How China’s Financial Cracks Could Spread

Date: 18-10-2017
Source: The Wall Street Journal

If China’s growth falters, the fallout will be felt around the world
China is the world’s second-largest economy, the biggest buyer of nearly all commodities and the biggest exporter.

Can financial turmoil in China play havoc with the rest of the world? It has already happened.

On the first trading day of 2016, China’s central bank sent shockwaves around the world by sharply lowering the value of the yuan. The decline in the currency itself, which came after the bursting of a stock market bubble, was not the biggest concern. Rather it was a sudden loss of confidence in China’s growth story that reverberated around the world.

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Why, Oh Why, Can’t We Have a Decent Stock Bubble?

Date: 17-10-2017
Source: The Wall Street Journal

‘Irrational exuberance’ is tempered by memories of the frothy markets of 2000 and 2007

A “for sale” sign stands among dead grass outside a home in Gilbert, Ariz., in 2009. The public’s “irrational exuberance” is tempered by memories of the housing bubble.

After an eight-year bull market and the cheapest borrowing costs in history, the big surprise isn’t that the stock market’s high, but that it isn’t higher still.

Where’s the irrational exuberance? Why are taxi—-well, Uber—-drivers still talking about politics and sports, when they should be offering stock tips and thinking about packing it all in and day trading?

The simple answer is that after the dot-com bubble of 2000 and the housing and credit bubble of 2007, it’s hard to tempt the wider public into believing in market magic.

EU Official Sees Trump Team Cooperating Positively on Financial Rules

Date: 16-10-2017
Source: The Wall Street Journal

Valdis Dombrovskis sees ‘targeted adjustments,’ not push toward financial sector deregulation

Valdis Dombrovskis, who leads financial-services policy work at the European Union’s executive arm, said fears about President Donald Trump’s financial deregulatory agenda haven’t been realized.

WASHINGTON—European officials see cooperation with the Trump administration on financial sector oversight “developing in a positive way,” according to a top official who met with U.S. regulators on Friday.

European Commission Vice President Valdis Dombrovskis in an interview said European Union fears about President Donald Trump’s financial deregulatory agenda haven’t been realized.

The Eurozone’s Challenge: Don’t Waste the Recovery

Date: 16-10-2017
Source: The Wall Street Journal By Simon Nixon

The bloc’s robust recovery is an opportunity to strengthen its resilience to future shocks—but will governments grasp it?

French President Emmanuel Macron, and German Chancellor Angela Merkel have different priorities when it comes to reforming the eurozone’s architecture.

The International Monetary Fund had a clear message for economic policy makers gathered in Washington for its annual meetings last week: don’t waste a recovery. The global economy is enjoying a robust upswing, so governments should fix the roof while the sun is shining.

It was a message directed particularly at the eurozone. The strength of the currency bloc’s recovery has taken almost everyone by surprise, not least the IMF, which upgraded its forecast for eurozone growth in 2018 by 0.2 percentage point to 2.1% compared with its July forecast, putting it on a par with the U.S. This recovery is both broad-based, spanning all countries and sectors, and well-balanced—with household spending, exports and investment all playing their part.

J.P. Morgan’s James Dimon May Hate Bitcoin, but He Loves Blockchain

Date: 16-10-2017
Source: The Wall Street Journal

Bank expected to roll out a pilot program to use the record-keeping technology to speed global payments

James Dimon, the chief executive of J.P. Morgan.

J.P. Morgan Chase & Co. CEO James Dimon  recently trashed the digital currency bitcoin as a fraud that will blow up. But he’s still enamored with the technology that underpins it and other virtual currencies.

The latest sign is expected Monday, when the nation’s largest bank rolls out its next pilot program to use the record-keeping technology, known as blockchain. The initiative will enable the faster, more secure transfer of cross-border payments between J.P. Morgan, Royal Bank of Canada and  Australia and New Zealand Banking Group Ltd.

IMF Identifies Nine Big Banks Likely to Struggle With Profitability

Date: 12-10-2017
Source: The Wall Street Journal

Projects Deutsche Bank, Citi, Barclays and others could deliver subpar profits by 2019

The International Monetary Fund said some of the world’s largest financial institutions—including Deutsche Bank AG, Citigroup Inc., Barclays PLC and a few Japanese institutions—could struggle in coming years to remain sufficiently profitable.

“About a third of banks by assets may struggle to achieve sustainable profitability, underscoring ongoing challenges and medium-term vulnerabilities,” the IMF said, referring to the world’s most important financial institutions.

The IMF’s critique of the banks came in its biannual Global Financial Stability Report, released Wednesday as finance ministers and central bankers from 189 countries gather in Washington for the annual meetings of the IMF and the World Bank.

OECD Indicators Show U.K., Russia as Weak Spots

Date: 10-10-2017
Source: The Wall Street Journal

Global economy is set for strong growth into 2018

The global economy is set for continued strong growth into 2018, but the U.K. and Russia are likely to miss out, according to leading indicators released Monday by the Organization for Economic Cooperation and Development.

The Paris-based research body’s gauges of future activity, based on data for August, pointed to faster growth in China, Italy and Brazil, while the strong growth experienced over recent months is set to continue in the U.S., the eurozone as a whole and Japan.

Date: 11-10-2017
Source: The Wall Street Journal
Subject: Wal-Mart Plans Further Cost Cuts as Competition With Amazon Intensifies

Retailer to keep U.S. store openings to a minimum, focus on online selling to drive growth

Wal-Mart’s CEO said the company plans several ways of delivering groceries to shoppers’ homes, including using employees, contract delivery workers and third-party services such as Deliv.

Wal-Mart Stores Inc. plans to open fewer U.S. stores than it has in at least 25 years and deepen its cost-cutting efforts, attempting to free up cash for e-commerce and store improvements in an increasingly competitive retail environment.

The strategy is central to Wal-Mart’s plan to fend off Amazon.com Inc. and a sign that executives believe the profitable, cavernous stores Wal-Mart built rapidly for decades won’t grow through expansion.

Brexit Poses Risk to U.K.’s Existing Economic Order

Date: 09-10-2017
Source: The Wall Street Journal By Simon Nixon

At last week’s Conservative Party conference, there was growing concern at where the process is heading

British Prime Minister Theresa May

The British people didn’t vote for a revolution. They simply voted to leave the European Union. But senior figures across the political spectrum believe that a revolution is what Britain is getting.

Contrary to what Brexiters said during last year’s referendum—and continued to insist until recently—Britain’s departure from the EU is going to be anything but easy. It is increasingly clear that Brexit was an act of violence against the existing economic order.

There is scarcely a corner of the U.K. economy that is unaffected by the decision to reverse 43 years of European integration. At last week’s conference of the ruling Conservative Party, there was growing concern at where this process is heading and how it might end.

What makes Brexit so destabilizing is that it shares two features common to revolutions. First, it has created a parallel legitimacy, pitching the supposed “will of the people” expressed in the referendum against the traditional sovereignty of Parliament, thereby constraining the ability of elected representatives to exercise their own judgment.

Second, it has created a power vacuum. Brexiters campaigned under the slogan “Take Back Control,” but they never agreed who should take control of the powers currently held by Brussels. They shook the economic order but without a coherent plan as to what to put in its place.

The Truth Is Catching Up With Tesla

Date: 08-10-2017
Source: The Wall Street Journal

CEO Elon Musk is a visionary, but there is a fine line between setting aggressive goals and misleading shareholders

New revelations about Tesla Inc.’s production of the highly anticipated Model 3 sedan should shock, but not surprise, investors.

The Wall Street Journal reported Friday that Tesla has recently been building major portions of the Model 3 by hand. This comes less than a week after Tesla announced it fell short of its third-quarter production guidance of 1,500 cars by more than 80%.

At the time, Tesla attributed the shortfall to “production bottlenecks.” On Friday, Tesla said it would postpone its launch event for a new truck to November to deal with Model 3 issues and to help provide assistance to Puerto Rico.

Tesla Chief Executive Elon Musk is known as a risk-taker, which has endeared him to Wall Street analysts and investors alike. There is a fine line, however, between setting aggressive goals and misleading shareholders.