Ahead of her semi-annual testimony to Congress, Janet Yellen’s prepared remarks have been posted. Click for the full thoughts of the Chairman of the Federal Reserve board of Governors on the economy, monetary policy, and financial stability.
The final report from Smithers & Co has landed, as the septuagenarian scourge of “stockbroker economics” eases into retirement.
We are assured that he’ll still be blogging for the FT, but the regular research output will cease. The valedictory note is, as you might expect, on the bearish side of things:
The US equity market is overvalued to an extent only experienced five times before in the past 212 years. On two occasions, however, it has risen well above the current degree of overvaluation.
Judging by the amount of time it took to register and start playing, downloads may be a counter-indicator of investment banker business. But in a world where everything is gameified…
“Buy. Sell. Merge. Master…” Read more
Paul is still ill, we’re afraid, and Bryce is on safari in Uzbekistan (we think), so no Markets Live again today. Sorry.
Instead, perhaps the FX Benchmark Consultative Document might be of interest. (Click for the full thing, with thanks to the RBA’s Guy Debelle who along with Paul Fisher of the BoE did much of the heavy lifting)
If we told you that stocks were cheap relative to corporate bonds, would that make you think equities are attractive or that credit is really something to avoid?
We ask because Barclays provide a long term update to a well worn chart of the yield on stocks versus bonds, in this case the US version: Read more
US defeat at WTO || UK cabinet shake up || Korean Won drops || Canaries drilling near approval || Microsoft to cut jobs || Markets calm ahead of Yellen testimony Read more
Compare and contrast time. First Nomura, on China’s June credit and money growth data which grew at their fastest pace in three months in June:
M2 growth rose more than expected to 14.7% y-o-y from 13.4% on policy easing, and new total social financing also rose strongly to higher-than-expected RMB1.97trn in June from RMB1.40trn, largely led by off-balance sheet credit.
Stronger money and credit data are positive for short-term growth, but the renewed pick up in off-balance sheet credit raises a longer-term concern – if this is the start of another major upswing in TSF led by a less regulated shadow financing sector, it raises the risk of a sharper slowdown further out.
We continue to expect real GDP growth to stay at 7.4% y-o-y in Q2, unchanged from Q1, and also expect government to ease policies further in Q3, which should help growth to rebound slightly to 7.5% y-o-y in Q3 and 7.6% in Q4.
Then Peking University’s Michael Pettis, in his latest note: Read more
Elsewhere on Tuesday,
– China’s bad debt cannot simply be socialised.
– Yates vs Sumner on on market monetarism.
– Bloomberg’s ‘secret’ Craiglist, just for posh people. Read more
Markets: Asian equity markets were in day two of a rebound as investors took an optimistic view that problems in Portugal’s banking sector won’t cause anything like the contagion seen in 2011. Mainland China markets pared losses after central bank data showed that all sorts of money was being thrown around to prop up growth. The M2 measure of money supply rose at an annual pace of 14.7 per cent – its quickest since August – versus forecasts at just 13.6 per cent. (FT’s Global Markets Overview) Read more