Comment, analysis and other offerings from Thursday’s FT,
Analysis: Financial markets – derivative dilemmas
As regulators start to decide how much trading in derivatives needs to move on to exchanges, a tussle is in prospect for a profitable role in the new order, writes the FT’s Aline van Duyne.
Market Insight: John Plender – The puzzle behind blue chip valuations
Market behaviour is singularly unfriendly to conventional investors at present, writes the FT columnist. Asset prices, whether of equities, bonds or alternative investments such as commodities, go up and down in lockstep. Yet when prices go down, many investors feel that nothing looks that cheap. The obvious exception, I would argue, is that of quality stocks in the US and much of Europe.
News analysis: Eurozone eyes Portugal’s lead on collateral
When Portugal said last month it would post collateral on derivatives trades, the news sent ripples through government debt markets, write FT reporters. Portugal was the first country in the eurozone to break a market convention that sovereigns do not post collateral. Other debt managers are now wondering what it could mean for their own operations.
Judgment call: Should executives on holiday turn off their BlackBerrys?
Should you stay in touch with the office while you are on holiday? In the era of 24-hour business, many executives take a summer break but stay in touch with the office while away. Is this a good idea? Would it be better to have a period of being out of touch?
Gavyn Davies: Fed and Bank of England still seem more dovish than hard currency mob at ECB and BoJ
The Fed decision announced last night seems to have disappointed markets, yet it will surely come to be seen as a clear win for the doves, notes the macroeconomist. Prior to yesterday, the default option at the Fed was to allow the size of its balance sheet to decline whenever its holdings of mortgage debt matured. Although this would not have led to much shrinkage of the balance sheet in the near future, it signalled that the Fed was looking for opportunities to reverse its policy of unconventional easing. That bias has now been removed, though not yet reversed.
Olivier Blanchard and Carlo Cottarelli: The great false choice, stimulus or austerity
The debate on the need for further fiscal stimulus or quicker retrenchment has become too ideological, and too extreme. Underneath it, however, there is more agreement on the basics than may be apparent at first blush. Indeed, despite the warring comments that have appeared in these pages, there is actually no necessary conflict between restoring fiscal sustainability and maintaining support for the recovery, write the chief economist and head of fiscal affairs at the IMF.
Money supply: Rate normalisation in Europe
Recovery in Europe is a regional affair, writes the FT’s Emma Saunders. To generalise, the east is still cutting, the north is raising, and everywhere else is on hold. Money Supply has created a map to show this.
Normal Gall: Oil euphoria puts Lula’s legacy at risk
Brazil’s popular president, Luiz Inácio Lula da Silva, now in his last months in office, seemed set to retire with a chorus of praise – until he plunged into the complications of deep-water oil. Just as Icarus saw his wings of wax melt as he flew too close to the sun, so Mr Lula is risking his legacy as controversies multiply over his petroleum policies, writes the executive director at the Fernand Braudel Institute of World Economics in São Paulo.