Central Banks

Noel Quinn deftly sails HSBC into stiff winds

27 October 2020

A 36% fall in quarterly profit was better than feared thanks in part to choppy markets. The CEO’s plan to wring more fees out of customers is also welcome. Low interest rates are only one problem, though. UK, U.S. and Chinese authorities loom too large over the bank’s prospects.

Review: Picking the turning point in inflation

16 October 2020

In “The Great Demographic Reversal”, Charles Goodhart and Manoj Pradhan make a good case for why prices will take off. Ageing societies need more carers and labour scarcity may finally lift wages. But they’re perhaps too sanguine on how soon pandemic-stricken economies can heal.

The Exchange: The long wait for inflation

6 October 2020

Charles Goodhart and Manoj Pradhan tackle an issue perplexing policymakers and investors: if, and when, price pressures will rise. The authors of “The Great Demographic Reversal” discuss ageing societies, emerging economies, and why the world won’t follow in Japan’s footsteps.

Corona Capital: Fiscal stimulus, Fitness riches

6 October 2020

Concise views on the pandemic’s corporate and financial fallout: Central bankers including the Federal Reserve’s Jerome Powell urge more fiscal help as Covid-19 cases rise again; and the owner of NordicTrack treadmills raises cash at a $7 billion-plus valuation.

ECB’s valiant “lowflation” brainstorm has a flaw

30 September 2020

President Christine Lagarde outlined several ways the central bank’s strategy might adapt to a world where prices rise too slowly, not too fast. For all its merits, the exercise assumes rate-setters have full control over inflation. The past decade shows they don’t.

Angst-ridden end to 2020 is written into options

23 September 2020

As if Covid-19 hadn’t sparked enough market gyrations, the next three months bring U.S. elections, tense UK-EU trade talks, and more. Central bankers are keeping bonds on a tight leash so jitters will be channelled into currencies. That is already showing up in FX option prices.

The Exchange: Inflation nation

22 September 2020

The Fed’s new rate-setting philosophy is a game-changer, and hawks have become an endangered species in D.C. So argues David Kelly, chief global strategist at JPMorgan Asset Management. The central bank may boost inflation, he suggests – but its blunt tools could cause damage.

Corona Capital: Newspaper rivals, College football

17 September 2020

Concise views on the pandemic’s corporate and financial fallout: the Wall Street Journal hits up the New York Times’ printing presses; U.S. college football’s Big Ten makes a comeback.

Corona Capital: Fed’s optimism, Package holidays

16 September 2020

Concise views on the pandemic’s corporate and financial fallout: Jay Powell and crew at the U.S. central bank reckon the nation’s economy is doing better, just, than they expected; Anglo-German travel company TUI may raise 1 bln euros as the virus whacks new bookings.

Jay Powell kills inflation-focused central banking

27 August 2020

The Fed chief will now accept overshoots above the 2% target that his monetary policy has in any event failed to hit. Instead, the U.S. central bank’s new mission statement targets robust labour markets more aggressively. It's a recipe for ultra-easy policy more of the time.

Fed policy review will leave market put untouched

26 August 2020

Chair Jay Powell’s every utterance is being scoured for hints of whether a new framework will introduce innovations like average-inflation targeting. But one thing won’t change. Rate setters will backstop markets, as they have done for a decade, and investors are counting on it.

Guest view: Freeing Abenomics from Abe

26 August 2020

Japanese Prime Minister Shinzo Abe’s return to hospital has raised concerns about a change of power. His signature economic policy fell short even before the pandemic. A strong successor could reinvent it, but that seems unlikely, argues ex-BOJ policy board member Sayuri Shirai.

Norway’s $1.1 trln fund is a bad toy for hedgies

24 August 2020

Nicolai Tangen’s appointment as boss of the gargantuan rainy-day fund hangs in the balance. Norwegians mostly worry about the big investor’s conflicts, but his likely approach is a larger concern. Active trading of so much money could pointlessly disrupt global markets.

Corona Capital: Dividends, Zoom, Big-screen blues

24 August 2020

Concise views on the pandemic’s corporate and financial fallout: As company bosses try to conserve cash, investors are feeling the pinch; Zoom has a back-to-school problem; and a mediocre debut for Russell Crowe’s new road-rage movie shows Hollywood is stuck in the slow lane.

EU banks’ sovereign-debt relapse brings new risks

24 August 2020

Lenders from Italy’s Intesa Sanpaolo to Spain’s BBVA have boosted holdings of domestic government bonds, helped by cheap ECB funds. The exposure leaves them vulnerable if euro zone breakup fears return. And it makes completing Europe’s banking union and cross-border M&A harder.

U.S. stocks send a mostly mathematical message

20 August 2020

Record highs for the S&P 500 Index can co-exist with a weak and unpredictable economy. Sure, businesses are emerging from shutdowns; on the other hand, joblessness remains high. But stock markets arguably just reflect the new distorted reality – one with squashed interest rates.

Temasek MAC attack draws Singapore’s bailout line

12 August 2020

The sovereign fund escaped a $3 bln deal for rig-builder Keppel, citing a “material adverse change”. It avoids setting an unrealistic valuation that would complicate consolidation. Singapore’s offshore sector can get its fix without turning patient capital into reckless capital.

Does $20 trillion buy much inflation?

11 August 2020

The market’s answer is a firm no. Global stimulus worth over 20% of world GDP has been unveiled, on Bank of America’s numbers. Future price expectations are rising but have yet to bust central bank targets. These low readings show the continuing mystery of inflation’s causes.

China bank failure fires quiet warning shot

10 August 2020

Beijing will let Baoshang Bank go under in the first such insolvency since 2001. The liquidation of the lender, used as a piggy bank by an insurer, will raise credit costs for small peers, pushing more of them to the brink. It’s an overdue cleansing, but a risky time to do it.

At least U.S. GDP trajectory is a known unknown

30 July 2020

Output crashed at a 33% annual pace in the three months to June. The current quarter looks less bad. The size and durability of gains in activity and jobs are, though, anyone’s guess. Real-time data speeds measurement. And the Fed, and especially Congress, can shift the outcome.