It’s no secret that we’re big fans of Andy Haldane on this blog.
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The following comes from Icap’s shipping team on Friday:
The carefully engineered economic slowdown in China is a fact clearly expressed in the recent readings of some key economic indicators. However, we fail to see any affirmative sign of a weakness in the structural demand for iron ore and other raw materials key for industrial output.
Anyone who has watched the 2011 Adam Curtis documentary series “All watched over by machines of loving grace” will remember the bit about Alan Greenspan becoming confused about America’s exceptional growth in the 1990s.
At the time, the data didn’t seem to fit the prevailing reality. The incredible and seemingly unstoppable growth Greenspan was seeing on the ground was at odds with his economic models, which instead were signalling an imminent rebalancing on the back of wage pressures and implied inflation. Read more
In sum, both the benefits and costs of nontraditional monetary policies are uncertain; in all likelihood, they will also vary over time, depending on factors such as the state of the economy and financial markets and the extent of prior Federal Reserve asset purchases. Moreover, nontraditional policies have potential costs that may be less relevant for traditional policies. For these reasons, the hurdle for using nontraditional policies should be higher than for traditional policies. At the same time, the costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant.
Of risk-on, risk-off.
It’s getting back to its all-time high according to HSBC’s quant team: Read more
Live markets commentary from FT.com
Asian stocks fell as investors awaited Ben Bernanke’s speech later on Friday, and reports showed an unexpected decline in Japan’s industrial output and manufacturing activity contracted to the lowest level in 16 months. South Korea’s second consecutive month of decline in industrial output also dampened exporters there (Bloomberg, Financial Times).
The ECB would have sweeping powers over all eurozone banks under draft plans drawn up by the European Commission, although Germany and the ECB itself have urged more decentralised steps towards a eurozone banking union. The EC plan, which is still being drafted and will be unveiled on September 12, would strip national supervisors of almost any authority to shut down or restructure their countries’ failing banks, handing this power to a new ECB board separate to its governing council (Financial Times). Read more