Posts from Friday Aug 31 2012

Two Jackson Hole papers: Woodford and Haldane

It’s no secret that we’re big fans of Andy Haldane on this blog.

Exhibit A — a paper given to this year’s Jackson Hole conference by the Bank of England’s executive director for financial stability, and Vasileios Madouros (also of the Bank). Read more

Bankia, el banco malo

The Spanish bank posted a €4.4bn loss late on Friday night, requiring the Spanish government to inject ‘transitory’ capital “con carácter inmediato” months before a proper, EU-led restructuring and recap plan for the Bankia group is drawn up.

Yes, this bank is still a disaster zone. Read more

Iron ore, an alternative view

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.

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Time to resurrect the ‘missing variable’?

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

Bernanke, the speech (and that market functioning issue)

From Ben Bernanke’s opening remarks to the Jackson Hole shindig…

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.

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Total domination!

Of risk-on, risk-off.

It’s getting back to its all-time high according to HSBC’s quant team: Read more

If QE3 is so close, why is the Fed’s balance sheet shrinking?

As the markets wait to see if Helicopter Ben is maybe about to treat them to a third round of QE, it’s interesting to note that the Fed’s balance sheet has been shrinking of late.

This morning’s The King Report raises the obvious question: Read more

Markets Live transcript 31 Aug 2012

Live markets commentary from 

And this one time, at economist camp…

It’s Friday.

It’s what you’ve been waiting for. Read more

The (early) Lunch Wrap

Good morning, New York…


The Dragometer

Look what the markets priced in:

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Further reading

Elsewhere on Friday,

– Gina Rinehart tells Australia’s poor to stop moaning and work harderRead more

The 6am Cut London

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 (BloombergFinancial 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

I’ve Got the Power/ Dumbest bloke in the world – 62 Fe edition

Yep, it’s time for our daily look at the ever-decreasing iron ore price and the goings on at Fortescue Metals Group, the self-styled ‘New Force in Iron Ore’.

We start with FMG and this amusing ditty from the Australian Financial ReviewRead more