Top Stories

World economy

No Picture

World economy 26th December 2014

The Fed will almost certainly fail the next QE

SAO PAULO | By Benjamin Cole via Marcus Nunes’s Historinhas | The results are in, and it appears the Fed’s use of QE—faltering, dithering, at times mindlessly circumscribed in advance—was moderately successful in helping the U.S. climb out of recession. Europe is still mired in econo-gloom, courtesy of the ECB’s monetary noose around its neck. Japan may only now be fighting its way out of perma-gloom by way of aggressive QE. The U.S., in contrast, has posted slow growth since the end of the 2008-09 “great recession”.

Saito TN

World economy 26th December 2014

“People forget that QE is a Japanese innovation”

MADRID | By Ana Fuentes | In a blow to PM Shinzo Abe, the Japanese inflation rate fell to its lowest level in over a year in November (0.7% from a 0.9% rise the previous month, according to government data released Friday), complicating efforts of the central bank to end more than a decade of chronic price falls. Does this mean, as stimulus sceptics put it, that the Abenomics are doomed? Advisor to the new government and one of the 100 Most Influential People for Japan according to Nikkei Business, William H. Saito believes we have been quick to judge their strategy. As he explained to me, they have “many plan B’s left.”

 

No Picture

World economy 26th December 2014

Hu-Gang Tong puts China on path to strong capital market

SHANGHAI | By Qi Bing via Caixin | The smooth opening of the Hu-Gang Tong, the Shanghai-Hong Kong bourse linkage, marked the entrance of the Chinese capital market to a new era and was a major global event. It follows on progress China has made in opening up its markets after joining the World Trade Organization, and will hopefully greatly boost the country’s economic and social reforms in the years to come.

oil prices

World economy 23rd December 2014

Opec won’t cut production. Not even if oil barrel hits $20

MADRID | The Corner | “It’s not in the interest of OPEC producers to cut their production, whatever the price is… Whether it goes down to $20, $40, $50,$60, it is irrelevant, ” Saudi Arabia’s oil minister Ali al Naimi said in an interview with Middle East Economic Survey, quoted by Reuters. He sent oil prices tumbling below $60 per barrel. The oil crisis is causing violent and undesirable market volatility.

No Picture

World economy 23rd December 2014

Dollar strength means… remarkably little in the real world

ZURICH | UBS analysts | The recent general strength of the dollar has a bearing on commodity prices, clearly. Commodities are universally priced in dollars, and as homogenised products dollar appreciation should lead to a decline in commodity prices in dollar terms. However, the strength of the dollar against sterling (in 2008/9) or against the yen (sporadically since 2012) did not lead to UK or Japanese exporters cutting the dollar price of their manufactured products or services. 

No Picture

World economy 22nd December 2014

Market stress or financial crisis?

ZURICH | UBS analysts | The initial move in oil price was greeted as stimulating growth. The precipitous decline is triggering destabilising factors, especially in EM. As the US economy has accelerated, concern is growing that the Fed is about to shift policy in ways suited to its domestic objectives but not to the needs of increasingly stressed emerging and commodity producing countries and companies. In short, uneven global growth is simultaneously raising the spectre of unsustainable debt deflation across important parts of the (mostly emerging) world and a tightening of US dollar liquidity precisely when it is most needed.

Japon recurso1TC

World economy 20th December 2014

Japanese economy: short-term gain, long term pain?

MADRID | By Luis Arroyo | When many were speaking of a new Japanese recession and the failure of Shinzo Abe’s bold Keynesian policy, his Liberal Democrat Party obtained a sweeping victory at the polls on Sunday. In Europe, the Abenomics are in austerity fans’ crosshairs because if these policies happen to work they would look ridiculous. They were delighted when Japan’s GDP contracted in 3Q. But I’ve been following the Nippon economy for some time and I don’t really rust quarterly figures.

china

World economy 20th December 2014

China bans its own national anthem

By Ray Kwong | When it comes to putting the kibosh on things, the folks at Zhongnanhai (China’s version of the White House) have few peers. In recent memory, China has seen fit to ban puns, long beards, zombies, American pork, British cheese, clams from Alaska, Islamic-style clothing, TV programs that feature one-night stands, April Fools jokes, Bitcoin, film stars who use drugs or pay for sex, Windows 8, smoking in public places, the entire Muslim holy month of Ramadan, and the “The Big Bang Theory.”

And that was just this year.

Fed

World economy 18th December 2014

Fed’s baby steps towards tightening

MADRID | The Corner | Janet Yellen spoke about patience in judging when to raise rates on Wednesday, which means no hikes for at least two meetings. The change in guidance was played down by the FOMC statement. BNP Paribas analysts thinks the US central bank wants to prepare markets for hikes but at the same time reassure them. They call for the first hike in September.