China: ‘Important Information’ vs. Information that Is Important
BEIJING | By Yang Hengjun via Caixin | Leaders in China should beware of reports and views that are sanitized so as not to offend because they will lead to distorted decision-making.
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European earnings: Blink and you’d miss it
LONDON | Barclays | Is this it? In the last week earnings estimates have risen by 11bps. At first glance you’d be forgiven for thinking that’s a trivial amount. But after years of near-constant downgrades ,we believe it could be very relevant, particularly when taken alongside a reporting season which is proving surprisingly strong. Of course one swallow doesn’t make a summer, but this is an important development nonetheless. If this trend continues, it could finally mark the end of the downward cycle.
Corruption in Spain: Something rotten in the state of democracy
MADRID | By Sean Duffy | At this point, many Spaniards just shrug or roll their eyes. Perhaps you will occasionally see a strong shake of the head in cases of extreme exasperation. To universal dismay, this week brought yet more allegations of corruption against the ruling Popular Party.
Do the ECB’s stress tests results change anything for EU banks?
MADRID | The Corner | The ECB’s comprehensive assessment showed positive results, yet not sufficiently positive for banks to increase risk and lending. So no, stress tests were not a clearing event and we are not entering a new era as some have said. Which makes it harder for policy makers to rely on bankers for economic growth. This scenario “will likely add to pressures for greater structural reform in Europe,” analysts at Barclays believe.
How to solve the problems of Europe’s second biggest economy
John Bruton | I recently attended a conference that looked at France’s domestic economic situation, and the impact that has on the country’s global and European role. According to budgets published in October, France and Italy are failing to meet the eurozone’s requirements for reducing government debts and deficits to sustainable levels.
China’s growing private sector
By Richard N. Cooper via Caixin | There is a widespread impression both inside China and out that after the vigorous economic reforms of the 1980s and 1990s, moving away from central planning and state control to greater emphasis on markets, the reform process stopped, or even reversed, during the 2002-2012 period. This view was perhaps reinforced by the emphasis in the third plenum of the Communist Party’s 18th Central Committee in November 2013 on the need to move further toward less guidance from the state and greater reliance on market prices to allocate resources.
Spain: Growth slows down slightly, but it is still ahead of peers
MADRID | The Corner | Spain’s real GDP increased by 0.5% q/q in Q3 14 (flash estimate), in line with market consensus. Experts at Barclays believe that most of the growth contribution came from domestic demand, as weak eurozone growth in Q2 and Q3 likely implied soft external demand from key trading partners, including from the largest three economies.
“QE ends and I feel fine”
WASHINGTON | Comment by UBS analysts | The FOMC ended QE and made its Fed funds rate hike guidance a bit more data- dependent. While the funds rate is likely to remain in its current range “for a considerable time” after asset purchases end at the end of this month, rate hikes could occur sooner or later than the Fed currently anticipates depending on the evolution of economic data. This was as straightforward an FOMC statement as could have been expected at the end of QE. It does not suggest changes in Fed thinking; nor does it change our expectations for the first Fed fund rate hike in mid-2015.
The Fed becomes slightly more hawkish
MADRID | The Corner | As expected, the Fed confirmed the end of its QE3, although the announcement was slightly more restrictive. According to experts at Link Securitites, “while the decision shows that US economic conditions have improved (especially the labour market) and inflation remains at low levels, the message tone was more hawkish.”
Fed shutters bond-buying program
MADRID | The Corner | Showing its confidence in the US economic recovery and the jobs market, the Fed announced it will put an end to its bond purchases scheme before the end of this week, the central bank announced after its FOMC two-days meeting on Thursday. Short-term interest rates will remain near zero for a “considerable time”.