finance ministry. The total farm loans are estimated at a little under Rs 10 lakh crore.While it is early to quantify the extent of loan delinquency by farmers, bankers say that in some states, the default rate has increased by up to 50% in recent months. “Farmers are emptying their bank accounts so that we cannot deduct the payment due from them,” the head of a large

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Further reading

12 days ago

Elsewhere on Tuesday, – Scenes from a Goop conference:Gwyneth Paltrow’s inaugural health-and-wellness summit on Saturday kicked off just as you’d expect: well-groomed women wearing yoga pants and expensive handbags hooking themselves up to IVs and oxygen tubes in a parking lot, experiences otherwise associated with the glamour of getting triaged at a disaster site…In the day’s first lecture, Sadeghi spoke for nearly 90 minutes about “integrative photosynthesis,” “spiritual Wi-Fi,” “laterality to the body,” “neuro-vegetative signs” and “the ontological experience called your life.”– We need to talk about Uber… A timeline of the company’s growing list of problems.– We apparently need to talk about subprime mortgages again. From the WSJ: “Brokers willing to learn the lost art of making risky

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Further reading

13 days ago

Elsewhere on Monday,– An NYT longread: The bounty hunter of Wall St.– First an NYT Review: Can Trump survive in Caesar’s Palace? Then:New York’s Public Theater lost support from two high-profile corporate donors, Delta Air Lines and Bank of America, on Sunday amid intense criticism of its production of Shakespeare’s “Julius Caesar,” which depicts the assassination of a Trump-like Roman ruler.The companies’ decisions came after days of criticism online and in right-leaning media outlets that was amplified by Donald Trump Jr., a son of the president, who appeared to call into question the theater’s funding sources on Twitter on Sunday morning.– Summing up Noahpinion’s thoughts on macroeconomics.– Tom Forth’s first thoughts on the ONS’s new regional fiscal balance data.– Morgan Housel on

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Further reading

18 days ago

Elsewhere on Wednesday, – From Nate Silver: Are the UK polls skewed?– Bernanke explains to Vox what Donald Trump gets wrong on the economy. Also about blogging.– Chinese macro policy, buried under the headlines.– Damodaran on the dichotomies running through today’s markets:The bottom line, and this may disappoint those of you who were expecting a decisive market timing forecast, is that stocks are richly priced, relative to history, but not relative to alternative investments today. Paraphrasing Dickens, we could be on the verge of a sharp surge in stock prices or a sharp correction, entering an extended bull market or on the brink of a bear market, at the cusp of an economic boom or on the precipice of a bust. I will leave it to others who are much better than me at market timing to make

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Further reading

19 days ago

Elsewhere on Tuesday, – Guardian longread: Rise of the machines and who is the ‘internet of things’ good for?– Ray Dalio’s updated thoughts on Donald Trump’s policies and China’s latest economic moves.– Betting against history.– Who is the legend of spoofing?– From the BoE on Central Bank Digital Currency: DLT, or not DLT? That is the question.– Why do central banks care about their profits.– Simon Wren Lewis on the UK: Could austerity’s impact be persistent?– A new VoxEU ebook: Economics and policy in the Age of Trump.– A pretty widely signed letter in support of the nomination of Kevin Hassett to be Chairman of the Council of Economic Advisers.– A primer on Dodd-Frank’s Orderly Liquidation Authority from Brookings.– Also from Brookings: The $110 billion arms deal to Saudi Arabia is fake

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Further reading

20 days ago

Elsewhere on Monday,– Late to this but… My smart beta ETF premised on cats rang up an 849,751 per cent return.– Trainspotting, catching falling knives and GDXJ’s epic rebalance.– Cochrane vs Noahpinion on health care.– Concierge doctors underlining health inequality in the US. Including this exchange:“When I’m at a country club or a party and people ask me what I do, I say I’m an asset manager,” Dr. Shlain explained. “When they ask what asset, I point to their body.”– Scott Sumner: Two new picks for the Fed?– Hell is empty and all the hedge fund managers are at the Bellagio.– Did someone cancel the fintech revolution or has it just been delayed?– “Blue Apron wants you to buy some stock but they want you to hold it way longer than people hold Blue Apron subscriptions”.– Adam Ozimek on

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Further reading

24 days ago

Elsewhere on Thursday,– A Guardian longread on Brazil’s Operation Car Wash: Is this the biggest corruption scandal in history?– This seems not ideal but also not surprising: “We find no evidence that senior RMBS bankers at top banks suffered from lower job retention, fewer promotions, or worse job opportunities at other firms compared to their counterparts in other areas of structured finance that experienced no fraud.” See Levine for more. – In defence of stock splits: “To have a robust well-functioning order book, with tight spreads, deep liquidity, and inhospitable conditions for spoofing, large cap companies like AMZN are better off with share prices under $100.”– See if you can spot the problem with this model:But when Uber cut the heavy discounts, ridership tanked. Sixty-three

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Further reading

25 days ago

Elsewhere on Wednesday, – covfefe– “The biggest political story in China this year isn’t in Beijing. It isn’t even in China. It’s centered at a $68 million apartment overlooking Central Park in Manhattan.”– ‘Secular stagnation’ even truer today, Larry Summers says.– Krugman on the US-Germany imbalance.– An aside in the debt debate: “The bond market vigilante story is not only stupid and demonstrably wrong, but it is also an affinity fraud. “Clients” like to hear how heroic and important to society they are.”– Karthik Sankaran on ratings and hegemony.– Steve Cohen’s $20bn comeback is neither $20bn nor a comeback, discuss…– India’s bad debt is looking better to investors, says the NYT. Fair as far as it goes, but we are still waiting for deals to actually get done.– Today in herd behaviour:

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Further reading

26 days ago

Elsewhere on Tuesday,– Gavyn Davies on the Fed’s lowflation dilemma.– Toby Nangle read all thirty four of the written submissions for the Treasury Select Committee about post-crisis monetary policy so you wouldn’t have to.– A look back at the various iterations of the Bloomberg keyboard.– Facebucks, attention as a currency, Blockchain go-to-market & platforms.– Adam Ozimek: Guaranteeing a job for everyone is harder than it sounds.– Couriers on Britain’s shopping addiction: ‘Customers don’t care as long as it’s cheap’.– Balding on whether China can address its bank problems without having currency problems.– Ricardo Hausmann asks if “decent people” should “put their money in emerging-market bond funds” that feature Venezuelan “Hunger Bonds”:The solution is to demand that JPMorgan

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India’s new anti-profiteering authority…

29 days ago

The “License Raj” has been crumbling in accelerated fashion since, for shorthand sake, the year 1991 but its potency as a shorthand in arguments about the interfering quality of the Indian state remains.Take India’s new and long awaited national goods and service tax which aims to simplify a tax code that had been wildly different depending on what state you happened to be in — those different taxes had lead to delays at borders, mountains of paperwork, persistent queries by the uninitiated about what exactly an octroi is, etc etc.Now, the new GST isn’t perfect by any means. It has different tax bands in place for different goods, there are some incongruous bits, and it is basically quite complicated. We’ll put some more in the usual place on that. But the point of this post is that the

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Your morphing savings glut, with bonus demand-supply imbalances

29 days ago

The location of the world’s savings glut has already changed — less oil, more Germany and East Asia.But what’s also changed is that, per BofAML, said glut is no longer getting recycled into fixed income with the same ferocity it used to be:And that, they say, will have consequences:As Chart 3 highlights the most significant structural change is that persistently large current account surpluses are no longer being recycled into the accumulation of central bank reserve assets, which back in 2004/05 caused the decline in long-term US rates that Bernanke commented on. Looked at this from the perspective of current account deficit countries: their deficits are no longer funded by the foreign official sector, but instead by the foreign private sector.This raises two issues for bond markets:1.

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Further reading

May 26, 2017

Elsewhere on Friday,– Romer slaughters kittens… by Paul Romer on his problems within the World Bank, where he has been stripped of management control of the organisation’s research arm following a staff revolted against his attack on the bank’s turgid writing.– Levine: Hedge fund got bananas bonanza of inside information.– The WSJ’s quant series continues with a piece on the battle for talent between Silicon Valley and Wall St. Also a piece on the disappearing college jocks of Wall St.– The WSJ again on a Fannie and Freddie endgame, and why people should be paying attention to “Treasury Secretary Steven Mnuchin’s opening of the door for the first time to an explicit government guarantee for the mortgage market.”– Market volatility, as quoted by MacroMan: “The reports of my death have been

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Further reading

May 25, 2017

Elsewhere on Thursday, – One distinct noise dominated the biggest Wall Street conference of 2017… nervous laughter.– Will Trump destroy the dollar?– VIX manipulation? This paper says yes, probably. Levine explains it further here.– Oh, and Levine also did a Reddit AMA.– Tulips, myths and cryptocurrencies.– ‘Buy the Dip’ is becoming a Pavlovian reflex.– Citi humblebrag about their silly surprise indicator.– “Crispin Odey cites Hitler’s Russia invasion to explain bearish outlook”– Who could’ve guessed that the ‘political intelligence’ industry might help hedge funds insider trade?– The rise of the fat start-up, which apparently is a start-up flush with capital and hubris.– Jeremy Siegel versus Robert Shiller on equity valuations.– A Bloomberg longread: When the patient is a gold mine, the

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Snap AV: IF China’s credit rating downgrade mattered

May 24, 2017

And we’re not saying it does having been persuaded by George Magnus and this one-liner from Paul Donovan at UBS:One of the credit rating agencies – no one cares which one – lowered China’s credit rating from something to something else – no one cares what. There was a flicker of interest in Asian markets (an unusual reaction to a credit rating agency move), but there is no real new information.But IF the downgrade by Moody’s from Aa3 to A1 did matter, it would matter here according to Goldman:Credits with top-down support will be impacted – in our view, the credits that will be impacted by the downgrade are credits whose ratings are assessed more from a top-down approach, i.e. credits where substantial support from central government is implied and with that support being the key driver

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Further reading

May 24, 2017

Elsewhere on Wednesday, – Bernanke with some reflections on Japanese monetary policy.– Jason Furman ran ten million simulations to tell us about President Trump’s chances of achieving 3 per cent economic growth:In running 10,000,000 simulations, the estimated median annual growth rate over the next decade was 1.8 percent, while the 90-percent confidence interval ran from 0.7 percent to 3.0 percent (see figure 2). The odds of the growth rate being at or above 3 percent are only 4 percent—essentially requiring the economy to repeat some of the fastest productivity growth it has seen over the past seven decades.– The WSJ’s algo series continues with a piece about how only robots can tally what the largest US pension fund pays in fees. Which I suppose isn’t that weird?– There are bots. Look

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Further reading

May 23, 2017

Elsewhere on Tuesday, – Doughnut Economics – Grab a pencil, draw a doughnut!– The advantage (in a knowledge economy) of being a little underemployed.– Still not getting it after all these years, UK Treasury edition.– The quants run Wall St now, the first in a WSJ series.– Guy Debelle: How I learned to stop worrying and love the basis.– The outline of how the Indian central bank intends to try and deal with the country’s bad loan problem is getting a little clearer, also the quote here is priceless:The central bank said that it expects rating agencies to play a significant role in the resolution of stressed assets. However, to avoid a case of ‘rating shopping’ or any conflict of interest, the rating assignment may be decided by the RBI. The regulator also plans to create a pool out of

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Further reading

May 22, 2017

Elsewhere on Monday, – A NYT Fyre wrap, including this piece of optimism:Yet, speaking on May 2 with unnerved employees at his TriBeCa office — with its $30,000 sound system and frequent fashion-model visitors — Mr. McFarland deflected blame and vowed that Fyre would survive to mount another festival next year. The coverage had been “sensationalized,” he insisted, according to a recording obtained by The New York Times. (Fyre has attributed its cancellation to a combination of factors, including the weather.)Ja Rule, the rapper and Mr. McFarland’s celebrity business partner, looked on the bright side. “The whole world knows Fyre’s name now,” he said. “This will pass, guys.”– The mad king of juice: Inside the dysfunctional origins of Juicero.– How a family of hog farmers manage the excess

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Further reading

May 19, 2017

Elsewhere on Friday, – What Donald Trump needs to know about Bob Mueller and Jim Comey.– Guntram Wolff: What could a euro-area finance minister do?– After surveying a world plunged into perpetual chaos and fear Jon Corzine decides to start managing money again.– Also, “Bill Ackman said on Thursday he is poised to go on a great investment run after a humiliating bet forced his hedge fund firm to return to basics.”– Ryan Avent on how to negotiate the trade-off between competition and collaboration.– Taibbi pulling no punches: Roger Ailes was one of the worst Americans ever.– The end of competition?– What does that financial-regulatory Rorschach test, the “Twenty-First Century Glass-Steagall,” really mean? And how “Mnuchin’s response at times approached the cosmic incomprehensibility of a

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Snap AV: The state of the reflation trade

May 18, 2017

This is from Credit Suisse’s Andrew Garthwaite and team, who first chart the Trump Trade’s roll-over:They think, despite the above which shows inflation surprises turning negative, that the reflation trade has further to run. It’s just that the drivers are shifting. Here’s their reasoning in summary form:‘Hard’ vs ‘soft’ data gap to close: There has been a near record gap in the US between the survey-based, or soft, data and the real, hard data. In our judgement, this gap will be reconciled by the hard data accelerating while the soft data slows. We still believe that the five structural headwinds to global growth over the past four years are diminishing (fiscal tightening, the euro crisis, bank deleveraging, the decline in BRIC growth and the collapse in commodity prices), while we see US

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