FURTHER FURTHER READING
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Two recent notes emphasise that the impressive recent ISM manufacturing readings in the US are probably as much about expectations of future performance as about what has already happened.
Aichi Amemiya of Nomura notes that historical divergences between the ISM and the “hard data” have coincided with climbs in the equity market, suggesting that improved sentiment about the future is the common variable in both. Amemiya shows this by constructing a competing “hard-data based ISM manufacturing index” of five components that roughly mirror the five comprising the ISM. Read more
What’s been lighting a fire under Forest Laboratories?
Citi’s Hans Lorenzen is inciting a rebellion against central bank repression. Now more than ever, he suggests, is the time to fight the Fed.
First, he notes, realised volatility in credit is down almost 90 per cent from its peak two years ago, and spreads are now at 50-year lows. He blames this on central banks, which are “suppressing risk across markets”. Read more
Live markets commentary from FT.com
RBS apologises for Cyber Monday technology breakdown || Fed clears Goldman and JPM capital plans || Rio Tinto pledges to cut capex by $6bn in two years || Pearson buys Brazilian language school chain Grupo Multi || Dow Chemical plans to shed at least $5 billion worth of low-margin businesses || Apple buys Topsy to track Twitter || Ukraine government faces no-confidence vote || Petrobas shares fall on subsidy announcement || Inflation takes root in Japan || Gold price tumbles to lowest since July || Markets Read more
For those lucky enough not to recognise the FX shorthand… that’s a weak pun involving the overvalued and pegged Ukrainian hryvnia.
It’s alluding to the idea that Ukrainian households might, as protests over the rejection of an EU free trade deal last month continue, decide to start converting their deposits into FX. They have form.
That would put a whole load of pressure on already skimpy FX reserves — which at about $20bn are down to covering about two and a half months of imports, below the fairly arbitrary three months that makes the IMF all sweaty. Read more
Since September 2011, the Fed has succeeded in managing inflation expectations but not inflation itself. Has anybody noticed? What happens when they do? Will QE4 be as successful at changing even inflation expectations when QE1, QE2, Operation Twist and QE3 have failed to prevent recorded inflation from now falling to 1.1%?
Russell Napier, strategist for CLSA, warns that benign inflation (s0 far as stock market investors are concerned) is very close to becoming dangerous deflation once more. (H/T to Climateer.) Read more
A passage from chapter 2 of Robot Futures, Illah Nourbakhsh’s excellent introduction to the near and distant future of robotics applications:
Smog is a portmanteau that combines the natural and the artificial; fog simply reduces visibility, but when smoke and haze mix together, then quality of life decreases: runners cough, tennis players’ lungs burn, and asthma cases in children bloom.