Archive for December, 2016

THE GLOBAL ECONOMY IN NOVEMBER

November was characterised by the divergent reactions of markets to the surprise win by Donald Trump to become the next US President. US equity benchmarks reached record highs over the month, with the Dow Jones Industrial Average reaching its highest ever, while the yield on US Treasuries jumped to record levels amidst a global bond selloff. The US dollar continued to strengthen throughout the month. These were catalysed by market sentiment that Trump’s policies will boost US fiscal spending and increase inflation, forcing the US Federal Reserve to increase the pace of its rate hike process. However, the rally seems to have lost steam towards the end of the month, with questions about whether it was overdone.

On the other hand, Emerging Markets (EMs) were severely affected by the uncertainty over the impact of Trump’s protectionist policies and risk-off sentiment affecting high risk EM assets. Fund outflows from EMs have been estimated to be around $24bn since the election. Several EM central banks and governments were forced to intervene in order to prevent their currencies from depreciating to record levels amidst outflows and the strengthening dollar. Among them Malaysia sought to control currency trading and Indonesia followed the traditional central bank intervention of selling dollars to the market. Although most Asia Pacific stock markets saw loses from the uncertainty, Japan’s benchmark Topix reached its highest since early 2016 thanks to a weakening yen boosting Japanese exports.

Indian Prime Minister Modi’s surprise demonetization of the 500 and 1000 rupee notes on November 8th has led to a frustrated public struggling to convert their cash and has created a liquidity crunch that could cost as much as 1% of India’s GDP. Analysts expect Indian corporate earnings to drop in the short term, but see the process boosting bank deposits.

In Europe, attention was on more elections and referendums. Italy’s constitutional referendum on December 4th was the highlight and saw a resounding ‘No’ vote causing Prime Minister Renzi to resign on Monday. The market reaction was largely muted, but Italy faces the risk of a banking crisis, credit downgrades by ratings agencies and the emboldening of its populist parties. Austria managed to hold back the populist wave on Sunday, denying the right-wing anti-immigrant candidate its Presidency.

Oil prices rallied last week to record the best weekly gains for Brent crude since 2009, following the OPEC agreement on November 30th on production cuts. The agreement outlined the individual commitments made by each state, including non-OPEC Russia and Oman. It was made possible by Saudi Arabia agreeing to concede to concessions to Iran to increase its output to pre-sanctions levels. However, analysts continue to doubt the impact of the agreement in terms of adherence to the limitations and increased output by US shale oil producers.

Self-Managing: With Great Freedom Comes Great Responsibility

This week on Friday Focus we look at what freedom at Frontier means for its team. 

Frontier is largely a self-managing organization, we avoid having a rigid hierarchy and are constantly evolving as organizational needs change. 

 

Self-management is not entirely a new phenomenon, earliest examples of it date back to the 1950s. At the core of it though, what is self-management? As Frederic Laloux writes “Self-Management is not a startling new invention by any means. It is the way life has operated in the world for billions of years, bringing forth creatures and ecosystems so magnificent and complex we can hardly comprehend them. Self-organization is the life force of the world, thriving on the edge of chaos with just enough order to funnel its energy, but not so much as to slow down adaptation and learning.”

At Frontier we try to be as organic as possible. We only meet when we really have to, and the moment we spot anything unnecessary in what we do, we get rid of it. Everyone has a seat at the table, but we usually find that different team members are more influential when it comes to certain subjects than others, in this sense the concept of ‘power’ within Frontier is also organic and fluid. To quote Rufer again “on any issue some colleagues will have a bigger say than others will, depending on their expertise and willingness to help. These are hierarchies of influence, not position, and they’re built from the bottom up. At Morning Star one accumulates authority by demonstrating expertise, helping peers, and adding value. Stop doing those things, and your influence wanes—as will your pay”.

For self-management to really work within an organization the people that are a part of it also have to be expert self-managers. They have to be dynamic, proactive and ambitious if the organization as a whole is to thrive.

“For people experiencing Self-Management for the first time, the ride can be bittersweet at first. With freedom comes responsibility: you can no longer throw problems, harsh decisions, or difficult calls up the hierarchy and let your bosses take care of it. You can’t take refuge in blame, apathy, or resentfulness. Everybody needs to grow up and take full responsibility for their thoughts and actions―a steep learning curve for many”

 

For more on how we do self-management, visit our blog.

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