Something funny happened to the eurozone over summer. Things… began to look better.
Of course, there are plenty of difficulties lying in wait. As the FT’s Peter Spiegel and Alex Barker write, once a new German government is in place after this weekend’s election, fraught negotiations about Greece, Portugal, Ireland and the banking union will quickly return to the fore. Read more
Elsewhere on Wednesday,
- Just in case you thought QE was ending.
- How many jobs are vulnerable to computerisation? Probably, lots.
- Unemployment is still too high, inflation too low. So… Read more
Chinese authorities are continuing their efforts to finish mopping up the bad debts left from the big bank bailout of 1999-2000, in what some believe is an attempt to address — or, head off — another financial crisis.
So far we’ve seen IPOs, private capital raisings, quietly retiring bonds, and pushing for a big expansion of securitisation. Read more
Elsewhere on Tuesday,
- US gun rampages are increasing.
- Sumner on the medium of account, for the last time.
- Another endorsement for Yellen. Read more
Asian shares slightly lower ahead of FOMC meeting || Yellen lead contender for Fed nomination || JP Morgan close to $800m ‘Whale’ settlement with most regulators || Lloyds move seen as sign of UK confidence || Real estate slowdown weighed on China’s August growth || Saudi Arabia pumping the most oil since 1970s to meet export demand Read more
Shinzo Abe has a problem.
As the FT’s Jonathan Soble noted last week, part of what appears to have persuaded Abe to press ahead raising the sales tax to 8 per cent from 5 per cent next April was the “the risk that delaying would scare investors by making the government appear unwilling or unable to tackle the debt”. Read more
Last week we ran a guest post from Yukon Huang of the Carnegie Foundation, which argued that China’s high rate of investment to GDP (which exceeds levels ever reached by obvious comparisons such as Japan and South Korea) is a consequence of China’s economic rise, not a problem in itself.
The imbalance, says Huang, merely reflects the urbanisation-industrialisation process — income rises and output grows as newly-urbanised workers earn more, but the proportion of their income spent on consumption falls for a time. Read more
Chinese macro data have been on a good run recently. Today’s release of August industrial production was particularly strong, beating consensus forecasts by a relatively wide margin, although not in a way that bodes especially well for long-term growth sustainability.
Here’s a summary of key data published today, courtesy of BAML: Read more
Elsewhere on Friday,
- Ronald Coase might be the most important economist you’ve never heard of.
- But he didn’t actually think much of the Coase theorum.
- Inflation not actually always a monetary phenomenon. Read more
Asian stocks rise || Microsoft to buy Nokia phones business for €5.44bn || Vodafone investors set for record $84bn payout || Li confident China will meet economic goals || New bank bail-in bond requirements likely || Citi disposes of $6bn in alternative assets in a month || Private equity groups set to buy Frob-owned EVO Banco || US hedge funds criticise Co-op Bank || Japanese government takes over Fukushima plan Read more
Asian stocks higher, crude falls as imminent Syria strike fears fade || Verizon and Vodafone agree $130bn deal || Official China PMI at 16-month high || India’s growth slows to 2009 low || Microsoft to appoint activist to board || For new radiation hotspots at Fukushima || Everbright Securities fined Rmb523m Read more
Most Asian markets higher || Japan CPI reaches 5-year high, but mostly on energy costs || US and Switzerland reach tax evasion accord || RBI ‘to pilot gold buying project’ || Vodafone nears Verizon Wireless stake sale || KPN foundation blocks Carlos Slim bid || German economic miracle runs out || The Fed’s new tool Read more
At the end of this month, The Oil Drum will be archived after eight years.
A flurry of commentary when this was first announced concluded that it’s shutting down because of the demise of peak oil. Noah Smith, Forbes and Reuters’ John Kemp, among others, have concluded that extraction from new sources, particularly shale gas and oil in the US, have killed the idea of peak oil and, in turn, The Oil Drum. As an explanation for TOD’s impending closure, it sounds neat — but it’s not correct. Read more
Asian stocks rise || Syrian fears push oil higher || Red flags found in JP Morgan Asian hiring probe || US Lloyd’s of London probe intensifies || Brazil raises interest rates again || Philippines GDP beats || Pimco eyes asset expansion || The worrying reality of Chinese debt Read more
Asian stocks fall || FHFA seeks $6bn from JP Morgan over MBS mis-selling || JP Morgan ‘whale’ penalty seen at $500m – 600m || Syria fears drive oil higher || Carney speaks today || Are EMs suffering more than US benefited from QE? || Fonterra says no botulism-causing bacteria || Central bankers give up trying to save world || Curious patterns in forex rates Read more
Asian markets slightly higher after US housing slump || Fears over EMs take centre stage at Jackson Hole || German and Greek officials dampen debt write-down fears, new bailout signalled || Anadarko sells 10% Mozambique gasfield stake to ONGC || Martin Weale voices concern at BOE guidance || Banks step away from rates trading businesses || Goldman suspends four tech staff after Tuesday trade error Read more
Asian stocks strengthen, Japan surges || SEC calls meeting after Nasdaq outage || Moody’s may downgrade biggest US banks || Brazil’s central bank announces $60bn currency programme || John Lewis staff to get £40m in holiday backpay || CFTC readies HFT road-map || Chinese FDI rises more rapidly Read more
Asian markets fall further after FOMC minutes || China flash PMIs above 50 || UK banks face £1.3bn bill for mis-selling fraud protection || HP abandons revenue target || Bo Xilai trial opens, sort of || China Resources says may combine with Tesco for Li supermarket bid || Fed keeps investors guessing on timing and scale of taper Read more
The US shale gas production boom took everyone by surprise — apparently that includes George Mitchell himself, who was credited for sparking the shale gas production surge on his death last month.
Yet the variety of output from different shale gas plays is also taking some by surprise. Like Shell, for example, whose Q2 results were grim with a sharp fall in profits and a $2.1bn writedown, mostly of North American shale assets. Read more
Asian stocks fall || Investment banks are hiring || Indonesia boosts state buying of stocks || Schäuble says Greece will need third bailout || Malaysian GDP watched closely || Goldman glitch yesterday could cost $100m || Emerging world turmoil || Repo retreat could hurt other assets || Rupee’s plunge continues to ripple Read more
Stocks and currencies continue to fall in emerging Asia || RBS decision due within two weeks || Falcone to admit wrongdoing || Fed says big banks need to lift capital targets || Eurozone banks cut securities loans || How far can the rupee fall? Read more
China’s “bad bank” debts from the 1990s are being paid off by the government, increasingly rapidly of late. What this means for China’s big banks depends on which perspective you come from. It’s arguably a rather good thing in the near-term.
What it means for the broader economy is more complicated. Read more
Asian shares mixed, gold at two-month high || Japan’s exports jump but so does trade deficit || JP Morgan legal losses ‘could exceed reserves by $6.8bn’ || UK online retail fell in July for first time || CME under fire over Brent trades || Everbright Securities banned from prop trading after Friday Shanghai spike || Goldman seeking recruits to new bond trading platform || US fuel export surge drives Obama trade goal || CBI raises UK growth forecast || Who will continue Bernanke’s consensus approach? Read more
Earlier this week we wrote about how China is using its fiscal reserves to help retire some of the bad debts shelved off to the big “asset management companies” back in 1999 — with a big hat-tip to Chen Long, of INET’s China Economics Seminar.
Some more interesting news has been revealed by our colleague Paul J Davies in Hong Kong, who has a great story — two stories, in fact — about what Cinda and fellow AMC, Huarong, are doing. Read more
Today was just an ordinary day:
As FastFT noted, Shanghai-listed shares jumped 6 per cent in six minutes in morning trade, despite opening the day lower. The exchange’s official Sina Weibo microblog posted shortly afterwards that operations were running normally. Read more
Asian stocks down, tapering fears blamed || Surprise surge in Shanghai stocks || Cairo braced for more protests, more than 600 dead || China and Japan led record Treasury outflows || UK bad bank works on branding || Foreign banks in talks on China bad bad || China may probe IBM, Oracle, EMC: report || Bullard floats small-scale tapering Read more
Asian markets fell amid mixed earnings and expectations that lower US jobless claims today will boost the chance of Fed tapering next month. The Nikkei was down 1.7% and the Topix 1.5% lower as sentiment on Japanese stocks was also affected by the finance minister denying a cut to the corporate tax rate was being considered. The Shanghai Composite rose 1.1%. (Bloomberg)(FastFT)
Today: China FDI. UK retail sales. US jobless claims, CPI, NY Empire and Philadelphia manufacturing surveys. Read more
We’ve been pondering for a while here how China might avert or delay a full-blown financial crisis (or worse). Or, if you want to put it in a different light, how China might make its growth sustainable.
Either way, cleaning up bad debts from a bygone crisis might be a place to start. Chen Long at the INET China Economics Blog has noticed something interesting happening with China’s big Asset Management Companies — the four “bad banks” that were created in 1999 to buy Rmb1.4tn of distressed assets at book value from the four big state banks — equivalent to about 20 per cent of their combined loan books, or 18 per cent of China’s GDP in 1998, according to this BIS paper. Read more
Elsewhere on Wednesday,
- How about, greedy and corrupt vs greedy and ruthless?
- FDR thought Keynesian stimulus was ‘something for nothing’.
- Things learned from Getco’s 8-K. Read more
Asian markets mixed, HK closed due to typhoon || ‘Whale’ charges could be laid today || UK gilts reach 2-year high || UK unemployment today || BP sues US govt over new contract ban || Icahn pushes for bigger Apple buyback || China pressing ahead to cut industrial capacity || Whirlpool buys majority stake in Hefei Rongshida || Corporate profits and forecasts move in opposite directions Read more