FURTHER FURTHER READING
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Larry Summers was interviewed by Chrystia Freeland at the INET conference in Toronto last week, in a conversation that very usefully expanded upon his thoughts about secular stagnation. (H/T Interfluidity)
It’s a reassuring interview for us because so many of the statements he made echo what we (and other bloggers such as Steve Randy Waldman) have been saying for some time. Namely, that there’s something more significant going on in the industrialised global economy than the effects of a banking crisis per se, and that that *something* is probably related to technological abundance. More so, that this phenomenon is having strange macro effects on capitalist incentives.
There was also a nod to the point we’ve made for a long time, that the financial intermediation industry loses its raison d’etre in such an environment, and worse than that, potentially becomes a malignant rather than constructive force on development and growth. In short, that negative rates are hardly the solution. Read more
If we know one thing about investing, it’s that time and the power of compounding make stocks an essential holding for savers, right?
Well, maybe not, at least when the choice is to hold bonds with a reasonable yield instead and the excess returns from stocks have been on a long term downward trend, something suggested by this presentation from Claude Erb, the West Coast based manager of TR.
Which is going to take us on a mostly chart based and, we hope, relatively painless tour of a wonky concept — the equity risk premium. But it’s also a way to come at those arguments about long term measures of stock market valuation, the Cape ratio and Shiller PE, from another direction. Read more
We wonder if, after a brief blaze of real scrutiny, people have started to look past the imposition of a negative deposit rate by the ECB in favour of the more seductive and mysterious ECB QE and how it might be constructed. And we wonder if that is something of a mistake.
How a move to negative is constructed will, of course, have much to do with what it is intended to achieve — a weaker euro at last check — but we also can’t help but think it would be cool to make sure it won’t cause too much harm either. Herein lies a plan. Read more
Live markets commentary from FT.com
IBM hit by costs of restructuring || Google shares dip as earnings disappoint || Yahoo brings co-founder and Schwab on board ||
Diageo, the maker of Johnnie Walker scotch and Smirnoff vodka, on Thursday posted a sales drop of almost a fifth in Asia-Pacific in the third quarter, pushing the company to an overall 1.3 per cent decline in organic net sales || China’s Weibo raises a less than planned $285m in US IPO || Yellen warns inflation may lag recovery || American Funds warns on ‘Heartbleed’ bug || Markets Read more
This Reuters story about China having up to 1,000 tonnes of gold tied up in financing deals is doing the rounds, courtesy of information out of the WGC.
But it’s hardly a revelation.
Goldman even blessed us with a more recent update about the shenanigans in March: Read more
Markets: Asian markets are struggling to maintain an upbeat tone in spite of solid gains on Wall Street, but Hong Kong stocks were outperforming as Beijing cut the reserve requirement ratio for some rural banks. Wall Street prospered as a decline in the US dollar lifted the yen and hurt Japanese exporters. (FT’s Global Markets Overview) Read more
The influence of the ‘China factor’ on currency markets is waning.
That at least is the view of HSBC’s FX strategy team, headed by David Bloom. Read more
Janet Yellen’s speech on Wednesday repeated some of her earlier points about labour market slack — she thinks there is plenty left and hasn’t followed the shifting centre of gravity within the FOMC — and also included remarks on her inflation outlook and the Fed’s new, qualitative forward guidance.
On inflation: Read more
Some experimental video. This Alphaville blogger joined Lex’s Joseph Cotterill
on the set of mastermind in the FT studio to debate exactly what is up with Tesco.
Here is the Tesco share price, which you might notice is getting into lost decade territory.
Here meanwhile are Wednesday’s results: Read more
From the National Bank of Ukraine:
15.04.2014 press release
The National Bank has passed the decision to temporarily disconnect 14 banks from the System of Confirming the Agreements in the interbank foreign exchange market. The regulator resorted to this measure given the actions undertaken by these banks in the foreign exchange market that have a destabilizing effect on of the hryvnia exchange rate and create negative expectations about the future hryvnia exchange rate dynamics.
Live markets commentary from FT.com
The graph above from CreditSights, which shows cumulative net job changes by industry since the start of the recession, can be used to tell a general story about the US economy and a more specific story about the current labour market recovery. Read more
Ukraine tensions rise || Tesco profits drop, but shares bounce after long decline || Starbucks moves offices to London in reputation rebuilding exercise || Burberry sales jump, but currency to hit profits || European stocks rise Read more
Actually, the way Creditsights frames the question about credit issuance is “can it continue?” which points to their answer: probably, even if not at peak levels.
Speaking of which, if you have an investment grade credit rating, you must have been enjoying the party.
USD fixed-rate investment grade corporate issuance totaled $265 bn in the first quarter, which was a $75 bn increase over 4Q13 numbers and $30 bn greater than the amount seen in the first quarter of 2013. The 1Q14 tally only trails two prior periods: the $285 bn in 1Q09, when issuance was boosted by the TLGP program, and the $278 bn seen in 1Q12.
Markets: Asia-Pacific bourses were on the rise, led by Japan, but Greater China equity markets pared gains after the world’s second-largest economy reported its slowest quarterly growth since late 2012. The tone across the rest of the region was broadly positive after the S&P 500 swung out of negative territory early in the New York session to close 0.7 per cent higher. Forecast-beating earnings from Coca-Cola and Johnson & Johnson helped the mood. (FT’s Global Market Overview) Read more
For the nearly half-century through 2012, annual labour productivity growth in the US construction sector averaged close to zero, and it has been negative for the past two decades.
Here’s a graph constructed last year by Paul Teicholz, a civil engineer who has been working on construction technology issues for a long time and who produced the best concise analysis of the sector’s productivity that I’ve come across: Read more
Live markets commentary from FT.com
Ukraine raises rates as west discusses more sanctions || Diageo offers $1.9bn for greater stake in United Spirits || Google swoops on dronemaker Titan || AngelList sees $25m investor fund || ‘Heartbleed’ steals social security and mums’ messages || Hong Kong regulators move to safeguard bank liquidity || Copper miners look past present pain to future gain || UK inflation falls to 1.6% || Markets Read more