Posts from Wednesday Mar 13 2013

The Closer

Longest winning streak for the Dow in 16 years. The index edged up just 5 points to close at 14455.28 — registering nine c0nsecutive days of gains for the first time since November 1996. The S&P 500 closed at 1,554.52, within a whisker of its all-time high of 1,565.15 (Reuters).

The new Pope is Argentine, a former Archbishop of Buenos Aires. Jorge Mario Bergoglio will assume the papal name of Francis I, having won on the fifth ballot. As cardinal, he balanced modernising and conservative sides of the Argentine church. Pope Francis is the first Jesuit ever to achieve the papacy, and the first non-European for 1,272 years (Financial Times, Wall Street Journal). Read more

Harvard hangups and the labour market

From a note Wednesday morning by ConvergEx (emphasis ours): Read more

The Fed’s balance sheet and an expert commentary problem

Alan Blinder closes his op-ed in today’s Wall Street Journal:

Is there a way out? Here’s one thing that could help. As I have argued for some time, the Fed should reduce the interest rate it pays on the roughly $1.7 trillion of banks’ excess reserves. If it did so, banks would keep less cash on deposit at the Fed. The liberated funds would probably flow mainly into the money markets, but some would probably find their way into increased lending—which would give the economy a little boost. Read more

Bank bail-ins, the long and short term of it

Compare (Bloomberg News, 2011):

EU Writedown Plan Puts Banks’ Long-Term Debt in Firing Line Read more

Smoke, stats, and sashaying away

Statistical modelling. It goes everywhere.

The Monkey Cage points us to this 2004 paper on strategic voting in papal elections (there was still no sign of white smoke at pixel time on Wednesday): Read more

Estimating the LSAP effect on the stock market

This guest post is submitted by Donald Luskin, chief investment officer of Trend Macrolytics. A hat tip to Lorcan Roche Kelly, chief Europe strategist of Trend Macrolytics and longtime friend of FT Alphaville, for the suggestion.

An abiding narrative explaining the melt-up in US equities — despite a sluggish economy and slow earnings growth — is that quantitative easing by the Fed amounts to printing money, which finds its way into stocks. Read more

Kill the old, sequestration edition

Quite a few analyses of the sequestration cuts have noted that they do little to address the sources of longer-term budget deficits, which are mainly the result of expected health care costs.

Matt Slaugher of Tuck Business School and Matthew Rees of Geonomica argue something similar but take a slightly different approach, emphasising which generations the cuts are punishing most: Read more

Markets Live: Wednesday, 13th March, 2013

Live markets commentary from FT.com 

Who to believe, Michael O’Leary or Reuters?

From Irish airline Ryanair, a few weeks back…

In response to media reports today 23 Jan, Ryanair’s Stephen McNamara said:

“Don’t believe all of what you read in the press. Michael O’Leary confirmed in Rome yesterday (22 Jan) that there is no aircraft order imminent and none that is expected until perhaps the end of calendar 2013 or early 2014, at the earliest.”

From the newswire on Wednesday…  Read more

Japan’s employers, taking up the Abenomics cause

Well, some of them at least. One of the big determinants of whether ‘Abenomics’ manages to pull Japan from its deflationary spiral is through wage growth. Inflation can’t really kick off or arguably even begin without rising wages. One can argue about how important wage growth is, or where it fits in causality-wise — and we’ll come to that later. But it is — or will be — an important signal as to whether this three-pronged approach of the new-ish Japanese government is working.

And actually, it might be catching on. Read more

The (early) Lunch Wrap

The future of financial benchmarks || Transition at the BoJ || Spectre of stagflation in the UK || 787 Dreamliner could return within weeks || Turkey emerges as economic victor from Iraq War || IBM uses big data on brain injuries || Republican budget proposal || Silicon Valley hits India over trade || China’s steel output rises || Bailout talks in Cyprus || Market Update Read more

Some Libor frustration

Barclays views it as imperative that the market has access to Benchmarks that are well constructed, transparent and that inspire the confidence of other market participants and regulators…

You can say that again.

Some (more) Libor reading landed this week — the responses from banks, and other cogs and gears of the market, to a recent report by Iosco about reforming financial benchmarks. Everyone from Thomson Reuters to the European Central Bank, Blackrock to Calpers, has weighed in here. Read more

Further reading

Elsewhere on Tuesday,

- Out of control!

- On leaderless economies.

- Grantham telling it like it is. Read more

The 6am Cut London

Asian shares struggled for traction as some investors locked in profits from the markets’ recent rally. The yen strengthened 0.2% and the Nikkei fell 0.5% after a small rise earlier in the day. Australia’s S&P/ASX 200 index slipped 0.2% due to weakness in financial shares, while South Korea’s Kospi Composite index added 0.1%. The Hang Seng index was down 0.4% and the Shanghai Composite index fell off 0.1%. (Financial Times)

UK stagflation spectre looms: “Inflation expectations, as measured by the difference between nominal and inflation-linked bond yields, ticked up to near 3.3 per cent on Tuesday, levels not seen since September 2008.” Separately, the National Institute of Economic and Social Research said the economy continued to flatline in the first two months of 2013. (Financial TimesRead more

Japan’s DPJ not so sure about Iwata… and possibly Kuroda, too

Excitement about an imminently more pro-active BoJ might take a bit of a tumble on this news out of Tokyo late yesterday.

From the Japan Times:

The Democratic Party of Japan said Tuesday it will support Asian Development Bank President Haruhiko Kuroda as the next Bank of Japan governor but will oppose Gakushuin University professor Kikuo Iwata’s nomination as one of the two BOJ deputy governors because of his extreme stance on monetary policy.

 Read more