Posts tagged 'Economy'

Don’t try this at home – central banker edition

Central bankers can do many things but they should never, ever attempt humour.

To illustrate the point we present the price action in the Australian dollar on Wednesday. Read more

Down, down, deeper and down

We are, of course, talking about the Australian dollar — now going head to head with the Syrian pound for the title of the world’s worst performing currency.

The latest drop follows a call from Pimco of even lower interest rates. Read more

Spain’s funding costs post a Draghi-ing

So, we are days from finding out what the ECB is planning to do… or at least, days away from knowing more than we do now.

But immediate largesse in the bond market isn’t the only bit of help that should be concentrated on. There is still Spain’s bank-bailout to consider and where its costs should ultimately lieRead more

‘Badwill’ in Spain

A hat-tip to David Enrich for the spot.

This is from Banco Sabadell’s results at the end of July. It’s all about the consolidation of Banco CAM into its new parentRead more

Germany’s saviours

Or, a new Bloody Ridiculous Investment Concept to save Germany.

From Handelsblatt (in the fine FT Alphaville tradition of Google Translated German): Read more


Here’s a call from Sober Look on Tuesday — Germany’s growth might be on the cusp of going negative:

So much for the hopes and dreams of German decoupling from the Eurozone’s economic troubles. How things have changed in just six months… Germany’s growth trajectory is now converging with the rest of the euro area’s weakened economic conditions.

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And the rupee just keeps sliding

Miss Prism. That would be delightful. Cecily, you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side…

Apparently the rupee’s plight has gotten bad enough for the Reserve Bank of India and the government to have a chat and attempt again to shore up the embattled currency. Read more

Reserve Bank of India: we’re holding rates, YOU sort it out!

Right, we’ve had a few looks at India over the last while — at its crumbling rupee, widely reported deficits and stumbling, ineffective political system. Heck, Standards & Poor’s even got in on the act and prompted us to ask if the Brics are about to become the Brcs.

That all makes Monday’s decision to keep rates on hold by the Reserve Bank of India a bit more suprising than it might otherwise have been. From the RBI’s statement (our emphasis): Read more

UK economy contracts in fourth quarter

Britain’s economy contracted slightly in the last quarter of 2011, official data on Wednesday showed, raising fears of a double dip recession, the FT reports. The data underscore the message on Tuesday from Sir Mervyn King, central bank governor, that the path to recovery will be “arduous”. The Office for National Statistics said that in the last three months of 2011, GDP slipped by 0.2 per cent, slightly more than the 0.1 per cent decline forecasted by economists surveyed by Thomson Reuters. For the year ended December 31, GDP has risen by 0.8 per cent The data show that the nation’s singl largest sector, services, was flat for the quarter, although it covers 21 different components. Of these, 8 showed an increase in outputWhile output in the nation’s services sector – its largest business sector – was flat in the fourth quarter when compared with the third quarter, the output of productive industries, including manufacturing, fell by 1.2 per cent.

Do you believe in netting? — Part 2

In Part one, FT Alphaville asked whether there was reason to doubt the netted derivatives exposures reported by banks. Here, we discuss how netting works (or doesn’t, ahem) when counterparties collapse.

Valuing swaps when the world is crumbling Read more

Do you believe in netting? — Part 1

On Friday, Jeffrey Snider of Atlantic Capital Management argued that finance now exists for its own exclusive benefit. The thrust of his argument is that derivatives have allowed banks to escape the bounds of actual cash assets and the real economy.

He introduced his argument by dissecting Bank of America’s derivatives disclosure, pointing out the distance between the net derivative asset that is reported ($79bn) and the market value of said asset before netting ($2,172bn). From there he goes on to marvel at the size of the derivatives market, and question whether there’s any good reason for it to be so big. Conclusion being as above: it’s so big that the link to the real economy is more or less gone. Read more

When the deleveraging meets the real economy

Looking forward to the new year yet?

After a likely outright contraction in GDP in 2012, in the creditless recovery that we envisage the pick-up in GDP growth is likely to be slow and shallow.

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Dr Gloom’s Reform Trilogy

Brace yourself we have another helping of doom and gloom from Dr Tim Morgan, the author of the recent Project Armageddon report.

It’s the first part of his Reform Trilogy, titled Challenging the denial consensus: a radical alternative based on tax cuts. In the report, Tullett Prebon’s Global Head of Research poses some radical questions about public spending and taxation, and reaches some equally radical conclusions. Read more

About that last bastion of health in Europe

Here’s a nice chart showing German new factory orders from Sean Corrigan at Diapason Commodities:

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Anarchy in the UK

Relax everyone, the UK’s haven status and AAA rating is safe.

Or so says Nomura in a ‘Riot‘ special. Read more

Edwards says this has nothing to do with that downgrade

Thought the current turmoil was down to the downgrade of US debt? Wrong!

According to Societe Generale’s uber bear, Albert Edwards, this has absolutely nothing to do with S&P, the White House, Tea Party etc. It’s the economy stupid: Read more

UK GDP grows by 0.5% in first quarter

The UK economy grew by 0.5 per cent in the first quarter as it rebounded from a contraction of 0.5 per cent in the fourth quarter of last year that had been largely caused by heavy snow, the FT reports. The figures from the Office of National Statistics suggest the economy was at best stagnant over the last six months, with the level of gross domestic product the same in the first quarter as it was in the third quarter of 2010. The data are in line with the average expectation of economists for growth of 0.5 per cent. The independent Office for Budget Responsibility had predicted 0.8 per cent growth. The weak growth came as construction output fell by 4.7 per cent in the quarter, and the output of utilities such as electricity and gas fell by 3.5 per cent after the cold December had boosted demand for heating.

The global economy is critically ill

It’s a SocGen double header on FT Alphaville this Friday morning.

You’ve had the apprentice (Dylan Grice) and now it’s time for the Dark Sith Lord (Albert Edwards). Read more

China manufacturing growth eases

Headline growth in China’s manufacturing industry eased for a second consecutive month in February as activity slowed to a six-month low in the face of tighter monetary policy and rising commodity prices, the FT reports. In a sharp contrast to the region’s largest economy, data from India suggested a marked expansion of industrial activity during the month, with growth accelerating to a three-month high, adding to fears about upward pressures on inflation. China’s official Purchasing Managers’ Index, published on Tuesday by the Federation of Logistics and Purchasing, fell to 52.2 from 52.9 in January – the lowest since August. However, the February figure remained positive and was higher than the median forecast of 52 in a Reuters survey of economists, indicating that the sector remains healthy in spite of interest rate increases and other measures intended to cool inflation.

Rising oil price threatens fragile recovery

High oil prices could threaten the fragile economic recovery among developed nations this year putting pressure on the Opec oil cartel to increase production, the FT reports. According to the leading energy watchdog, oil import costs over the past year for the 34 mostly rich countries that make up the Organisation for Economic Co-operation and Development have soared by $200bn to $790bn at the end of 2010. The International Energy Agency says the increase, due to high crude prices, is equal to a loss of income of about 0.5 per cent of OECD gross domestic product.  Oil prices have edged closer to $100 a barrel in recent weeks and Brent crude hit $95 a barrel for the first time in 27 months on Monday as the economic recovery has gathered pace.

Another house price decline

Because of the lag, the latest release of the S&P/Case-Shiller home price index won’t shock anyone, but it’s still worth noting:

New York, November 30, 2010 – Data through September 2010, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined 2.0% in the third quarter of 2010, after having risen 4.7% in the second quarter. Nationally, home prices are 1.5% below their year-earlier levels. In September, 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down; and only the two composites and five MSAs showed year-over-year gains. While housing prices are still above their spring 2009 lows, the end of the tax incentives and still active foreclosures appear to be weighing down the market.

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Blast off – UK GDP rocket

And it was RBS analysts wot won it.

Economic growth in the third quarter chewed up consensus forecasts and spat them out on Tuesday — recording 0.8 per cent above a predicted 0.4 per cent. Read more

US non-farm payrolls – down by 95,000

US non-farm payrolls fell by 95,000 jobs in September while the unemployment rate stayed at 9.6 per cent, according to the Bureau of Labor Statistics.

The decline was much more than expected by the market. Read more

Highlights (and lowlights) from the Beige Book

Just as the US was turning its weary eyes to Barack Obama’s speech on the economy on Wednesday, the Federal Reserve Board released the sixth Beige Book report of the year. This most recent edition covers activity in the last half of July and all of August.

The unsurprising top line: Read more

Watch President Obama’s speech on the economy

Starting at 2:10pm, EDT.

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Obama finds patience thinning

Declaring an end to US combat operations in Iraq last week, Barack Obama told his country he would from now on devote his attention to the ailing economy, saying that restoring growth and jobs was his “central responsibility as president”, reports the FT. Some listeners may have felt they had heard this somewhere before. Mr Obama said the economy would be his top priority four months earlier  – and in January be­fore that . . . and last November. Opinion polls show that voters are also growing fed up with hearing him saying the economy is on the right track when their daily lives do not bear this out. Even as the unemployment rate ticked up to 9.6 per cent last week, Mr Obama said his administration had taken steps to “break the back of this recession”.

US non-farm payrolls – down 54,000

US non-farm payrolls fell by 54,000 jobs in August while the unemployment rate remained constant at 9.6 per cent, according to The Bureau of Labor Statistics.

The decline was much less than expected by the market. Read more

Not another freaking economic indicator

Inbox jammed with the latest barrage of daily economic data points and previews?

Feeling overwhelmed at the prospect of wading through the reports and trying to figure out what the market consensus is? Read more

US Q2 house warming (or should that be warning)

Yes, house prices in the US climbed in the second quarter of the year. No, that’s not cause for optimism or even relief.

First the announcement from S&P (emphasis ours): Read more

Cargill sounds warning of a slow recovery

Cargill, the world’s largest agricultural commodities trader, on Tuesday warned that the global recovery had yet to gain traction as it reported a second straight decline in annual profit, reports the FT. As economists debate the merits of government intervention to avoid a double-dip recession, the company said the economic outlook was uncertain. “More uncertainty lies ahead, for the world has yet to transition from a policy-stimulated upturn to a structurally sustained recovery,” Cargill said in its annual report. The US’s largest privately owned company by revenue has a unique vantage on global economic trends, trading commodities from corn to oil to salt with employees in 66 countries.