Last year’s worries about the Chinese economy suffering a ‘hard landing’ eventually proved to be misplaced. Or should that be, worries that the government wouldn’t be able to engineer a soft landing, proved to be misplaced. Yet, while the economy seems to be on a more stable footing these days, there may be too much optimism that this will continue.
The consensus is for growth of a touch more than 8 per cent this year, roughly in line with what Beijing itself is forecasting. Yet Zhiwei Zhang and Wendy Chen, economists at Nomura, argue this is too bullish, and offer five reasons why they think 7.7 per cent is more realistic, with growth slowing to 7.3 per cent in the second half of 2013. Read more
Let’s take a moment for a high level overview of public debt-to-GDP ratios in the eurozone. If that’s not your idea of fun, well, you probably wouldn’t be reading FT Alphaville.
Courtesy of a note by Lasse Holboell W. Nielsen of the Economics Research team at Goldman Sachs (we may have added some kittens)… Read more
The disconnect we’ve noticed between commodity fundamentals and forward rates appears to be popping up in other asset classes as well.
Priya Misra, rates strategist at Bank of America Merrill Lynch, makes a very interesting point on Friday about what she sees in her sector. Read more
Live markets commentary from FT.com
Brussels turns up pressure over Libor || Relief over HP earnings buys Whitman time || Citi unveils pay plan for executives || Egyptian elections to start in April || ECB unveils €1.1bn profit on crisis bonds || US paints bearish outlook for grain prices || CFTC sues Nymex over information leaks || Markets: Growth-focused products are rallying Read more
Elsewhere on Friday,
- How the eurozone crisis was about a buyer’s strike.
- Perhaps the singularity isn’t going to happen?
- European banks would be less scary if they were in the US. Read more
Asian stocks edge up || European Commission looms over Libor banks || Shareholder rebuff to Rothschild paves way for Bumi split || HP earnings buy time for turnaround || Bankia’s epic loss Read more
ROUND-UP
US stocks down for the second day in a row. The S&P 500 fell 0.6 per cent, closing at 1,502.42, after poor data from both Europe and the US, where initial claims and the Philly Fed survey both cast a pall (Reuters). Read more
Good news for Sir Richard Gozney (KCMG, CVO, KStJ), who will be joining the board of Bumi after Thursday’s shareholder vote.
Not so good news for Nat Rothschild. Read more
That’s Citi’s risk-warning signals beginning to spike over the past couple of weeks and especially over the last day or two. From Citi’s Steven Englander: Read more
Click to enlarge — details (finally) of the sovereign bonds held by the European Central Bank’s inactive Securities Markets Programme, released on Thursday: Read more
We tried to explain the QE surplus ‘raid’ before but never approached the crystal clear clarity of Thursday’s ONS release on the treatment of cash transfers from the BoE to the Treasury (the release of which accompanies the news that public finances improved in January although they were flattered by such transfers): Read more
Live markets commentary from FT.com
Fed doubtful on open-ended QE3 policy || January public finances in surplus after tax receipts || US moves to fight corporate cybercrime || China and economy to direct Abe US talks || Google to debut Chrome for touchscreens || 800,000 Pentagon staff face unpaid leave || Russia’s missing billions revealed || Markets: Growth-focused asset prices are stumbling on Thursday morning Read more
FT Alphaville, by means of thorough research conducted long through the night on reddit, has discovered a most cunning and convoluted attempt to avoid taxes… Read more
Western markets were all a-jitter on Thursday. Obviously we can blame the Fed. Bickering between central bankers just doesn’t look good, whether they are American, British or continental Europeans.
An immediate question is raised: are we witnessing the end of ‘fast and loose’ policy? The quick answer is probably ‘not yet,’ although yes, it will end, and maybe sooner than some had come to assume. This presents a fresh challenge for policy markets, as noted by Lloyds’ Charles Diebel: Read more
Nymex WTI futures trade experienced somewhat of a wobble on Wednesday.
As Stephen Schork highlights in his chart of the day: Read more
Elsewhere on Thursday,
- A gift of the gab?
- Banks on borrowed money.
- Russia’s “well organised” capital flight. Read more
Asian markets fall after FOMC minutes || China talks of more property curbs || US Congress to target Target2 Iran-linked transfers || RSA investors unhappy at dividend cut || FSA’s Libor report coming soonish || Foxconn hiring freeze hurts Apple shares || Questions after Sony PS4 announcement || Fed wants to expand beyond primary dealers Read more
ROUND-UP
FT markets round-up: “Disappointing US housing data and weaker-than-expected results from the largest luxury homebuilder drove down stocks in the sector while broader markets sold off after the release of the FOMC minutes. Main indices fell sharply giving up some of the recent gains after reaching fresh multiyear highs during the previous session. The minutes from the FOMC meeting revealed that “many” officials were concerned about the costs and risks of further asset purchases, as the Fed buys securities at a pace of $85bn a month. Markets which started the day lower, sold off after the release of the minutes with the benchmark S&P 500 index closing down 1.2 per cent at 1,511.95.” (Financial Times) Read more
Here’s the passage from the January FOMC minutes that is getting the most attention (emphasis ours, and we separated it into multiple pars for an easier read):
Several participants emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved. For example, one participant argued that purchases should vary incrementally from meeting to meeting in response to incoming information about the economy. Read more
Ay ay ay! Gold is approaching a death cross and all sorts of other commodities are looking nasty too.
Read more
From a terrific post by Andy Harless:
Machismo is a type of commitment mechanism. Read more
Eurobank recently lowered the over-collateralisation (OC) of its second covered bond programme to the bare minimum allowed by Greece’s covered bond law. Avid covered bond-watchers (there must be a handful of you out there) will know of course, that specially designed legal frameworks are one of the big perks of the covered bond structure – along with juicy benefits like an overstuffing of assets and the dual recourse nature of the centuries-old debt instruments. Read more
Cheery chap, Tim Morgan, chief economist at money broker Tullett Prebon. Here’s a few charts to warm us all up on a cold February day…
Read more
Live markets commentary from FT.com
Kloppers to be replaced by inside geologist || €3.5bn buyout plan for France’s Elior || Italy’s centre-left woos Monti || Bulgaria’s government resigns || Dell shareholders maintain criticism of buyout after earnings fall || Isle of Man tax haven horizon || China FDI falls again || JGB dog that didn’t bark || Markets Read more
Here’s the dovish BoE minutes that started sterling sliding (click through for the pdf): Read more
Don’t go messing with the kiwi! The governor of New Zealand’s central bank, Graeme Wheeler, was pretty clear in a speech earlier today:
We believe the exchange rate is significantly over-valued relative to what would be sustainable long term in the absence of sizeable increases in the terms of trade and productivity. Read more
The weaker yen hasn’t done much for Japan’s exports so far, with preliminary data out today showing another record in Japan’s trade deficit. Exports were 6.4 per cent higher, year-on-year, in January and failed to raise as much as imports (up 7.3 per cent). This brought the trade deficit to Y1.63bn.
Societe Generale say not to worry yet, however. Firstly, those figures are not seasonally-adjusted. Month-on-month seasonally-adjusted numbers show the trade deficit shrank from Y678.9bn in January from a revised Y783.8bn in December. Read more
Older entries
1The real rate of British inflation
2A Minutes worth of sterling freefall [updated]
3Skidelsky on robots and more leisure
4When choked gold responds to hedging demand (and Soros)
5From bubbles to wobbles
Show more6Tax avoidance: it's close to home
7Unstable commodities
8Rational nerdiness vs macho bada$$ery in monetary policy
9ECB transparency, €100bn of Italian bonds edition
10Are rates mispriced or are investors missing something?
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