Capital Calls: S&P/Visible Alpha 20 Feb 2024 Concise views on global finance: The financial analytics firm’s $500 mln bid for alternative data provider underscores the importance of bringing proprietary data to funds that trade on momentum. But as Lyft’s rally after a typo showed, automation has its limits.
Maxed-out shoppers put fire under Fed’s status quo 31 Jan 2024 American consumers are powering the economy. But their spendthrift ways are a big concern for central bank Chair Jay Powell. Credit card balances have just recorded the biggest jump on record and now top $1 trln. Rates are steady for now. The next move will be much riskier.
Economic slack gives Bailey cover to cut rates 31 Jan 2024 The market wants the Bank of England to lower borrowing costs soon. Governor Andrew Bailey is set to keep them steady on Thursday because inflation remains high. Yet sub-par economic performance in the next few years could pave the way for easier monetary policy from May.
Close the Volcker playbook and open Greenspan’s 30 Jan 2024 Fed Chair Jay Powell wisely embraced Paul Volcker’s inflation-fighting approach from the early 1980s and quickly raised borrowing costs. With price pressures abating, it’s time to change tactics. Leaning into Alan Greenspan’s tactical 1995 interest rate cuts makes more sense now.
Revamp of the world order will have to wait 29 Jan 2024 Developing countries last week called for a rethink of global governance. While it’s possible to imagine an order more conducive to peace, justice and prosperity, the chances of creating it are slim. Better to shore up the existing multilateral system and wait for better times.
Take China’s easing signal with a pinch of caution 25 Jan 2024 Beijing is releasing $140 bln of liquidity at banks, trimming some lending rates, and talking up measures to boost the appeal of stocks. It is also pressing on rebalancing the world’s second largest economy. In a grand overhaul, short-term pain can only be managed to a point.
ECB is battling an imaginary wage spiral 24 Jan 2024 European Central Bank President Christine Lagarde is set to hold rates this week because she fears rising salaries will boost inflation. Yet euro zone workers are getting raises of just 3.8%, down from a year ago. Frankfurt may not want to cheer bigger pay, but it can ignore it.
Fixed income investors have reasons to be fearful 23 Jan 2024 Uncertainty over the direction of inflation and monetary policy is buffeting markets. In this Exchange podcast Jim Grant, founder of ‘Grant’s Interest Rate Observer’, discusses his gloomy outlook for US bonds and sounds a warning about the risks of shadow banking.
Overdraft fee reform has a big, small-bank flaw 19 Jan 2024 The US consumer watchdog’s assault against charges levied when accounts go into the red is a win for customers – but only those of the biggest banks. Small lenders are exempt, partly because of their political clout. Trouble is, they often bank the neediest bunch.
China’s war on corruption turns into high wire act 18 Jan 2024 Xi Jinping is declaring victory in his decade-long war on graft. He has made more progress than India and the US over the same period by some global standards. Yet the decision to double down on cleaning up the finance sector when the economy is weak could come at a heavy cost.
BoE can win inflation race but lag on rate cuts 17 Jan 2024 UK price growth could drop in the spring due to lower energy bills, enabling the Bank of England to hit its 2% target before the US and Europe. But wage and services inflation will stop Governor Andrew Bailey from reducing borrowing costs. So will a likely UK fiscal splurge.
China consumers keep Beijing, and world, on edge 17 Jan 2024 The economy expanded 5.2% last quarter, thanks to manufacturing. But local demand remains weak, forcing factories to look abroad. That will stoke global trade tensions and add to fears that China will export deflation. All eyes are on how Beijing stimulates domestic consumption.
Goldman’s new durability message cuts two ways 16 Jan 2024 After failing in consumer finance, the investment bank wants to emphasize the predictability of its existing businesses. Boss David Solomon makes a good case that a chunk of revenue is more reliable than it once was. And yet arch-rival Morgan Stanley generates even more of it.
Mega-banks menaced by closing jaws in murky waters 12 Jan 2024 JPMorgan, BofA, Citi and Wells Fargo all unveiled financial results clouded by exceptional items and less predictable outlooks. Bad-debt costs are up and interest rates are probably coming down. Cutting expenses relative to revenue, or “positive jaws,” will be a 2024 fixation.
BoE can counter banks’ unfriendly rate fire 12 Jan 2024 UK lenders like HSBC think lower borrowing costs are coming and have slashed five-year mortgage payments below 4%. That makes it harder for the Bank of England to slay inflation and, in fact, may delay any cuts. Governor Andrew Bailey could ask the City to reward savers as well.
Imperial dollar is impervious to lower rate hopes 9 Jan 2024 In theory, the currency should weaken as the Federal Reserve readies to cut borrowing costs. But it is up 1% in 2024 and just had its best week since July. The US economy’s resilience is one reason. But the greenback’s strength also becomes a perpetual problem for everyone else.
Bond deluge will nudge ECB to softer rate stance 4 Jan 2024 European countries’ fiscal needs and the end of central bank buying mean a record 675 bln euros of sovereign debt will be on sale in 2024. That may keep borrowing costs high for states like Italy. ECB President Christine Lagarde can help by meeting investor hopes for swift cuts.
Convertibles will be 2024’s hot financial model 2 Jan 2024 Hybrid bonds, which fueled hedge fund billionaire Ken Griffin’s rise, sputtered after a $370 bln Covid-era boom. Refinancing needs are revving them back up as interest-cost savings lure new issuers like Duke Energy. New features should tempt investors to ride off with them again.
Dear Chancellor: inflation will fall…when it falls 28 Dec 2023 Bank of England Governor Andrew Bailey has to write to the UK finance minister when consumer price growth is above or below 2%. Yet it’s clear mere central bankers can’t influence the behaviour of people or firms. Breakingviews imagines a letter in 2024 which says as much.
Russia’s economy will suffer from brawl at the top 18 Dec 2023 The CEO of state-held oil major Rosneft slammed the central bank’s high interest rates. President Vladimir Putin has long thrived on tensions between hardliners and the few remaining technocrats. But with Moscow in permanent crisis mode, the high-level conflict spells trouble.