China’s new central banker is a gesture to U.S. 19 Mar 2018 Vice Governor Yi Gang was a long shot due to prejudice against "sea turtles", or Chinese with overseas experience. But as well as a reformer, Beijing wanted someone who could reassure foreign investors. Yi is both. The financial bureaucracy needs more like him.
Volatility now has a life of its own 15 Mar 2018 Measures of how much asset prices are expected to gyrate have risen from ultralow levels. But investment strategies that worked a decade ago may not now. Volatility can now lead, not just follow asset prices and old market relationships may break down when turmoil hits.
China’s lithium trouble in Chile hints at more 15 Mar 2018 A government agency wants to block Tianqi Lithium's bid for a stake in $13 bln rival SQM, arguing the market is too concentrated. China seldom gets pushback in resources M&A. Beijing can expect more potholes as it tightens its grip on ingredients for electric vehicle batteries.
Mario Draghi faces tricky exit from bond buying 8 Mar 2018 The European Central Bank president has started laying the groundwork to end three years of asset purchases. But there’s a growing danger that his careful preparations will be thrown off course by U.S. protectionism, euro zone politics, or unwelcome market moves.
China’s softening on bad loans looks complacent 7 Mar 2018 The regulator is easing buffers required for problem loans, according to media reports. This is another incremental move to relieve struggling lenders and borrowers amid a shadow banking squeeze. That’s good for them, but Beijing appears too relaxed about bank balance sheets.
Euro zone reform faces green and red lights 5 Mar 2018 Germany’s new ruling coalition has cleared the way for reforms to strengthen the single currency area. Yet proposals to backstop banks and governments remain contentious. Italy’s new government adds uncertainty. With the ECB’s firepower waning, delay may prove costly.
China’s economic targets invite promise fatigue 5 Mar 2018 More money and more credit, less tax and red tape, plus the same old 6.5 pct growth target: Beijing’s key economic conference opened with cautious tweaks to last year's playbook. Chinese promises in Davos that reform will "exceed foreign expectations" look thin already.
Powell buys wiggle room with political savvy 27 Feb 2018 The new Fed chair deftly handled his first congressional testimony since taking office, giving few indications he is itching to tighten faster. If anything, his political nous and a friendly Republican majority might give the central bank more room to run the U.S. economy hot.
Latvian bank failure raises 8 bln euro question 26 Feb 2018 That’s the amount foreigners have deposited in the Baltic nation’s lenders. Now ABLV, the third-largest bank, is being wound up following U.S. money-laundering charges. The cost to Latvian taxpayers is limited. Containing the fallout for the overall banking system will be harder.
Latvia exposes euro zone’s money-laundering holes 20 Feb 2018 The U.S. has accused the country’s third-largest bank of busting North Korean sanctions. This triggered outflows and an ECB payment freeze. Euro members Malta and Cyprus have also faced criticism for poor oversight. The bloc needs to rethink the policing of its weakest links.
Spain’s ECB victory is really a win for Germany 19 Feb 2018 The only person left in the race to become European Central Bank vice president is Spanish Finance Minister Luis de Guindos. It’s thus likely that the top job will go to a northern European in 2019. That will please Germans keen for an end to unorthodox monetary policies.
Bank of Japan’s Kuroda bags a tricky second term 16 Feb 2018 Continuity in Japan contrasts with a changing of the guard at U.S. and European central banks. Haruhiko Kuroda is unlikely to wind up asset-buying or ramp it up a lot. But he must handle the backdraft from policy changes elsewhere and has limited scope to fight the next crisis.
Italy’s electoral race has a dark horse 15 Feb 2018 Opinion polls suggest the March 4 poll will produce a conservative or broad right-left government that will maintain the status quo. But new voting rules make predictions harder than usual. A post-election alliance of anti-EU parties is improbable – but not impossible.
Market turmoil increases the attraction of cash 9 Feb 2018 Despite the global stock market selloff, investors are showing little interest in the safest government bonds. That’s because U.S. fiscal and monetary policies have diminished the safe-haven appeal of Treasuries. When neither debt nor equity is appealing, cash becomes king.
Mark Carney’s next rate rise rests on Theresa May 8 Feb 2018 The Bank of England boss says UK interest rates may rise further and sooner than previously anticipated. But that assumes a smooth exit from the European Union. If the prime minister fails to secure a transition deal in the next few months he will have to backtrack.
Chancellor: Beware economic models’ hidden biases 6 Feb 2018 In the age of fake news there’s one comforting thought. It’s easy to expose blatant lies. Harder to identify are possible prejudices buried in the models that inform policy decisions, as recent controversies involving Brexit's impact and the World Bank business rankings suggest.
Volatility shock knocks Credit Suisse’s new image 6 Feb 2018 The value of an exchange-traded fund set up by the Swiss bank to benefit from calm markets has collapsed due to recent turbulence. Though the financial damage to Credit Suisse is minimal, it’s an unwelcome reminder of past mistakes. The reputational fallout could be more severe.
Fed crystallizes Wells Fargo’s Tim Sloan discount 5 Feb 2018 Investors wiped $26 bln off the U.S. lender’s value after Janet Yellen censured it on her last day. That worsens the weak stock-price record since Sloan became CEO. Wells’ top line is growing more slowly than rivals’, too. A new boss could be the cultural change the bank needs.
Mario Draghi is ill-equipped for currency wars 25 Jan 2018 The European Central Bank chief took a potshot at the United States for flouting an international agreement not to manipulate currencies. The rate-setter has limited policy room to resist a strong euro. European politicians who take up the cudgels risk escalating the fight.
Breakdown: How do you say “taper” in Japanese? 22 Jan 2018 The Bank of Japan’s $4.7 trln balance sheet is nearly equal to national GDP. It’s early for a radical rethink by the world’s most aggressive major central bank, but tweaks could be necessary. This will require tact. Mere hints of change recently have upset investors.