Posted by hkarner - 20. März 2017
Source: The Wall Street Journal
Exuberant U.S. markets are in some cases offsetting central banks’ shift away from low rates
Global stock markets as a whole have rallied over the past half year.
Central banks around the world are signaling a move away from ultra-easy money, but financial markets are responding as if the low-interest-rate party isn’t stopping.
A day after the Federal Reserve raised short-term interest rates a quarter percentage point, the People’s Bank of China raised a suite of key short-term interest rates and the Bank of England signaled that an increase in rates may not be far off. Turkey also raised a lending rate, while central banks in Japan, Norway and Indonesia held rates steady.
The events marked a striking turn from the low-interest-rate policies many central banks ushered in as recently as last year to spur markets and slow-growing economies. Low rates make it cheaper for businesses and individuals to borrow, spend and invest and tend to push up the value of asset prices like stocks. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, Fed, QE, Stocks, USA, WSJ | Leave a Comment »
Posted by hkarner - 9. März 2017
Source: The Wall Street Journal
‘External reserves are a form of insurance for sovereigns against crisis and defaults,’ says an analyst
In emerging economies, reserve levels have stabilized after two years of big declines.
Central banks around the world are increasing foreign-currency reserves, highlighting the fragile underpinnings of the global economic recovery despite a bullish mood in financial markets.
In emerging economies, reserve levels have stabilized after two years of big declines. Two-thirds of the 30 biggest emerging markets increased reserves last year, according to Fitch Ratings. Foreign-currency holdings in Israel, Vietnam and the Czech Republic recently reached new records, their central banks have reported.
China’s foreign reserves rose by $6.9 billion in February compared with the previous month, rebounding for the first time in eight months and pushing the reserve total back above the $3 trillion mark. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, Devisenreserven, emerging economies, WSJ | Leave a Comment »
Posted by hkarner - 3. März 2017
MUNICH – How long will major central banks blindly rely on rigid rules to control inflation and stimulate growth? Given the clear benefits of nimble monetary policy, central bankers need to open their eyes to the possibilities that flexibility affords.
The rule of thumb for monetary policymakers has long been that if inflation is below official target ranges, short-term interest rates should be set at a level that spurs spending and investment. This approach has meant that once interest rates reach or approach zero, central banks have little choice but to activate large asset-purchase programs that are supposed to stimulate demand. When circumstances call for it, policymakers default to the predetermined scripts of neo-Keynesian economic models. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, heise, Monetary System, Project Syndicate | Leave a Comment »
Posted by hkarner - 25. Februar 2017
Source: The Wall Street Journal
Political style and economic policy, particularly protectionism, concern pro-globalization policy makers
President Donald Trump, has sent up enough protectionist flags to concern EU central bankers.
Two top European central bankers had harsh words about the economic policy coming from the U.S. in remarks Thursday.
The establishment of protectionist policies in the U.S. risks undermining a key element to wealth, the head of Germany’s central bank said.
The blunt language reflects the concern felt across the globe from policy makers as they try to make sense of President Donald Trump’s unconventional economic policy and political style.
“The U.S. erecting trade barriers leading to other countries becoming more protectionist would, I firmly believe, potentially call into question one of the key pillars of our prosperity,” said Jens Weidmann in the opening of the central bank’s annual report.
The new president’s administration has angered many in Germany by accusing Europe’s largest economy of unfairly benefiting from an undervalued euro. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, Economist, Europe, Trump | Leave a Comment »
Posted by hkarner - 17. Februar 2017
Source: The Wall Street Journal
With stocks, bonds, and commodities no longer rising together, asset allocation suddenly matters again
Asset classes with seemingly little in common, such as gold and technology stocks, are among the top performers in 2017 so far.
The tight synchronization that has characterized financial markets for much of the past decade is breaking down, presenting investors with opportunities and risks they haven’t grappled with in years.
Global stocks, bonds, currencies and commodities have parted ways in recent months, after largely rising in lockstep for most of the post-financial-crisis period.
Cross-asset correlation recently fell to its lowest level since 2006, according to a Morgan Stanley analysis of 34 indicators tracking the relative performance of different asset classes and regions.
Asset classes with seemingly little in common have shone in recent weeks. Gold, emerging-markets and technology stocks rank among the top performers in 2017 so far. The prices of government bonds issued by rich countries, after rallying to record highs in some cases last year, have declined sharply in the U.S. and Europe since mid-2016, as inflation has begun to pick up. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Bonds, Central Banks, Gold, Investment, Stocks, WSJ | Leave a Comment »
Posted by hkarner - 27. Januar 2017
Ludwig von Mises betont, wie wichtig es sei, den objektiven Tauschwert des Geldes zu sichern; denselben Sachverhalt würden wir heute als Erhaltung der Geldwertstabilität bezeichnen. Diese war von jeher aus zwei Richtungen gefährdet, durch Inflation – wenn das Geld seinen Wert verliert, man also mit der gleichen Geldmenge weniger Güter erwirbt -, oder durch Deflation, wenn sein Wert steigt, was keineswegs so erfreulich ist, wie es auf den ersten Blick scheint. In einer modernen Wirtschaft, wo Staat und Unternehmen in der Regel hoch verschuldet sind, wird Deflation zur akuten Gefahr, da beide dadurch gezwungen sind, ihre Schulden mit einem viel höheren Güteraufkommen zu begleichen. Das treibt Unternehmen reihenweise in den Bankrott.
Posted in Artikel | Verschlagwortet mit: Central Banks, Deflation, digital currency, Geldschöpfung, Inflation, Jenner, von Mises | Leave a Comment »
Posted by hkarner - 31. Dezember 2016
CAMBRIDGE – Only a small group of central banks refrain from intervening in the foreign-exchange market to stabilize their currencies’ exchange rate or coax it in the desired direction. Even when they do not intervene directly, their interest-rate policies are often formulated to be compatible with exchange-rate objectives. As a result, freely floating currencies are comparatively rare. This has important implications for the United States authorities as they confront a sharp rise in the dollar’s exchange rate.
When a potential or actual loss of confidence in the currency threatens to bring about large capital outflows, intervention usually takes the form of sales of foreign-exchange reserves to mitigate the magnitude or speed of depreciation. The People’s Bank of China’s ongoing reserve losses are a salient recent example. The most recent US intervention in foreign-exchange markets (which has been rare in general) to support a weak dollar dates back to 1992-1995. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: appreciaition, Central Banks, Dollar, Project Syndicate, Reinhart | Leave a Comment »
Posted by hkarner - 2. November 2016
Otmar Issing, former Chief Economist and Member of the Board of the European Central Bank, is President of the Center for Financial Studies at Goethe University, Frankfurt, and the author of The Birth of the Euro.
NOV 1, 2016 Project Syndicate
FRANKFURT – The reputation of central banks has always had its ups and downs. For years, central banks’ prestige has been almost unprecedentedly high. But a correction now seems inevitable, with central-bank independence becoming a key casualty.
Central banks’ reputation reached a peak before and at the turn of the century, thanks to the so-called Great Moderation. Low and stable inflation, sustained growth, and high employment led many to view central banks as a kind of master of the universe, able – and expected – to manage the economy for the benefit of all. The depiction of US Federal Reserve Chair Alan Greenspan as “Maestro” exemplified this perception.
The 2008 global financial crisis initially bolstered central banks’ reputation further. With resolute action, monetary authorities made a major contribution to preventing a repeat of the Great Depression. They were, yet again, lauded as saviors of the world economy. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, ECB, Finanzkrise, Issing, Project Syndicate | Leave a Comment »
Posted by hkarner - 7. Oktober 2016
Source: The Wall Street Journal By SIMON NIXON
The worry is that politics, economics and finance are combining in a way that threatens to throw globalization in reverse, Simon Nixon writes
One of the biggest puzzles in the global economy right now is the slowdown in trade.
Since 2012, global trade has been growing at just 3% a year, less than half the rate in the previous three decades. Between 1985 and 2003, it grew twice as fast as global gross domestic product; in the last four years, trade has barely managed to keep pace, according to the International Monetary Fund.
What’s more, this slowdown has been across the board, affecting both developed countries and emerging economies, trade in services as well as goods.
The World Trade Organization is now forecasting that world trade will grow by just 1.7% this year, making this the first year in 15 years it has grown more slowly than the world economy. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Central Banks, Deglobalization, IMF, Nixon, Trade, WSJ | Leave a Comment »
Posted by hkarner - 27. September 2016
Stephen S. Roach
Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm’s chief economist, is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer at Yale’s School of Management. He is the author of Unbalanced: The Codependency of America and China.
SEP 26, 2016,, Project Syndicate
NEW HAVEN – The final day of the summer marked the start of yet another season of futile policymaking by two of the world’s major central banks – the US Federal Reserve and the Bank of Japan. The Fed did nothing, which is precisely the problem. And the alchemists at the BOJ unveiled yet another feeble unconventional policy gambit.
Both the Fed and the BOJ are pursuing strategies that are woefully disconnected from the economies they have been entrusted to manage. Moreover, their latest actions reinforce a deepening commitment to an increasingly insidious transmission mechanism between monetary policy, financial markets, and asset-dependent economies. This approach led to the meltdown of 2008-2009, and it could well sow the seeds of another crisis in the years ahead.
Lost in the debate over the efficacy of the new and powerful tools that central bankers have added to their arsenal is the harsh reality of anemic economic growth. Japan is an obvious case in point. Stuck in what has been essentially a 1% growth trajectory for the last quarter-century, its economy has failed to respond to repeated efforts at extraordinary monetary stimulus. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: BoJ, Central Banks, Fed, Growth, Japan, Project Syndicate, Roach | Leave a Comment »