Reviving recovery story puts bonds at risk 2 Sep 2010 The market mood has swung back from double dip to recovery. Solid U.S. manufacturing was the chief catalyst, though fast growth in exportoriented Australia is another sign that Chinese growth is holding up. Bonds that are priced for a deflating world now look vulnerable.
Obama pulled two ways on stimulus 2.0 2 Sep 2010 Departing White House economic adviser Christina Romer says last year's $814 bln package fell short. That may suggest those arguing for more are gaining ground with the administration. But short of a renewed economic slump, electoral politics are working against more spending.
A Labour leader who could upset the UK coalition 2 Sep 2010 Two Eds, two Milibands, and about half a policy between five candidates. One will lead Britain's opposition Labour party, but only David Miliband, front runner ahead of his younger brother Ed, appears to have grasped the scale of the UK's problems.
State capital sounds alarm on muni defaults 1 Sep 2010 Harrisburg, Pennsylvania, is skipping a general obligation bond payment. The default is small but the significance potentially much larger. The struggles of municipalities tend to lag the economic cycle and a sluggish recovery could very well produce a surge of them.
Fuld may have a point mixed in with his Kool-Aid 1 Sep 2010 Blaming Lehman s demise on the lack of a bailout neglects years of hubris. It was Fuld s job to watch his firm s back. But his charge that regulators were damagingly inconsistent is fair. The U.S. crisis commission should get to the bottom of why and how to avoid it next time.
It may be too late for Obama to cut taxes 1 Sep 2010 The administration is possibly warming to the idea of tax breaks to boost the economy. Such a plan would have landed plenty of Republican votes 18 months ago. But with the president s popularity falling and elections looming, congressional support won t be so easy to coalesce.
Decent Canadian recovery outshines sluggish U.S. 31 Aug 2010 The annualized Q2 growth rate of 2.0 pct north of the border didn t much beat the U.S. pace, but final demand growth at 3.2 pct was much stronger. That s an indication that Canada s economy, though weighed down partly by its neighbor s weakness, is recovering more robustly.
FDIC’s cautious optimism at odds with the market 31 Aug 2010 Bank investors digested the Q2 positives the regulator is just pointing out weeks ago. Now revenue shortfalls and chances of a double dip worry them enough to drive many bank stocks below book value. The FDIC s report is a handy historical snapshot, but may already be outdated.
Strong yen is not Japan’s main problem 30 Aug 2010 The BOJ's latest moves failed to weaken the currency. In any case, the tradeweighted yen is weaker than its real 19902010 average and Japanese exports are still rising. Export lobbies may have the government's ear, but intervention could make Japan's domestic predicament worse.
Bernanke fights phantom problem, ignores real one 27 Aug 2010 The Fed boss said on Friday he would act against deflation but he ignored the federal deficit. Even Japan has not had significant longterm deflation, while the U.S. deficit is at record levels. Bernanke s faulty diagnosis and treatment are unlikely to produce faster growth.
South Africa has work cut out to reach BRIC goal 26 Aug 2010 President Jacob Zuma wants South Africa to leap from the emerging CIVETS grouping into the club representing the biggest fastgrowing economies. That would bring a deluge of foreign investment. But Zuma has plenty to prove including that he can avoid the BRICs worst failings.
SEC’s speedy Potash Corp charges put FSA to shame 25 Aug 2010 Barely a week after BHP launched its $39 bln bid for the Canadian mining group, the U.S. watchdog has charged two Spaniards with insider dealing. The speedy international swoop makes the UK Financial Services Authority's muchhyped crackdown on whitecollar crime look vegetative.
Ireland’s bad bank needs full transparency 25 Aug 2010 The Irish Nationwide Building Society has dumped 591 mln euros of dud loans with Ireland's bad bank at a 72 pct haircut. There could be tidy gains on future sales. But without decent disclosure around the sale process, there's no way of knowing that taxpayers will get full value.
One easy cut for the UK: a 17 bln stg train set 25 Aug 2010 A new railway linking England s two biggest cities sounds like an extravagance at the best of times. But when UK public spending needs drastic pruning, such a project is totally divorced from economic reality. The government should scrap it.
U.S. house sales decline brings double dip closer 24 Aug 2010 The plunge in existing home sales in July owes much to the expiry of a home buyers' tax credit. But real house prices are still as high as in 2000, so their tentative recovery is vulnerable to another significant leg down. That in turn could bring a second recessionary downturn.
100-year Treasuries could be tough sell 24 Aug 2010 If a U.S. railroad can issue 100year bonds, why not the U.S. Treasury? Longer maturities than the current 30year maximum would reduce refinancing needs and appeal to institutions. But investors might well demand more return for the risks than Treasury would be willing to pay.
Peru faces choice of near-neighbors’ policies 20 Aug 2010 The Andean country has enjoyed standout economic growth in 2010, but this may not last. In next April s election, it will choose between resourcesled growth like Chile, state expansion like Argentina or full state control like Venezuela. Peruvians votes will really matter.
U.S. deficit forecast masks true scope of problem 19 Aug 2010 Budget scorekeepers now predict a $1.34 trillion deficit for 2010, a tad less than forecast in March. Still, it's an enormous gap. And the headline number lowballs the shortfall. If America ran its books more like a business, the real state of its finances would be clearer.
Soft-speaking investors may be handed bigger stick 19 Aug 2010 The SEC plans to vote next week on giving investors an easier way to challenge corporate boards. Longterm holders with a big enough slug of stock would be able to nominate directors on the company's dime. But instead of sparking battles, it may just help shareholders get heard.
Government guarantees won’t die with GSEs 18 Aug 2010 Bond guru Bill Gross warned on Tuesday that without government guarantees, only mortgage bonds backed by supersafe loans would interest him. He frets too much. It may be Fannie and Freddie's funeral, but housing support from D.C. will live on. The key question is how much.