Hadas: GDP is a measure ready for retirement 27 Nov 2019 The fuss over China’s revised growth statistics points to peak uselessness of the 85-year old Gross Domestic Product. Too many countries mess with a number which gives slow, blurry readings of the economic pulse, especially for megacities. The future is “now-casting”, and more.
Fed’s stability is an appreciating asset 20 Nov 2019 Ambassador Gordon Sondland implicated not just President Donald Trump, but also the vice president and secretary of state in the House impeachment probe. The central bank’s independence should comfort investors – unless Trump starts threatening Chair Jay Powell’s job again.
German fiscal rethink might backfire on euro zone 13 Nov 2019 ECB boss Christine Lagarde wants Germany and the Netherlands to spend more. Even if she gets her way, the economic benefits for others may be limited. Especially if a northern European rebound lifts the single currency and bond yields, or forces a rethink of easy monetary policy.
Hercules is set to soothe Greece’s Achilles heel 13 Nov 2019 A program named for the mythical hero should help slash the eye-popping 75 billion euros of bad loans at the country's banks. Pricing and tax credits remain unresolved. But the plan will give Athens a better shot at its ambitious goals for economic growth.
ECB decisions would benefit from a bit more light 11 Nov 2019 The central bank’s policy-making process is less formal and transparent than peers. New boss Christine Lagarde could change that by holding formal votes. Publishing the results, as the Fed does, would raise problems. But disclosing anonymous tallies would still be an improvement.
Hadas: Sweden raises tone of negative rate debate 6 Nov 2019 Its central bank plans to increase the policy interest rate to zero. Current conventional thinking says that is a step in the wrong direction. But there are reasons to worry about minus signs on rates. If the economy emerges unscathed, others may copy the Swedish experiment.
EU banking union needs more than German concession 6 Nov 2019 Finance Minister Olaf Scholz is willing to consider an EU deposit insurance scheme. Countries like Italy may balk at some of his conditions. That such a sensible plan can take so long to come to fruition shows how far Europe is from rational policy making on financial regulation.
UK gilts’ odd stability is precarious 6 Nov 2019 Britain’s main political parties are in a bidding war to woo voters before an election. Yet UK debt yields are steady. Hopes of more Bank of England easing is one reason. Bond vigilantes will wake up if a smooth Brexit opens the way for rate rises and government spending surges.
Fed cut is over-stuffing the cushion this time 30 Oct 2019 Another interest-rate reduction is what traders wanted. But U.S. stocks just hit a record high, the economy is chugging along with solid – if not spectacular – growth, and inflation has crept up. The Fed’s touted data dependency is looking more like addiction to the markets drug.
Mario Draghi’s tacit advice to Christine Lagarde 24 Oct 2019 The outgoing ECB boss says his successor needs no guidance. But his last big news conference contained clues. First, never give up, though economic risks are rife. Second, turn the page on infighting. Third, be wary of financial bubbles. Fourth, expect brickbats, whatever you do.
Christine Lagarde gets lucky with German ECB pick 23 Oct 2019 Berlin is set to nominate Isabel Schnabel to the central bank’s board. The university professor would bring economic expertise, and, judging by public comments, more open views on monetary policy than her Teutonic predecessor. The new ECB president would welcome both qualities.
World’s financial superheroes encounter kryptonite 21 Oct 2019 Fixing what’s blighting global growth prospects is, for once, beyond the combined capabilities of the finance ministers and central bankers who frequent the IMF’s annual meetings. They can do a lot, but are proving less potent when gravel is thrown in the gears of world trade.
Mario Draghi’s detractors prepare for next fight 10 Oct 2019 The outgoing ECB boss ignored technocrats’ advice not to resume bond buying, the FT says. The leaked guidance reflects increasingly vocal dissent. The central bank won’t reverse its looser policy any time soon. But incoming chief Christine Lagarde faces clear battle lines.
London IPO abattoir’s next victim could be African 9 Oct 2019 Trade bank Afrexim wants to raise $200 mln in the UK, despite recent troubled attempts by Kazakh and UAE groups. A new continental free trade deal bolsters its case. But demand for an entity controlled by regional governments could elicit a similarly lukewarm response.
Breakdown: Fed needs adaptable repo response 8 Oct 2019 Chairman Jay Powell says the U.S. central bank will start buying bonds again to help ensure money markets stay well behaved. The Fed has learned a tough lesson from last month’s spike in repo rates: exiting the era of quantitative easing isn’t going to be easy.
Bank of Japan tests the limits of monetary policy 1 Oct 2019 The weakest Japanese government-bond auction in three years caused global yields to jump. The swift reaction, rooted in uncertainty about new policies designed to keep rates low, should teach Europe a worrying lesson: A bond-purchasing safety net can sometimes be dangerous.
India’s financial fires are starting to rage 1 Oct 2019 An outsize scandal at a Mumbai-based co-operative bank, abetted by poor oversight, has battered confidence. Plummeting share prices, meanwhile, raise questions over the future of private lender Yes Bank, and others. It signals loan pain to come for an already scorched economy.
German ECB exit could make Lagarde’s life harder 26 Sep 2019 Sabine Lautenschlaeger resigned from the European Central Bank’s board. With no reason given, it is all too easy to blame the premature departure on discontent over recent monetary easing. Incoming boss Christine Lagarde’s room for manoeuvre may be shrinking before she starts.
Fed wrestles the unpredictable and the unintended 18 Sep 2019 Cutting interest rates again was the easy part. The whimsical trade policy of President Donald Trump and threats to oil supplies call for insurance. But stress in money markets is partly the U.S. central bank’s own handiwork. Chair Jay Powell is discovering the Fed’s new normal.
ECB’s Super Mario channels a new cartoon hero 12 Sep 2019 Mario Draghi unveiled a rate cut and new asset purchases, his parting gift as central bank chief. While he shares a name with Nintendo’s famous plumber, the open-ended buying smacks of Toy Story’s Buzz Lightyear. Markets seem to think stimulus will last to infinity and beyond.