This Year’s Hottest Trade: Buying Everything

Date: 22-10-2019
Source: The Wall Street Journal

Stocks, bonds, gold and oil have staged a rare concurrent rally

The New York Stock Exchange. The S&P 500 has risen 20% this year, even as Treasurys have rallied.

Stocks and bonds have staged a rare simultaneous ascent, logging the best performance in a quarter-century.

The S&P 500 has advanced 20% in 2019, while Treasurys have rallied. The last time the benchmark stock index rose more than 10% while the Treasury yield fell more than a percentage point in the first three quarters of the year was in 1995, according to Dow Jones Market Data.

That trend continued as the fourth quarter kicked off. Government bonds and gold notched gains last week as the S&P 500 hovered within 1.3% of its record reached in July and clinched its second straight week of gains.

Brexit and Britain’s Broken Parliament

Date: 22-10-2019
Source: The Wall Street Journal By Walter Russell Mead

The prime minister can’t call an election, thanks to a reform enacted in 2011.

Is Britain broken? That’s the question a bemused world has been asking since the unexpected result of Remainer David Cameron’s Brexit referendum plunged the U.K. into a three-year political crisis.

Two things are striking about this period of national agony and debate. The first is how sensible and peaceful the British people have remained. The Brexit referendum carried by 52% to 48% (a margin of roughly 1.3 million out of more than 33.5 million votes cast) and the consequences are unpredictable and large. Will the United Kingdom even stay united as Scotland and Northern Ireland react to Brexit? Will Britain’s economy flourish as it opens to the world or wither without privileged access to European markets? From the City of London’s financial sector to the Sunderland Nissan factory, hundreds of thousands, even millions of jobs may be at stake.

Tech Treadmill Wears Firms Out

Date: 21-10-2019
Source: The Wall Street Journal

Once a company jumps on a new trend like streaming, it has to spend to stay ahead.

Does technology provide a competitive advantage? Companies are counting on it. In March McDonald’s spent $300 million buying an Israeli artificial-intelligence startup to personalize menus based on weather and trending items. Now they’re considering license-plate recognition systems for drive-through lanes. Based on your history they might offer to supersize your order, or just hand you your usual Happy Meal. CEO Steve Easterbrook says, “Technology is a critical element of our Velocity Growth Plan.”

The problem is that adopting a useful technology doesn’t mean your advantage will last. I’ve long been amused by a succession of Harvard Business Review pieces that demonstrate this point. In 1985 Michael E. Porter wrote “How Information Gives You Competitive Advantage,” then in 1990 came Max Hopper’s “Rattling SABRE—New Ways to Compete on Information,” and finally in 2013 we got Rita Gunther McGrath’s “The End of Competitive Advantage.” Each of these takes describes a different stage in the life cycle of corporate tech.

Hopper was, as Harvard professor James Cash noted, “the first person who really defined the marketing leverage that could come from using technology.” In the late 1950s Hopper helped build Sabre, an automated flight-reservation system, and in 1981 he helped design the first major frequent-flier program to give American Airlines a competitive “AAdvantage.” Yet by 1990 he worried that the game was over, suggesting that technology was “table stakes for competition.” Hopper noted that “SABRE’s real importance to American Airlines was that it prevented an erosion of market share.”

ABörsen-Crash von 1929: Kann sich die Finanzkatastrophe wiederholen?

Dank an H.G. 

SN, 18/10/2019, Hannes Breustedt

Vor 90 Jahren leitete der „Schwarze Donnerstag“ die große Weltwirtschaftskrise ein. Die Kombination aus Spekulationsblasen, Konjunkturflaute und Handelskonflikten endete in einem ökonomischen Totalabsturz. Einige Parallelen zur Gegenwart sind unübersehbar.

Broker am „Schwarzen Freitag“ 1929 in der New Yorker Börse: Innerhalb weniger Tage verloren Millionen Amerikaner ihr Vermögen, die Panik griff weltweit auf die Börsenplätze über. SN/AP Broker am „Schwarzen Freitag“ 1929 in der New Yorker Börse: Innerhalb weniger Tage verloren Millionen Amerikaner ihr Vermögen, die Panik griff weltweit auf die Börsenplätze über. Der Börsen-Crash von 1929 beendete den Wirtschaftsboom der Goldenen Zwanziger im vergangenen Jahrhundert abrupt. Der auf das Finanzbeben folgende Konjunktureinbruch ging als Great Depression in die Geschichtsbücher ein und gilt bis heute als schwerste und längste Weltwirtschaftskrise der Neuzeit. Vor allem der Schwarze Donnerstag am 24. Oktober bleibt als eines der dunkelsten Kapitel der Finanzhistorie in Erinnerung – in Europa aufgrund des Zeitunterschieds auch Schwarzer Freitag genannt. 90 Jahre später sind die Bewertungen an der Börse erneut bedenklich hoch. Und erneut halten Handelskonflikte und Konjunktursorgen Anleger in Atem – besteht das Risiko, dass sich ein Desaster wie damals wiederholt?

World economy is sleepwalking into a new financial crisis, warns Mervyn King

Date: 21-10-2019
Source: The Guardian Larry Elliott in Washington

Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss

Lord King said resistance to new thinking meant a repeat of the financial chaos of the 2008-09 period was looming.

The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.

Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.

Financial Markets Face Fresh Wave of Political Uncertainty: ‘There’s Literally Nowhere to Hide’

Date: 21-10-2019
Source: The Wall Street Journal

Investors spooked by widespread turmoil are seeking havens

The U.K. Parliament’s decision to postpone a final vote on the country’s exit from the European Union marks the latest geopolitical development likely to swing financial markets, highlighting the extreme levels of uncertainty that some investors worry isn’t being properly accounted for with U.S. stocks near all-time highs.

The U.S.-China trade war, Britain leaving the EU and impeachment proceedings in the U.S. are just some of the major political obstacles facing investors. Adding to the uncertainty are the Turkish military operation in Syria, attacks on Saudi oil production and social unrest spanning from Hong Kong to Barcelona.

In response, some investors are boosting holdings of cash and other assets that tend to hold their value when markets turn rocky. Others are recommending strategies that could protect against a swift downturn.

A massive money-laundering scandal stains the image of Nordic banks

Date: 21-10-2019
Source: The Economist

Danske and Swedbank will struggle to regain clients’ and regulators’ trust

Danske bank’s headquarters in Copenhagen, reminiscent of a Greek temple, speaks of an illustrious past. But Denmark’s biggest bank has “no vanity left”, says a spokesman. Since 2008 it has been embroiled in a disaster every five years. After one during the financial crisis, it was again in crisis mode in 2013 when the board sacked Eivind Kolding after 18 catastrophic months at its helm. Last year Thomas Borgen, Mr Kolding’s successor, resigned amid revelations about Danske’s role in a vast money-laundering scandal. In May Mr Borgen was charged by Denmark’s prosecutor.

The money-laundering crisis is the most damaging yet for Danske, and for other Nordic banks allegedly involved. Last year the Organised Crime and Corruption Reporting Project, a group of investigative journalists, gave Danske its “Corrupt Actor of the Year” award. How did the bank squander its good name—and can it regain clients’ and regulators’ trust?

The Survival of Democracy in Central and Eastern Europe

Oct 16, 2019 Sławomir Sierakowski, Project Syndicate

Sławomir Sierakowski, founder of the Krytyka Polityczna movement, is Director of the Institute for Advanced Study in Warsaw and Senior Fellow at the German Council on Foreign Relations.

Following parliamentary elections in Poland and local elections in Hungary, populist autocrats in both countries remain in power, where they will continue to undermine democratic institutions. Even so, relative victories for opposition forces in both countries show that the region’s „illiberal democrats“ are not unbeatable.

WARSAW – Is populism in Central and Eastern Europe finally losing its momentum? In Poland, opposition parties won the Senate, and the ruling Law and Justice (PiS) party’s share of the vote slipped to 43.7%, from 45.5% in European Parliament elections this past May. And in Hungary’s local elections, the opposition retook power in Budapest and won mayoral races in ten other cities.

Rebel amendment defeat is yet another painful bellyflop for Boris Johnson

Date: 20-10-2019
Source: The Guardian by Polly Toynbee

Prime minister was stopped dead in his tracks from bulldozing deal through parliament with no scrutiny

‘Boris Johnson richly deserves to become the next Tory leader to fail over Europe.’

The prime minister nose-dives again, yet another painful bellyflop among the many in his 88 short days in power. He takes the same humiliating punishment he inflicted on his predecessor in order to snatch her seat: she was gracious, but you could see the inner smirk.

Today he was stopped dead in his tracks from bulldozing an EU deal through parliament. An act that would cement Britain’s fate for decades to come was insultingly put to parliament without time for scrutiny, with no Treasury economic impact assessment, and its 553-page legal text only handed to MPs in the morning as the debate began.

No wonder many, like Sir Oliver Letwin himself, who back the deal in principle, balked at signing up blindfold to such a pig in a poke with no time for deliberation. Will Boris Johnson refuse to send the letter asking for an extension, will he break the law? If so, the law will break him, again.

If anyone was hoping for some great historic parliamentary moment, this was no resounding debate on the nature and future of Britain to ring out through the ages. Instead you could hear the flapping of pigeons coming home to roost to this house that had created such a disastrously flawed referendum.

Eine Scorecard zur Beendigung des kurzfristigen Denkens

Oct 17, 2019 Klaus Schwab, Project Syndicate

Klaus Schwab is Founder and Executive Chairman of the World Economic Forum.

GENF – Die Angst vor einer weltweiten Rezession, der Handelskrieg zwischen den USA und China, die Auswirkungen des Brexit und ein gefährlicher Schuldenüberhang sorgen für eine der stressreichsten Phasen seit einem Jahrzehnt. Gleichzeitig stehen langfristige Ziele, wie die Umsetzung der Nachhaltigkeitszielen bis 2020, die Umsetzung des Pariser Klimaabkommens bis 2050 und der Umbau des Wirtschaftssystems für die nächsten 50 Jahre, an. 

Um ein langristiges Denken anzuregen, braucht es eine Neuorientierung. Dazu drei Vorschläge:Zunächst müssen wir den wirtschaftlichen Bezugsrahmen ändern. 75 Jahre lang stand das Bruttoinlandsprodukts (BIP) im Zentrum und die Volkswirtschaften dienten als Werkzeug zur Mobilisierung der Produktion für den Krieg. Gegenwärtig aber ist die Maximierung von nachhatligem Wohlstand das Ziel und es braucht alternative Messgrössen.Eine Gruppe von Ökonomen aus der Privatwirtschaft, Hochschulen und internationalen Einrichtungen, (u.a. Diane Coyle und Mariana Mazzucato) haben das „Wealth Project“ (Wohlstandsprojekt), aufbauend auf Weltbank-Ansätzen, entwickelt.