When Everything Is Expensive, Not Investing Is a Great Option

Date: 26-06-2017
Source: The Wall Street Journal

Stocks are at record highs and bond yields exceedingly low. It is time to hoard cash for the next buying opportunity.

In a world where many markets look expensive, putting cash to work is hard. Simply hanging on to more of it might be a good idea.

That is particularly the case after the first half of 2017 has delivered good results across the board. Most strikingly, both bonds and stocks are up. The MSCI World index of developed-market stocks is up 9.7% so far this year, while long-dated bonds are also partying, with the 30-year Treasury yield falling around 0.25 percentage point to just 2.73%, boosting prices. Corporate-bond yield spreads are back to their tightest levels since the global financial crisis.

In 10 Years, Your iPhone Won’t Be a Phone Anymore

Date: 26-06-2017
Source: The Wall Street Journal

Siri will be the conductor of a suite of devices, all tracking your interactions and anticipating your next moves

It’s 2027, and you’re walking down the street, confident you’ll arrive at your destination even though you don’t know where it is. You may not even remember why your device is telling you to go there.

There’s a voice in your ear giving you turn-by-turn directions and, in between, prepping you for this meeting. Oh, right, you’re supposed to be interviewing a dog whisperer for your pet-psychiatry business. You arrive at the coffee shop, look around quizzically, and a woman you don’t recognize approaches. A display only you can see highlights her face and prints her name next to it in crisp block lettering, Terminator-style. Afterward, you’ll get an automatically generated transcript of everything the two of you said.

Date: 24-06-2017
Source: The Wall Street Journal
Subject: Macron’s EU Agenda Meets Stiff Resistance

Opposition to French president’s push to screen foreign investments highlights divisions, reform challenges

BRUSSELS—French President Emmanuel Macron’s bid to revitalize the European Union is bumping into longstanding divisions over trade, with countries that depend on Chinese cash resisting his push to scrutinize foreign investments.

Following Mr. Macron electoral victories on a pro-European platform, he received a warm welcome at his first EU summit in Brussels. His ambitious agenda, however, quickly got bogged down as some EU governments attacked Mr. Macron’s proposal to screen the flow of global capital into Europe.

“Poland will protest against protectionist measures,” Prime Minister Beata Szydlo said Friday, as the two-day gathering of EU leaders ended.

The French president also drew ire for implying Eastern European countries were treating the bloc like a “supermarket” by tapping its benefits without upholding its democratic values.

U.K.’s Euro Clearing Business at Risk as ECB Requests More Powers

With another stupid statement by Mr. Kern. Full Elder (= Vollholler) (hfk)

Date: 24-06-2017
Source: The Wall Street Journal

Brexit raises questions about whether big U.K.-based clearing houses should move elsewhere within the EU

A view of the City of London financial district. London-based clearinghouses clear around 90% of the euro-denominated interest rate swaps of euro area banks, and 40% of their euro-denominated credit default swaps, according to ECB estimates.

FRANKFURT—The European Central Bank lodged a formal request for greater powers to supervise euro-denominated clearing, stepping up a tug of war between European Union authorities and Britain over the future of the lucrative business line after Brexit.

Britain’s departure from the EU has rekindled a debate about whether big U.K.-based clearing houses should decamp within the bloc, given the importance of their activities for the stability of eurozone financial markets.

The ECB said on Friday it had lodged a request with EU authorities for changes to its statute that would allow it to exercise “a clear legal competence in the area of central clearing.”

Britain Still Believes in Fantasies on Brexit

Date: 22-06-2017
Source: The Wall Street Journal By Simon Nixon

The government of Theresa May has far less leverage in the talks than it is willing to acknowledge

Prime Minister Theresa May and her husband Philip departing 10 Downing Street on Wednesday for the opening of Parliament.

No one should have been surprised that the Brexit talks began this week with an immediate capitulation by the U.K. government over the sequence of topics to be treated. Brexit minister David Davis had boasted during the recent campaign that the European Union’s refusal to discuss a trade deal until sufficient progress had been made on settling Britain’s outstanding budget obligations and securing the rights of EU and British citizens would launch “the fight of the summer.” That was revealed to be empty bravado, given that the U.K. needs a deal far more than the EU does. Yet even now that Britain’s lack of leverage has been laid bare, an air of unreality remains about much of the Brexit debate.

One fantasy that refuses to die is the notion that the EU might somehow be persuaded to water down the principle of free movement of citizens, thus allowing the U.K. to restrict EU migration while retaining its membership in the single market. This idea first surfaced during David Cameron’s doomed attempt to rewrite the free-movement rules before the Brexit referendum. It reappeared this week in a new campaign by more than 50 Labour politicians who want the U.K. to remain inside a “reformed single market.” Yet it should be obvious by now that there is no appetite in the EU to water down the right of free movement, a point even Prime Minister Theresa May has conceded.

The Economy Needs Amazons, but It Mostly Has GEs

Date: 22-06-2017
Source: The Wall Street Journal By Greg Ip

GE wrote the rules of corporate finance, Amazon broke them. To end economic stagnation we need more Amazons.

When Amazon.com Inc. announced Friday it was buying Whole Foods, the stock market got a taste of something long missing: volatility.

The turmoil, however, was confined to retail. While the two companies’ stocks rose sharply and their competitors’ tanked, the rest of the market remained placid. Indeed, months of historically low market volatility has begun to look like dangerous complacency.

Yet there is another, potentially more troubling explanation: stagnation. Muted markets may be the inevitable product of steady, sluggish growth, low and predictable interest rates, declining business startups and failures, and decreased competition. In other words, the problem is, there aren’t enough Amazons disrupting the stock market and the economy.

Globalism’s Great French Hope

Date: 21-06-2017
Source: The Wall Street Journal by Greg Ip

French president Emmanuel Macron has exposed a hole in the nationalist agenda,

For global elites left dispirited by Britain’s vote to leave the European Union and Donald Trump’s presidency?, France has provided a shot of adrenaline. Emmanuel Macron won the presidency last month on a proudly pro-European platform, and Sunday, French voters gave him a solid legislative majority.

It is premature to say the nationalist wave has crested. But after establishment victories in the Netherlands and Austria and a setback to Brexit champion Theresa May, it appears globalism—whether the European Union specifically or open borders more generally—is not as politically poisonous as feared.

Still, the message of the last few months is not that voters are in love with globalism again: Turnout in the French elections was historically low. Rather, it’s that nationalists have been far better at spurring anger at the status quo than offering a coherent replacement, as Britain’s Brexit confusion and Mr. Trump’s stalled agenda demonstrate. The public unhappiness that fueled their rise remains, although it increasingly is being felt on the left, not just the right.

Merkel Signals Openness to Eurozone Reforms

Date: 20-06-2017
Source: The Wall Street Journal

German chancellor says she could envision supporting French proposal for common finance minister and budget

BERLIN—German Chancellor Angela Merkel for the first time sketched out the outlines of a bargain with France on fixing the governance of Europe’s single currency, in the clearest sign yet that the two biggest eurozone countries are inching closer toward reconciling sharply different views on the matter.

Germany could support two central French demands—the appointment of a eurozone finance minister and the creation of a common budget—if some conditions were met, Ms. Merkel told business leaders in Berlin on Tuesday.

“We can of course think about a eurozone budget as long as it’s clear that this is really strengthening structures and achieving sensible results,” she said.

In a striking softening of previous language opposing money transfers and joint liabilities among member states, Ms. Merkel said “we could think about a common finance minister…if we aren’t pooling liabilities in the wrong place.”

Embattled at Home, Theresa May Now Faces Tricky Brexit Talks

Date: 18-06-2017
Source: The Wall Street Journal

After a weaker-than-expected election, U.K. prime minister is also under pressure over London tower fire

British Prime Minister Theresa May and her husband, Philip,

LONDON—A day before negotiations between the U.K. and the European Union begin, Prime Minister Theresa May faced a ballooning crisis at home, with critics accusing her of fumbling the government’s response to a London apartment tower fire that left at least 58 people dead.

Mrs. May, already weakened by an election setback less than two weeks ago, over the weekend pledged to make more funding available to victims of the Grenfell Tower fire, after saying the government’s initial response was “not good enough.” On the back of a string of government policy reversals, Mrs. May heads into the talks with plummeting public support amid questions about her Brexit strategy.

Keir Starmer, the Brexit spokesman for the main opposition Labour Party, said Mrs. May’s diminished standing and her approach to negotiations has put the U.K. in the “worst possible starting position.”

“I think the prime minister has got us into a complete mess,” Mr. Starmer told the British Broadcasting Corp., saying she has alienated Britain’s allies in Europe and weakened its position with the EU. “She’s got no mandate here, and she’s got no authority abroad.”

Macron Deals a Crippling Blow to France’s Establishment

Date: 19-06-2017
Source: The Wall Street Journal

Scale of traditional parties’ defeat is a measure of collective failure to reinvigorate the country

PARIS—The resounding victory of President Emmanuel Macron’s fledgling political force in parliamentary elections crushed the traditional parties that have governed France since the end of World War II.

The French president’s party La République en Marche, founded barely a year ago, bulldozed into the National Assembly with its centrist ally, taking 350 of the 577 seats.

In its wake was the rubble of France’s former left-right divide—the Socialist Party and the center-right Les Républicains—that had taken turns governing the country for decades.