THE CORNER TEAM | Remember when we told you the euro-zone was on the road to recovery after a particularly encouraging PMI was released? Now a bunch of analysts are focusing on the end of recession. The ECB keeping on with its low interest rate policy, as well as the U.S. Fed non-tapering-yet mood should help too, they say. However, a minority of market watchers point out this relative financial stability may not last long.
WASHINGTON | By Jeff Madrick via The Next New Deal | Wall Street has responded well to Summers’s withdrawal, but Main Street would also be better off without an inflation hawk leading the Federal Reserve.
By Barry Knapp (Barclays) | There is a key difference from the surprisingly low volatility Septembers in 2009-12. In that period, the Fed was either buying assets or had pre-announced a new program; this year, it is preparing to weaken the portfolio balance effect. In our view, for equities to overcome unfavorable seasonality and another round of fiscal concerns, fundamentals, which have been mediocre for over a year, due primarily to weakening global and soft domestic growth, will have to improve considerably.
MADRID | By J.P. Marin Arrese | When it comes to make a decision, a central banker is not supposed to hesitate, otherwise bewilderment and dismay will take in and lead to utter economic disarray. Mr Bernanke is bound to keep his word about tapering. And he has very little time to deliver before leaving office.
By Johannes Müller (Deutsche Asset & Wealth Management) | Fed’s tapering will be the beginning of a normalization of financial markets. The U.S. central bank is beginning to lift the foot off the accelerator, but it is unlikely that Bernanke and company will imminently step on the brake.
MADRID | By J. P. Marin Arrese | As Barroso recently delivered his yearly “state of the Union” speech, only staunch believers in the European dream think he is in full command. His so-called executives act as bell boys ready to carry the luggage to those national governments that run matters, especially Berlin. Managing a tiny 1% GDP budget, the Commission proves quite unable to exert any influence on the area’s economy.
SAO PAULO | By Marcus Nunes | In a recent post John Taylor leans on Bob Hall to criticize NGDP Targeting. He goes: “In his paper at the recent Jackson Hole conference, Bob Hall criticized nominal GDP targeting, citing his 1994 paper with Greg Mankiw. Bob argues that “A policy of stabilizing nominal GDP growth would require contractionary policies to lower inflation when productivity growth is unusually high. Such a policy might easily trigger a spell at the zero lower bound.”
NEW YORK | By Ana Fuentes | Barack Obama will give six interviews to U.S. media this Monday to build public support about an intervention in Syria. The White House is using its lobbying skills to make a case for an action that for some analysts could compromise the last good economic data.
MADRID | By Luis Martí | Spaniards are not slim quite yet. Or that’s how the IMF’s last report sees it. While admitting that reforms have gone quite far, the IMF wants wage earners to run an extra mile. But there are a few reasons why the institution’s proposal doesn’t make the cut.
MADRID | By Francisco López | The euro zone’s growth has been better than expected and the last data had unleashed speculation before a possible change of message of the ECB’s President. Far from reality. To the disappointment of the Bank’s Board hawks, with Germany at the forefront, Mr. Draghi has guaranteed that the price of money will follow “at the current level (0.50%) or even lower for an extended period of time”.