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Posts Tagged ‘WSJ’

Deflation Risks May Warrant Radical New Central-Bank Thinking, the IMF’s Chief Economist Says

Posted by hkarner - 10. November 2015

The Bank of Japan and other central banks around the world may need to try radical new easy-money policies to stave off the rising specter of deflation and revive sickly economic prospects, the International Monetary Fund’s new chief economist warns.

Obstfeld“I worry about deflation globally,” new IMF Economic Counselor Maurice Obstfeld said in an interview ahead of an annual IMF research conference that focuses this year on unconventional monetary policies and exchange rate regimes. “It may be time to start thinking outside the box.”

Weak—and in some cases falling—price growth has plagued Japan, Europe, the U.S. and other major economies since the financial crisis. Plummeting commodity prices are exacerbating the so-called “lowflation” and deflation problems that curb investment, spending and growth.

Surveying several dozen of the largest economies around the world, Mr. Obstfeld said the number of countries experiencing low inflation is rising. Combined with slowing emerging market output, ballooning government debt and monetary policy constrained by the lower limits of interest rates, the deflation risk is fueling fears the global economy could be fast stuck into a deep low-growth mire. Den Rest des Beitrags lesen »

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The European Union Needs a Grand Bargain

Posted by hkarner - 10. November 2015

Date: 09-11-2015
Source: The Wall Street Journal By SIMON NIXON

Britain’s bid to alter its EU relationship is a chance for the bloc to enact broader changes

Cameron1British Prime Minister David Cameron speaking in September during a press conference in Madrid.

On Tuesday, Prime Minister David Cameron will write a letter to Donald Tusk, the president of the European Council, setting out the U.K. government’s demand for changes in its relationship with the European Union. It will be a watershed moment for the EU.

The letter itself is unlikely to say much that Mr. Cameron hasn’t said publicly before, according to senior U.K. officials. Its significance lies in the fact that what until now has been a domestic political problem for Mr. Cameron will become a political problem for the entire EU, with the implicit threat that if he fails to achieve his goals, Britain could vote to exit the EU in a referendum promised by the end of 2017.

So far, Mr. Cameron’s insistence on renegotiating the terms of Britain’s EU membership has been met mostly with frustration. No one wants the U.K. to leave, but many accuse it of diverting attention from more serious challenges presented by the refugee crisis and continuing strains in the eurozone. Den Rest des Beitrags lesen »

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Nobody knows the details but they are all against it

Posted by hkarner - 10. November 2015

Date: 09-11-2015
Source: The Wall Street Journal
Subject: Why Opposition to Trade Deals Is So Entrenched

Proposed pact between U.S., EU is tough sell as critics cite potential impact on environment, labor law; Germans worry about ‘chlorinated chicken’

HAMBURG—Few places have a longer affinity for free trade than this German city, home to one of Europe’s busiest ports.

The city’s left-leaning government overruled environmentalists in 2012 and approved deepening the Elbe River for bigger container ships. License plates boast of the city’s founding role in the Hanseatic League, a medieval alliance that was among the world’s first free-trade blocs.

But unease over new trade deals runs deep in Hamburg these days, as it does in the U.S. and across much of the developed world. The more aggressively leaders push to expand the reach of multilateral agreements into sensitive zones such as drug patents and investor protections, the more aggressively opponents push back. Den Rest des Beitrags lesen »

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Has the World Lost Faith in Capitalism?

Posted by hkarner - 7. November 2015

Date: 07-11-2015
Source: The Wall Street Journal

A new survey suggests that restoring confidence in free enterprise will mean ensuring that the same rules apply to everyone

What Americas think of capitalismA look at contemporary views of capitalism

If you want to find people who still believe in “the American dream”—the magnetic idea that anyone can build a better life for themselves and their families, regardless of circumstance—you might be best advised to travel to Mumbai. Half of the Indians in a recent poll agreed that “the next generation will probably be richer, safer and healthier than the last.”

The Indians are the most sanguine of the more than 1,000 adults in each of seven nations surveyed in early September by the market-research firm YouGov for the London-based Legatum Institute (with which I am affiliated). The percentage of optimists drops to 42 in Thailand, 39 in Indonesia, 29 in Brazil, 19 in the U.K. and 15 in Germany. But it isn’t old-world Britain or Germany that is gloomiest about the future. It is new-world America, where only 14% of those surveyed think that life will be better for their children, and 52% disagree.

The trajectory of the world doesn’t justify this pessimism. People are living longer on every continent. They’re doing less arduous, backbreaking work. Natural disasters are killing fewer people. Fewer crops are failing. Some 100,000 people are being lifted out of poverty every day, according to World Bank data.

Life is also getting better in the U.S., on multiple measures, but the survey found that 55% of Americans think the “rich get richer” and the “poor get poorer” under capitalism. Sixty-five percent agree that most big businesses have “dodged taxes, damaged the environment or bought special favors from politicians,” and 58% want restrictions on the import of manufactured goods. Den Rest des Beitrags lesen »

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BitBeat: Bitcoin Surges Past $400 on Back of the New ‘Shining Star’

Posted by hkarner - 6. November 2015

Date: 04-11-2015

Source: The Wall Street Journal


­Welcome to BitBeat, the latest in cryptocurrency news and analysis.

Bitcoin CCBitcoin Latest Price: $413.20; up 15% (via CoinDesk)

Crossing Our Desk:

The price of bitcoin is surging, crossing back over the $400 mark for the first time since last November, amid a burst of trading activity and a surge in interest in the technology underlying the cryptocurrency.

Bitcoin crossed back over $400 on Tuesday (and well over it on most exchanges), up 15% over the past 24 hours and capping a run that has seen it nearly double since falling to $209 back in August. It’s been nearly a year since the price was at the $400 level, last November. Back then, it was on its way down, a drawn-out, year-long slide from the late 2013 all-time high above $1,100. Today, the price is on its way up.

There isn’t one explanation for the move, but one thing is clear: The bitcoin hype machine is back in action – even if it’s been redirected.

The news around the cryptocurrency world has been pretty bright lately. Even if bitcoin still has a stigma in the public eye, the hype around the potential of bitcoin’s underlying mechanics – the so-called blockchain – has positively exploded.

Former J.P. Morgan Chase & Co. executive Blythe Masters, now running the fintech startup Digital Asset Holdings, graced the cover of Bloomberg Markets magazine, in an article titled “It’s All About the Blockchain.” The cover story of this week’s Economist, “The Next Big Thing,” is also about the potential of the blockchain. Microsoft is putting Ethereum-based blockchain tools into its Azure business service. It seems as if every bank on Wall Street and in the City is setting up some kind of group to probe and experiment. It’s as if the shift in focus to the blockchain has completely changed people’s opinions about the technology.

“The idea is now at the forefront of every financial institution, every corporation, every media outlet,” said Bobby Cho, director of trading at New York-based exchange ItBit. “Even if you’re reading about blockchain technology, you’re inherently reading about bitcoin also.”

The interest is driving up the trading activity, and the increased activity is spurring interest from institutional traders who’ve been sitting on the sidelines, waiting for bitcoin’s market to perk up again. “Now the volatility is back,” Mr.

Cho said, “and they’re thinking, ‘we can make some money here.’ These guys are looking for a product to trade.”

It is clear that volume is rising. In early September, trading on BTCC, the biggest bitcoin exchange, was averaging around 20,000 bitcoins a day. Lately it’s been closer to 80,000 bitcoins, and CEO Bobby Lee told MoneyBeat that on Tuesday, it was near to the exchange’s one-day record of 90,000. Bitcoin is still a relatively thin market, so the added volume alone can explain part of the surge. Any buying spree will be amplified by the scarcity of bitcoins, something that helped explain the 2013 surge to the all-time high of $1,100.

Some have surmised that the new capital controls imposed in China are spurring nationals there to use bitcoin as a way to evade the controls, but Mr. Lee rejects that. There are better ways to evade capital controls, he said. China has an extensive black-market currency exchange system that’s very similar to the hawala system used in the Muslim world (we explained this at some length in “The Age of Cryptocurrency”) and effectively evades the stringent capital controls.

Additionally, the price of bitcoin when converted from U.S. dollars to yuan winds up about $10-15 higher. This reflects, Mr. Lee said, the fact that given the price controls, it’s actually harder to buy bitcoins there. So the arbitrage opportunity is to buy bitcoin in dollars, and exchange them into yuan. That makes it less likely that traders are moving their yuan out via bitcoin.

In China, the trading is all speculative, Mr. Lee said, and right now all that positive press has the speculators driving up the price. “People in China are always trigger happy,” he said. “We’ve been in a bear market for a year and a half.” The blockchain is the new “shining star, and it spills over to the bitcoin world as well.”

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Dow Pushes Into Positive Territory for 2015

Posted by hkarner - 3. November 2015

Date: 03-11-2015
Source: The Wall Street Journal

Most indexes posted solid gains in October, fueled by earnings, central bank measures

DOW 2015The Dow Jones Industrial Average pushed back into positive territory for 2015 for the first time since July, erasing a deep summer slump and leaving all of the main U.S. stock indexes in the black.

The Dow rose 165.22 points, or 0.9%, to 17828.76, and is now up 0.03% for the year. The last time the blue-chip index closed with a 2015 gain was on July 22.

The S&P 500 advanced 24.69 points, or 1.2%, to 2104.05, leaving it 2.2% higher for the year. The Nasdaq Composite climbed 73.40 points, or 1.5%, to 5127.15 and is now up 8.3% in 2015.

The gains signal an easing of concerns about Chinese growth and the stability of emerging markets that sank stocks in August and September. U.S. growth remains sluggish, but solid earnings by some major companies and the continuation of loose monetary policy from major central banks have lifted markets.

Monday was “a decent move on decent volume,” said Gordon Charlop, managing director at Rosenblatt Securities. “It’s been pretty much green across the landscape.”

Energy stocks in the S&P 500 rose the most, up 2.4%. Chevron shares increased $4.08, or 4.5%, to $94.96, and Exxon Mobil added 2.54, or 3.1%, to 85.28.

The S&P’s health-care sector rallied 2%, notching the second-best performance. Pfizer rose 1.24, or 3.7%, to 35.06.

While health-care stocks have been hit by political scrutiny of drug pricing in recent months, many investors say certain companies in the sector can continue to deliver strong earnings growth, which should boost shares in the long run.

“In a world where global growth is likely to remain positive but muted, we’re still looking for opportunities in sectors like health care that can deliver even without a major economic upswing,” said Stephen Parker, a portfolio manager at J.P. Morgan Private Bank. He said he added to some of his health-care positions during the pullback.

U.S. biotech company Dyax rose 7.82, or 28%, to 35.35 after Shire said it struck an all-cash deal for Dyax valued at as much as $6.5 billion.

Separately, U.S.-listed shares of Valeant Pharmaceuticals International rose 6.70, or 7.2%, to 100.47 after short selling firm Citron Research offered no new allegations against the company in an updated report on Monday. Valeant shares slumped in the wake of an October report from Citron that questioned its business practices. Valeant has defended its accounting.

Investors also looked ahead to the U.S. government’s jobs report for October, due Friday, as they continue to bet on when the Federal Reserve will raise short-term interest rates. The Fed considers the strength of the labor market and the level of inflation as it debates monetary policy.

“With that looming employment report…a lot of people are just nibbling and waiting for that number to come out before making major bets,” said Larry Peruzzi, director of international trading at Cabrera Capital Markets.

Economists surveyed by The Wall Street Journal expect that employers added 183,000 jobs in October, up from 142,000 jobs in September. The unemployment rate is forecast to slip to 5% from 5.1%.

“If we do get a good jobs number…that will probably raise the odds of a liftoff in December,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

On Monday, the Institute for Supply Management’s gauge of U.S. manufacturing activity slipped to 50.1 in October, from 50.2 in September. That was the weakest since May 2013 and barely above the 50 level that separates expansion from contraction.

Still, new orders came in at a faster pace, offering an encouraging sign for the manufacturing sector, said Alan Gayle, director of asset allocation at RidgeWorth Investments, which manages $40 billion.

In the bigger picture, “if we see continued improvement in the domestic economy and dollar strength, then that suggests the lagging small-cap sector could rebound,” Mr. Gayle said.

“There are early signs that it’s happening,” he added, referring to Monday’s action. Shares of small companies rallied more than their large-cap peers, driving the Russell 2000 up 2.1%.

The Stoxx Europe 600 rose 0.3%, rebounding from early losses after eurozone manufacturing data for September was revised higher, suggesting the region remains resilient to spillover from China’s slowdown.

Asian stocks fell after two reports showed a continued contraction in China’s manufacturing activity. The Shanghai Composite Index lost 1.7% and Japan’s Nikkei Stock Average declined 2.1%

Meanwhile, the Turkish lira surged more than 3% against the dollar as investors welcomed the surprise victory of President Recep Tayyip Erdogan’s political party in a vote that should end months of political uncertainty.

In commodity markets, U.S. oil prices lost 1% to $46.14 a barrel. Gold fell 0.5% to $1,135.80 a troy ounce.

The yield on the 10-year Treasury note rose to 2.185%, from 2.151% on Friday. Yields rise as prices fall.

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Why European Integration Makes Economic Sense

Posted by hkarner - 30. Oktober 2015

Date: 29-10-2015
Source: The Wall Street Journal By SIMON NIXON

Bank of England report offers compelling case that the U.K. economy is better off with EU membership

Carney CCBank of England Gov. Mark Carney spoke at St. Peter’s College in Oxford last week.

Mark Carney’s intervention last week in the debate over Britain’s relationship with the European Union was remarkable for two reasons.

The first was the Bank of England Governor’s apparent decision to move into overtly political territory. There was no problem with the bulk of his speech and the accompanying 100-page report which provided a sophisticated, rigorous and entirely appropriate analysis of the impact of EU membership on Britain’s monetary and financial stability.

But trouble lay in Mr. Carney’s assertion that future eurozone integration could pose a risk to U.K. financial stability and that the government therefore needed to secure safeguards, including recognition that the EU is a “multi-currency union,” as part of its much-trumpeted renegotiation.

Mr. Carney made this assertion using identical language to U.K. government ministers, who have recently seized upon protection of the City of London as its latest EU renegotiation priority. Yet there was nothing in the BOE report to support the claim that the U.K. is at risk from future eurozone caucusing, or to explain what form those risks might take; the statement simply pops up on the final page. For those skeptical that such a risk exists or that there is anything the U.K. government could usefully achieve to address it, the omission leaves the BOE open to the accusation that this was a politically driven exercise, thereby undermining its credibility. Den Rest des Beitrags lesen »

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The Best and Worst Countries to Run a Business, According to the World Bank

Posted by hkarner - 28. Oktober 2015

Date: 28-10-2015
Source: The Wall Street Journal

WB Doing Business Ranking ScoreRather than create more attractive business climates to spur souring growth prospects, many of the world’s largest economies may actually be making it more difficult to start and run a company.

Almost half of the Group of 20 largest economies have fallen in the World Bank’s annual “Doing Business” rankings, including emerging markets such as China, Turkey, South Africa and Brazil that most need economic overhauls to revive growth prospects.


The World Bank’s flagship report on the best and worst places to start and operate a business in 189 economies WB Doing Businee 2015 structurearound the globe underscores the inability of many governments to make needed policy changes.

Global growth is settling into a long period of anemic expansion as large emerging markets—the world’s most powerful engines since the global financial crisis—sputter and big advanced economies remain stuck in low gear. Those troubles are rippling out across the globe, jeopardizing prospects for rich and poor countries alike. G-20 nations have vowed to restructure their economies to make them more competitive and attractive to investment, but have so far failed to deliver on their promises. Den Rest des Beitrags lesen »

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Would Germans Ever Cross the Street on a Red Light?

Posted by hkarner - 28. Oktober 2015

While – for Italians it is said – traffic lights are just recommendations! (hfk)

Date: 27-10-2015
Source: The Wall Street Journal

Rule-abiding nation may yield as walkers, cyclists question fines

In Berlin, people patiently wait at red lights. But Germany’s Left Party hopes to change traffic rules to allow pedestrians and cyclists to cross on red without facing a fine.

BERLIN—It’s late at night in sleepy central Berlin, the roads are empty, and the light is red. For many German commuters, whether on two wheels or on two feet, the proper course of action is clear: You wait. Den Rest des Beitrags lesen »

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How the Global Financial Crisis Drove Down Collective Bargaining  

Posted by hkarner - 26. Oktober 2015

Date: 25-10-2015
Source: The Wall Street Journal

The U.S. isn’t the only country where collective bargaining has come under pressure. The global financial crisis put a widespread dent on it in recent years, a new analysis of 48 countries shows.

Between 2008 and 2013, the share of employees covered by collective-bargaining agreements fell an average of 4.6% in the 48 countries assessed, while union density dropped an average 2.3%, according to the International Labor Organization study.

The decline, which follows a longer-term slide in union membership rates in many countries, reflects a variety of factors. Legislation allowed some financially troubled companies to opt out of their bargaining agreements. The recession also made it more difficult to renew existing pacts. Meanwhile, some governments made it harder to negotiate national and sector-wide agreements reached by union federations and employer groups, favoring company-level pacts instead.

The study makes the case that wage inequality is rising, so public policies are needed to shore up collective bargaining and make it more inclusive. It says that bargaining coverage varies widely across a broader group of 75 countries, ranging from one or two percent of employees in Malaysia and Ethiopia to nearly 100% in Belgium and France. Den Rest des Beitrags lesen »

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