FURTHER FURTHER READING
– America owes a lot to Bernanke.
– The return of McMansions.
– Should we trust economists?
John Kemp at Reuters has been following the interesting case of light sweet fatigue in the oil market.
As he first noted on Tuesday, a surge in shale oil production alongside a big increase in modern refinery capacity is increasingly undermining the value of sweet crude in the market. Read more
Spotted on Tuesday… the pari passu saga that started in the US courts crosses another border. Belgium:
Gaspard Koenig has been sounding off, entertainingly, at the Centre for Policy Studies on the costs associated with the Banque de France — whose governor, Christian Noyer, has been pressing Hollande’s government to make deeper and quicker cuts…
Let’s take a look at the Banque de France, which recently published its annual report. Apart from being lavishly located in the Hotel de Toulouse, a 17th-century gem, its operating costs are bewilderingly high. It employs 13,000 agents for a total human resources expenditure of nearly €1.5 bn a year (including pensions). With 6% of its staff aged under 30 and 32% over 55, the Banque de France’s age pyramid looks more like a cocktail glass.
This is a short follow-up to Monday’s negative rate confusion and prepay-tax option post.
In it we argued two very simple points:
1) Negative rates might very well cause Eonia to go up because they are in fact liquidity contractionary.
2) Negative rates are contractionary because they encourage all of the following: banknote hoarding instead of excess reserves, capital flight (which manifests by means of a depreciating exchange rate which can impact non-depository asset valuations), the prepayment of private tax liabilities, the unwinding of LTROs/MROs, the resale of ECB held bond assets back into the market.
Live markets commentary from FT.com
French minister hits at Amazon dumping || Banking commision raises option on RBS split || US funds left bruised by heavy bond losses || ECB backs away from use of ‘big bazooka’ to boost credit || Apple denies charges over ebook prices || Wheat bear market worsens || Uneven gains signal US car demand near plateau Read more
SocGen’s bathed-bear Albert Edward has been forced by overwhelming rage to look past the rich vein of Abenomics to the UK’s George Osborne. It’s the Chancellor’s latest meddling with the housing market that has got Edwards so inflamed:
George Osborne in his March budget proposed an unusually misguided piece of government interference in the housing market.
Asian shares were muted. The Nikkei rose 1 per cent following Monday’s weak ISM manufacturing number in the US. (Reuters) Topix fact du jour: analysts expect its earnings to rise 57 per cent this year, compared to a global average of 19 per cent. (Bloomberg)
Japan’s public pension funds are to be recruited to buy stocks and real assets in the Abe government’s latest move to mobilise the country’s savings for growth. A panel will be set up to review investment guidelines for the public funds, which have previously piled into Japanese sovereign bonds, including the mighty Government Pension Investment Fund. The guidelines would come into force by April 2015 under the draft plan. (Reuters) Read more