Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘WSJ’

It’s Bonds That Are Overvalued, Not Stocks. Here’s Why

Posted by hkarner - 9. Mai 2015

Date: 09-05-2015
Source: The Wall Street Journal

Federal Reserve Chair Janet Yellen discusses market risks and other issues with International Monetary Fund  Managing Director Christine Lagarde at the Institute for New Economic Thinking Conference on Finance and Society at the IMF in Washington.

Yellen ccJanet Yellen, the Federal Reserve chairwoman, shook up markets yesterday by noting that stock market valuations were “quite high.”

She also acknowledged stocks aren’t quite so pricey when compared to bonds. And that’s an important caveat, because it’s bonds, not stocks, whose valuations are extreme; so extreme they make stocks positively cheap.

The two are very much connected. Bonds are expensive for the same reason stocks are cheap: the world is still afraid of disaster. And that holds important lessons for both the investors, and the Fed.

Stocks are expensive, based on the most common valuation metric: Standard  & Poor’s 500-stock index trades at 17.5 times last year’s earnings, well above the 10-year average of 15.8. But that’s not the best metric of stock valuation; a better one is to ask how much stocks are likely to return over the next decade or so compared to bonds. Den Rest des Beitrags lesen »

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5 Questions About Europe’s Digital Blueprint

Posted by hkarner - 6. Mai 2015

Date: 06-05-2015
Source: The Wall Street Journal

The European Commission on Wednesday unveiled a long-awaited blueprint to boost its digital sector.

1       Why a Digital Single Market?

Europe’s digital sector is currently a hodge-podge of 28 sets of national rules. Consumers and businesses who wish to trade or access content across the region face different laws and regulations for consumer protection, copyright, treatment of data, tax and so on. That fragmentation makes it difficult for online businesses to grow, and is one reason, policymakers argue, why European Internet firms have fallen behind their U.S. peers. Joining the markets together would allow consumers and businesses to act seamlessly across the entire region, and potentially propel home-grown Internet firms into the big league.

2       What’s the Plan?

In short: tear down the walls. The EU’s executive arm wants to harmonize the rules and improve cross-border access to data. It also plans an ambitious overhaul of the telecommunications sector, aimed at ensuring a “level playing field” for all firms. European telecom operators have complained that they face unfair competition from new challengers like Skype and WhatsApp.

3       What’s the Payoff?
Potentially huge. Citizens would find it easier and cheaper to buy goods and services and access content whatever their nationality or location. And a market of 500 million citizens could give local Internet firms an advantage over the U.S., with 300 million. The EU estimates that completing the digital single market could add more than €400 billion to the region’s economy and create hundreds of thousands of new jobs.

4       Will U.S. Tech Giants Feel Pain?
Central to the EU’s plans are several major investigations that could curb the activities of mainly U.S.-based Internet companies. These include a “comprehensive assessment” of how online platforms–search engines, social media, price comparison sites and app stores—could be abusing their power over smaller firms. The investigation could lead to new regulations for Internet companies if the EU finds a problem. Antitrust regulators will also open a sweeping investigation into whether Internet commerce firms are violating antitrust laws by restricting cross-border trade. The inquiries follow sustained pressure from France and Germany to use EU competition rules and other regulations to target the business practices of large technology firms.

5       What’s Next?

The EU will convert its 16 initiatives into concrete legislative proposals by the end of next year. These will then be debated and modified by national governments and the European Parliament before they can enter into law, a process that typically takes years.

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Memories of Flash Crash Weigh on Markets and Regulators

Posted by hkarner - 5. Mai 2015

Date: 04-05-2015

Source: The Wall Street Journal

Supervising high-frequency traders remains a worry

Nearly five years after the “flash crash” rocked financial markets, people who have studied it warn that some form of repeat event can’t be ruled out.

An important reason, they say, is that regulators still have trouble supervising the high-frequency trading firms that, according to Tabb Group, account for almost half of trading volume. 

The flash crash hit on the afternoon of May 6, 2010, as riots in Athens and a European debt crisis weighed on markets. In about eight minutes the Dow Jones Industrial Average fell 700 points before rebounding. Some individual stocks briefly lost most of their value and then recovered it. Some traders caught in the middle lost money. Den Rest des Beitrags lesen »

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Five Years After First Bailout, Greece Back on the Brink

Posted by hkarner - 3. Mai 2015

Date: 02-05-2015
Source: The Wall Street Journal

Athens and its creditors reach another impasse, with time running out to avoid bankruptcy

ATHENS—Five years into the biggest bailout of a debtor in history, Greece is closer to the brink than ever, with time running out to avert a bankruptcy that could destabilize not only the eurozone, but the global economy as well.

When Europe and the International Monetary Fund first agreed to bail Greece out on May 2, 2010, the plan was to return Greece to growth and bond markets within three years.

Instead, after half a decade and €245 billion ($274 billion) in promised loans, the two sides have reached an impasse. Although Greece has come close to financial meltdown before, the ideological divide has never been deeper. Den Rest des Beitrags lesen »

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Spain and Portugal Can Cope With Grexit

Posted by hkarner - 1. Mai 2015

Date: 30-04-2015
Source: The Wall Street Journal By SIMON NIXON

Both countries are at risk from a Greek eurozone exit, but they have confidence their economies can withstand the shock

If anyone was going to blink over Greece, one might think it would be Spain or Portugal—the two countries widely considered most at risk if Greece leaves the eurozone. Indeed, both saw a slight rise in their borrowing costs last week at a particularly bleak moment in Greece’s negotiations with other eurozone members. And Goldman Sachs warned in an eye-catching report this week that if Greece does exit the euro, Spain’s borrowing costs could rise to four percentage points above Germany’s, compared with a spread of one percentage point now.

Greece has largely based its brinkmanship is based on an assumption that the eurozone will ultimately capitulate to its demands to prevent chaos spreading across the currency bloc. Den Rest des Beitrags lesen »

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Greece’s Far Left Against the World

Posted by hkarner - 30. April 2015

Date: 30-04-2015
Source: The Wall Street Journal

Syriza brands as a traitor anyone who disagrees with its economic policies.

LOYALTY PROGRAM: Greece’s minister of energy and development, Panagiotis Lafazanis, has denounced some of his party’s opponents as a ‘Fifth Column.’

In a recent interview with an Athens newspaper, Greece’s minister of energy and development, Panagiotis Lafazanis, declared that Greece faces a life-or-death struggle against “neocolonial foreign centers.”

“We cannot have an agreement with the neocolonial centers that dominate the EU and the IMF,” he said, “if Greece is not able to really threaten their basic economic political and geostrategic interests.” Den Rest des Beitrags lesen »

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Glut of Capital and Labor Challenge Policy Makers

Posted by hkarner - 26. April 2015

Date: 25-04-2015
Source: The Wall Street Journal

Global oversupply extends beyond commodities, elevating deflation risk

The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand.

“What we’re looking at is a low-growth, low-inflation, low-rate environment,” said Megan Greene, chief economist of John Hancock Asset Management, who added that the global economy could spend the next decade “working this off.”

The current state of plenty is confounding on many fronts. The surfeit of commodities depresses prices and stokes concerns of deflation. Den Rest des Beitrags lesen »

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Debt Piles Up in Asia, Threatening Growth

Posted by hkarner - 24. April 2015

Date: 22-04-2015
Source: The Wall Street Journal

Countries borrowed a lot during the crisis, and kept doing so afterward

SEOUL—Asian countries borrowed heavily to maintain growth during the financial crisis, but couldn’t break the habit even as the global economy healed. Now they are feeling the hangover.

Growth is slowing fast across the continent as consumers and businesses focus on repaying debt. Central banks have cut rates, pushing currencies lower, but economies haven’t picked up. Demand has stayed weak, keeping wages stagnant and price growth anemic, making borrowings even harder to repay.

This dynamic could significantly harm the region’s economic prospects, potentially dragging down global growth rates.

“The problem is people already have taken on too much debt,” says Paul Sheard, chief global economist for Standard & Poor’s Ratings Services. “Even if you cut interest rates to zero, people are not going to borrow money.”

Kim Hee-do, a 35-year-old office worker in Seoul, is among those who refuse to borrow more, despite three interest-rate cuts by the South Korean central bank in recent months. Mr. Kim’s wife was hoping to take advantage of 1.75% interest rates to replace the couple’s 2003 Volkswagen Beetle, but he talked her out of it. Den Rest des Beitrags lesen »

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Refugee Surge in Germany Puts Pressure on Small Towns

Posted by hkarner - 23. April 2015

Date: 22-04-2015
Source: The Wall Street Journal

Tensions rise as officials turn to isolated communities to shelter a growing number of asylum-seekers

As the German government increasingly places asylum seekers in small towns, police report a rise in anti-refugee attacks, including the arson of a shelter in the town of Tröglitz the day before Easter.

GRILLENBURG, Germany—This village of 114 people deep in the pine forest near the Czech border has no supermarket, no police station, and next to no public transit. But the locals learned recently that their population is set to get a dramatic boost: Government officials are converting the village’s disused forestry school into a shelter for 80 refugees.

“They are making asses of us all,” said longtime resident Edwin Jasmann, 71, voicing anger at the government and fear of how life in this sleepy place will change. “The crime rate will rise far above what it is now.”

A rising tide of asylum-seekers, fleeing crises in the Middle East and economic desperation in Africa and the Balkans, has pushed the ravages of far-away wars and poverty into some of western Europe’s most isolated reaches.

Germany, with its relatively healthy economy and generous welfare safety net, is by far the most popular destination. In a preview of the challenges that could soon face the rest of Europe as the flow of refugees increases, the influx of migrants to Germany is overwhelming government authorities, fuelling right-wing movements, and forcing rural dwellers to confront new fears, prejudices, and responsibilities.

Last year, 626,065 refugees filed asylum claims in the European Union, a 44% increase from 2013. Most were Syrians, and nearly a third of the total came to Germany. An even bigger rise is likely this year amid a sharp increase in arrivals from Kosovo. From January to March, 85,394 people applied for asylum in Germany, more than double the total in the same period last year. Den Rest des Beitrags lesen »

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EU to File Antitrust Charges Against Gazprom

Posted by hkarner - 21. April 2015

Date: 20-04-2015
Source: The Wall Street Journal

Move escalates the standoff between Europe and Moscow

Margrethe Vestager said in February that she was ready to file formal charges against Gazprom “relatively short time span.”

BRUSSELS—The European Union’s competition regulator plans to file formal antitrust charges against Russia’s state-owned gas company OAO Gazprom on Wednesday, a person familiar with the matter said on Monday, a step set to escalate the standoff between Europe and Moscow.

The European Commission started a formal investigation into Gazprom’s business practices in some eastern and southern European countries in 2012, saying that it suspected the company of abusing its dominant position in those countries’ natural-gas supply. The bloc’s competition commissioner, Margrethe Vestager, said in February that she was ready to file formal charges against Gazprom “relatively short time span.” Den Rest des Beitrags lesen »

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