U.S. Treasury hasn’t yet been Trumped 17 Oct 2018 China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.
China’s share-backed debt problem is a lasting one 16 Oct 2018 Some $220 bln of loans backed by stock collateral threaten to worsen a nearly $2 trillion selloff this year in the People's Republic. Beijing is likely to step in to contain the immediate risk, but higher lending costs and moral hazard will hurt for longer.
Markets are finally getting back to basics 11 Oct 2018 A slump in stocks slowed on Thursday, partly thanks to tame U.S. inflation data. American equity valuations are high, trade tensions and interest rates are rising, and earnings season is under way. Six months of steady tech-led gains may be giving way to the facts on the ground.
South Africa offers markets a too-friendly face 9 Oct 2018 New finance chief Tito Mboweni is one of the country’s most respected black economists, and his decade at the helm of the reserve bank adds credibility to Cyril Ramaphosa’s government. Ties to Goldman Sachs, though, could make him a target for political criticism at home.
The Exchange: Jeff Lacker 9 Oct 2018 The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.
Beijing’s $175 bln boost raises stimulus conundrum 8 Oct 2018 The central bank has pumped yet more cash into the system. Despite the debt hangover from its last spree, China does need more investment in green technology, healthcare and education. Economically, it can also afford to spend wisely. Haste, though, will make more waste.
India holds back a currency bazooka 5 Oct 2018 The rupee is the worst performer in Asia this year, and doubts about the integrity of local shadow lenders are weighing it down further. A decision to keep rates steady acknowledges monetary policy won’t help much. Still, the central bank has a bigger weapon: diaspora bonds.
Credit Suisse LBO defence is a hostage to fortune 3 Oct 2018 The Swiss bank’s asset management arm lauded the attractions of the leveraged loan market in a letter to clients last month, according to the FT. The pitch will do little to reassure those who are alarmed by the erosion of lenders’ rights and could backfire when the market sours.
Italy budget gives with one hand, takes with other 1 Oct 2018 The new government has chosen to fight stuttering growth with tax cuts and a “citizens’ income”. Ditching austerity may boost sentiment and lift consumer spending in the short term. But the plan lacks a credible strategy to fight youth unemployment which is over 30 pct.
China is feeling the aftershocks of 2008, again 28 Sep 2018 Wall Street’s implosion taught Beijing to rue reliance on a rival. Yet officials, gloating over U.S. failures, neglected reform. Despite a decade trying to wean itself from American consumers, cash and currency, complacency has left China exposed to bad policies in Washington.
Indonesia could grease economic wheels with oil 27 Sep 2018 Rising Brent prices and a falling rupiah have left the country choking on fuel costs. It was once an OPEC member and net exporter, but now imports almost $1 bln of crude monthly. Even with a fresh interest rate hike, Jakarta can take fiscal steps to ease its energy pain.
Climate change stress tests omit the stress 27 Sep 2018 More companies are releasing guidance on how their balance sheets might cope with a decarbonised world. Unfortunately, disclosures are thin on detail and political apathy gives boards cover to do little. Time to turn voluntary exercises into more exacting and mandatory reviews.
Hawkish Fed competes with trade as investor risk 26 Sep 2018 The U.S. central bank raised rates for the third time this year and will probably do so again in December. Meanwhile, its balance sheet is shrinking as Uncle Sam issues more debt. U.S. duties on $200 bln in Chinese goods also just hit. The confluence could upset markets.
India’s financial turmoil augurs a reckoning 25 Sep 2018 Infrastructure lender IL&FS has helped trigger market mayhem, prompting regulators to step in to try to calm investors. The boss of India’s largest bank says this isn’t a “Lehman moment”. Maybe, but the amount of bad debt and short-term funding are worrisome.
Donald Trump makes Fed great again 20 Sep 2018 The U.S. president chose economist Nellie Liang to be a central bank governor. It will be the first time in five years that all seven board seats are filled. Liang’s financial stability expertise rounds out Trump’s other conventional picks and is going to be handy if crisis hits.
Bad time for Nigeria to bash foreign investors 20 Sep 2018 Outsiders pumped $15 bln into the African country’s financial markets in the last year, helping its oil-dependent economy. Though crude receipts are healthy, emerging market nerves are curbing appetite for its debt. High-profile attacks on HSBC and telecom group MTN won’t help.
Speedier FX markets offer muddier signals 17 Sep 2018 Electronic trading and automation has made the foreign exchanges even zippier, a BIS report says. That has both increased fragmentation in the $5-trillion-a-day currency market and given more clout to the biggest banks. Knowing who is doing what and why is even harder to discern.
Chancellor: The carry trade that followed Lehman 14 Sep 2018 The subprime crisis was born from yield-chasing in the Greenspan easy-money era. Even lower interest rates since the Lehman bust revived the global carry trade. Another maelstrom will be hard to avoid.
Chancellor: “Haves” enriched most from Lehman bust 13 Sep 2018 Ultralow interest rates after the crisis may have lifted many boats, but the yachts of the wealthiest have been buoyed above all. Wall Street and the CEO class particularly benefited. This has come at the expense of the less fortunate, who are making their displeasure known.
For Abe’s next trick, a diplomatic balancing act 10 Sep 2018 The veteran leader is on track to become Japan’s longest-serving prime minister. After almost six years of Abenomics, his signature policy is gaining traction. But with Tokyo caught in trade war crossfire, Shinzo Abe’s manoeuvring in Beijing and Washington will matter more.