In this guest post, Marcello Minenna, the head of Quantitative Analysis and Financial Innovation at Consob, the Italian securities regulator, argues that reforms to the European Stability Mechanism can pave the way for Eurobonds. The views expressed here are his personal opinions and do not necessarily reflect the views of Consob.
HSBC, having just been accused of “possible criminal complicity” in money laundering, must be glad to be fielding questions on a positive clean-up story today, writes Matthew Vincent in FT Opening Quote. This morning, it has promised $100bn of finance for low-carbon technology and sustainable development by 2025 as part of a package of measures to strengthen its commitment to tackling climate change and other “green” goals.
Target2 balances reflect euro area’s potential to be better than traditional exchange rate peg regime
Think of it within the context of the balance of payments as foreign exchange reserves that can never be depleted.
In this guest post, law professors Mark Weidemaier & Mitu Gulati evaluate the risk that euro area sovereign debt could be redenominated into new local currencies. The places to worry about are France and Italy, not Greece. Our work centers around questions related to sovereign debt, and lately we have heard from a number of industry friends who wanted to talk about redenomination risk for Euro area sovereigns.
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.
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.
Or moved into riskier assets by the ECB’s corporate bond buying machine (CSPP to its friends). Resistance may be futile but we’ll have to wait to make sure. To move into those riskier assets you’d like to think that eventually the search for yield will become a real, worthwhile thing in Europe again. And not everyone buys that – Credit Suisse for example point out that over the last 2.5yrs in particular government bonds (bunds) have outperformed both high and low yielding credit assets. Their point is that “the time to hunt for yield as a dominant strategy (rather than as a short-term trade) might actually be when yields start to rise.” But BofAML’s European credit team think it’ll maybe happen a bit sooner:
Post-Brexit sterling slump hits airline group IAG, Pearson revenues down, post-Brexit gloom at Foxtons. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here.