Posts from Thursday Jun 5 2014

2012: Whatever it takes. 2014: Everything it takes

For all practical purposes we have reached the lower bound…

But also:

Are we finished? The answer is no… within our mandate, we’re not finished yet.

Both were statements by Mario Draghi on Thursday. It’s really the swarming effect of the policies the ECB announced on Thursday, after all, right? Not so much the Outright Monetary Transaction-style bravura, which (let’s not forget) the market also underestimated two years ago. Read more

The negative zone

Wait for those “details” on how the ECB will operate negative rates — plus “Further monetary policy measures to enhance the functioning of the monetary policy transmission mechanism”… (sounds like an LTRO to us)

But for now, note the red.

 Read more

Smithers: Yellen and hindsight capital

This is an abridged version of a post by Andrew Smithers for his FT blog, one that lays out why using next year’s PE ratio to value the stock market is absurd. Taking the Fed Chair to task for her language, it is also ripost to the critique of long term valuation measures we have also featured.

Janet Yellen, the Fed’s head, rather bizarrely used the prospective price/earnings ratio, one of the weakest of all measures, to justify a statement that Wall Street was not overvalued. (This was doubly strange since her husband, George Akerlof, co-wrote a book with Robert Shiller, who has championed a much better measure…

I quote from a recent Buttonwood column in The Economist. Calling Ms Yellen’s comment “strange” seems very kind. Many people would rate the use of bad data in preference to better as irresponsible rather than strange, particularly when it carries with it the authority of the US Federal Reserve. Read more

Chinese debt — going external

We’ve said that this might be a dolorous year for the dollarless in China.

In which case, it’s nice of the State Administration of Foreign Exchange to loosen the rules under which Chinese companies can borrow abroad then — effective from June 1. Of course, as with all reform in China, attempts at liberalisation carry their own internal risks. In this case, the rise of external debt.

This is from Michael Pettis’s latest note (he’ll also be at Camp Alphaville, nudge-nudge): Read more

Markets Live: Thursday, 5th June, 2014

Live markets commentary from 

The (early) Lunch Wrap

Good morning New York,


Gratuitous plug time. The main stage line-up is live for Camp Alphaville. Check it out, and there are still places left for the pub quizRead more

Camp Alphaville — The Main Stage Rundown*

July 2, HAC, London, 11-9

* Everything is subject to change. Stay tuned for Igloo sessions and more.

11am The Soft Open – Markets Live

FT Alphaville editor Paul Murphy and Stock Market Correspondent Bryce Elder will produce a version of their daily online markets chat live on stage. Fingers crossed the tech holds up Read more

Further reading

Elsewhere on Thursday,

– In which Paul Krugman snorts crushed Adderall and re-reads Piketty.

– China, where 700 flattened mountains become a city.

– And where a city can go from 12 per cent growth to zero per cent in one year.

A Kurdish oil tanker in search of a loving home. Read more

The 6am London Cut

Camp Alphaville reminder courtesy of Paul Murphy: “Think of a festival, but for finance rather than music. Oh, and without the drugs.” (Details here)

Markets: Asia-Pacific equities were treading water head of a keenly anticipated European Central Bank policy meeting. Focus was also shifting to Friday’s May US jobs report. after private payrolls processor ADP reported that 179,000 jobs were created in the US last month, fewer than expected and down from a revised 215,000 increase in April. (FT’s Global Markets OverviewRead more