The tendency toward restriction that runs through the tone of the presentation seems to me to be quite problematic. It seems to me to support a wide variety of misguided policy impulses. –Larry Summers, Jackson Hole 2005 You might think Summers had changed his mind in the eleven years since he called Raghuram Rajan a “Luddite” for daring to suggest the financial system had gotten riskier since the 1970s thanks to competition and the rise of performance-based pay. After all, in a new paper, Summers and graduate student Natasha Sarin not only cited Rajan’s work approvingly, they concluded lenders are still too vulnerable to panics. You would, however, be wrong.
This will be a mostly charted recap of where exactly in the rabbit hole of negative yielding corp bonds we are following last week’s knee-shaking sale of some brand new negative yielders by non-state owned Henkel and Sanofi. It was a first. It was exciting.
This is a prophecy brought to you by Citi: Over the past five years the incumbent UK domestic banks have managed to maintain and improve net interest margins. As asset yields have declined the banks have been able to respond via careful liability management, lowering savings rates and retiring expensive legacy wholesale funding issued during the financial crisis. We believe this positive trend is now set to stall and reverse. While banks will probably be able to mitigate the impact of lower rates over the next 6 months, we fear that beyond this net interest margins [NIMs] could fall sharply.
Brexit was one of the biggest events of 2016, and has naturally triggered a fair bit of contemplation in the hedge fund industry, where money managers are now pondering the short and long term implications. Here is a selection of some of the Brexit points made in the second-quarter letters sent to investors by a batch of hedge funds. Most were sent out in July, but many of their thoughts remain very current.
It’s almost five months since 11m private documents leaked out of a Panamanian law firm, Mossack Fonseca. This guest post from Howard Bilton, chairman of off-shore advisory specialist The Sovereign Group, looks at the broader state of play for those looking to minimise their tax bills.
It’s not often you hear investment strategists write so cheerfully about redistribution, but then again it’s 2016, so anything goes: Happily, the fiscal flip this summer has thus far been more biased toward redistribution & Keynesianism rather than protectionism. For example: