Did Brazil miss a trick on Petrobras bond sale? 17 May 2013 President Dilma Rousseff uses the oil giant for many nationalistic purposes, though strengthening domestic capital markets isn’t apparently one. Issuing a slice of this week’s $11 bln bond offering in reais, though costly, would at least have been a better sort of meddling.
Hollande gets serious on Europe – at last 17 May 2013 France’s president has outlined a two-year plan to give the euro zone a centralised “economic government”. Addressing a key German concern, Hollande seems ready to agree sovereignty transfers to make it more than a coordinating body. The proposal may be premature. But it has legs.
Gold moves back to the brink 17 May 2013 The yellow metal recovered from an April plunge, but the price is now slipping. New figures show why. While jewellery demand rose by 12 percent in the first quarter, investment demand fell by half. Funds are selling. Physical gold sales may follow, bringing big price falls.
How to have a good argument about economics 17 May 2013 As the Great Stagnation stretches out into the indefinite future, the debate on how to respond is loud but inconclusive. Some want stimulus, others austerity, while structural reformers lock horns with monetary activists. Here are five rules for a more productive dialogue.
Bernanke deserves art museum spot next to Pollock 16 May 2013 A record $495 mln Christie’s sale set new highs for the abstract expressionist and other artists. More collectors than ever have $20 mln to spend on a single work. It paints a picture of an art world indebted to the Fed chairman and his alternative asset-friendly monetary policy.
Oil probe shows the slippery nature of prices 16 May 2013 Even if the EU probe into the manipulation of published energy prices comes to nothing, it highlights a strange market. In the global energy trade, billions of dollars change hands on the basis of “best guess” benchmarks. More is at stake than fines for rogue traders.
Rest of world wishes for Australia’s economic woes 16 May 2013 The land Down Under has its problems, not least a China-driven commodities downturn and a rising budget deficit. Fears of a housing bubble persist, too. But with unemployment low and the currency falling, Australia has the economic stability other countries dream of.
Greece’s vicious circle may be turning virtuous 15 May 2013 Yields on Greek 10-year bonds hit their lowest level in nearly three years. Investors are returning now that fears of a euro zone exit have receded and the country’s finances and politics look more stable. The economy is still in trouble, but it’s moving in the right direction.
King leaves UK close to top of weak EU league 15 May 2013 The outgoing governor of the Bank of England was asked to compare the UK to a football team: relegation or one of Europe’s elite? Mervyn King dodged the question, but modest recovery is enough to make the UK a strong contender in a poor European league. King can claim some credit.
Edward Hadas: Keynes, fertility, and growth 15 May 2013 When Niall Ferguson slammed into Keynes, he was worried about the policy implications of the economist’s general theory. But the pundit’s sexual slur raises a more interesting issue: how to create a truly fertile economy. Keynes has something to offer to that debate.
Small-number fixation clouds euro zone picture 15 May 2013 The official data show Germany growing and France in a double-dip recession. But that’s based on a difference in GDP of three parts in a thousand - statistically meaningless for what is already a rough measure. The miniscule movements might even hide a major turn upwards.
Japan’s yield spike is no canary in the debt mine 15 May 2013 Rising economic optimism has prompted a drop in government bond prices. Yet the cost of insuring against Japanese default remains low. Even if the country’s fabled Mrs Watanabes trim their holdings, the central bank’s bond-buying will keep Japan’s borrowing costs under control.
What China can learn from Hong Kong’s war on graft 15 May 2013 Chasing a former watchdog for lavish dinners sounds trivial, but focusing on the little things is what made Hong Kong clean up. China’s leaders also pledge to root out corruption, but lack three powerful weapons: independent institutions, freedom to complain, and zero tolerance.
Turkey’s IMF emancipation deserves cautious cheer 15 May 2013 Ankara is finally free of debt to the IMF. This crowns a decade of successful reform by the Islamist AKP party. It will make Turkey’s investment story even more convincing. But the country’s reliance on foreign funding remains a big vulnerability.
Bini Smaghi’s call for Italy bailout is optimistic 14 May 2013 The former ECB board member thinks the Italian government should seek aid to make its reforms credible. Yet markets’ current docility makes a bailout less necessary, and politically more improbable. The comments mostly highlight the euro zone’s shortage of both carrots and sticks.
Dan Loeb’s breakup plan deserves Sony’s ear 14 May 2013 The U.S. hedge fund manager wants the Japanese electronics giant to spin off its entertainment arm. Activists rarely prevail in Japan. But Loeb’s idea may have merit. In the spirit of the country’s economic renaissance, Sony should take him, and other shareholders, seriously.
U.S. still beats Japan as threat to global system 14 May 2013 Bears say Japan’s mega monetary stimulus will end in default and a terrible recession exported worldwide. It’s a weak argument. Japan’s massive monetary experiment has doubled bond yields, to 0.9 pct. But the more internationally dependent U.S. is still the bigger worry.
Bangladeshi accord shows limits of market forces 14 May 2013 Price isn’t everything, even in the fiercely competitive garment trade. A combination of conscience and public relations has pushed the largest European retailers to agree to curb the industry’s race to the bottom. If the new accord works, it will be globalisation at its best.
U.S. housing is both cheap and out of reach 13 May 2013 It’s one of the few assets that look undervalued as stock and bond prices go through the roof. That’s ironic, considering the Fed’s bond-buying policy was designed in part to prop up housing. But tight lending standards make it hard to take advantage of the opportunity.
Investors need to be alive to UK’s EU-exit risk 13 May 2013 Policy splits in a weak London government raise the chance that Britain will leave the EU. It’s still only a tail risk, but investors should be wary. Hard-to-model ructions could start any time. Fortunately, adverse market reactions could bring UK politicians to their senses.