"Kee" Points with Jim Kee, Ph.D.


US: In the U.S., decent housing data pointed to continued, muted recovery in that important sector, but probably the most important data point was the .4 percent increase in the Conference Board’s leading economic index. Good signal of continued expansion.


Europe: At $1.36, the Euro remains above the $1.35 value proposed by Nobel Laureate Robert Mundell as the upper limit, meaning that a Euro above $1.35 would threaten Europe’s weak expansion. Because of that, I have expected that the European Central Bank will ease at some point this year. And indeed, summarizing a recent speech by Mario Draghi, head of the European Central Bank, research house IHS Global Insight suggests that it “seems to reinforce the view that the ECB is much more likely than not to deliver a package of stimulative measures at its June 5 policy meeting.”


China: Much is made of Russian/China pacts regarding energy supplies from Russia to China, particularly the recent $400bb, 30-year deal with Gazprom to supply gas to China. But the U.S. is much more important to China than Russia, a fact recognized by Chinese officials. And if there’s one reason I would give for the current and decades-long failed “China implosion” forecasts, it is the overlooked pragmatism of the Chinese government. People’s University in Beijing professor Wang Yiwei summed it up pretty well in the Financial Times, “China still wants to build a major power relationship with the U.S. China’s interdependence with the world, especially the west, is much higher than Russia’s. We are more concerned about our relationship with the west.” China’s trade flows with the U.S. are three times those of Russia. The title of the article from which that quote was taken, by the way, was “Pragmatism not geopolitics sways Beijing.”


India: At this point it is just about impossible not to know that the pro-growth Narendra Modi has been sworn in as India’s new prime minister (e.g. it is the cover story of the current issue of Economist magazine). There is a lot of newfound hope for India.


Most interesting thing I saw last week: Measure twice and cut once! That’s what I was always taught, and I am sure you were too. So it is hard not to laugh at France’s “tragicomic” error of buying 341 new trains that are too big to fit into many stations! The error occurred because the trains were all built to current “international standards,” but many of the older train platforms were not.