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Posts Tagged ‘WSJ’

Will ECB Dominate Europe’s Corporate-Bond Market?

Posted by hkarner - 7. April 2016

Date: 06-04-2016
Source: The Wall Street Journal

Central bank plans to begin buying soon; trading in another debt market, covered bonds, suggests liquidity could be hurt

As the European Central Bank gears up to begin buying corporate bonds, investors are looking nervously at the effects this giant buyer has had on trading in another debt market.

The ECB announced in March that it will expand its asset-purchase program to nonfinancial corporate debt later this quarter in an effort to lower financing costs across the euro area. That announcement initially boosted credit markets and prompted a flurry of new issuance. But some investors are now concerned the ECB could own so much of the market that it could damage already-thin market liquidity.

As they consider the likely effects, investors are looking at ECB buying in the covered-bond market, a type of debt issued by banks and backed by a pool of their own assets, usually mortgages. Den Rest des Beitrags lesen »

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Negative Interest Rates Benefit the Global Economy, Says IMF Chief Christine Lagarde

Posted by hkarner - 6. April 2016

Date: 06-04-2016

Source: The Wall Street Journal

IMF LagardeSide-effects need to be monitored, says International Monetary Fund Managing Director

FRANKFURT—Subzero interest rates in Europe and Japan are “net positives” for the global economy, International Monetary Fund chief Christine Lagarde said Tuesday, though she warned that the side effects of unorthodox central-bank policies should be closely monitored.

Speaking ahead of the IMF’s Spring meetings in Washington, D.C., next week, Ms. Lagarde praised recent policy moves by the European Central Bank and the U.S. Federal Reserve, and called on governments to play their part by introducing growth-friendly reforms.

“We are on alert, not alarm” on the outlook for the global economy, Ms. Lagarde told an audience at Frankfurt University. She pointed to a “loss of growth momentum” over the past six months, “exacerbated by China’s relative slowdown, lower commodity prices, and the prospect of financial tightening for many countries.” Den Rest des Beitrags lesen »

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ECB Will Act Forcefully If Necessary to Fight Low Inflation, Says Praet

Posted by hkarner - 6. April 2016

Date: 05-04-2016
Source: The Wall Street Journal

Central Bank economist says persistent missing of inflation target deeply damaging to economy

“The need for a superior policy mix is no excuse for central banks to be passive when their mandates are under threat,” said Peter Praet, the European Central Bank’s chief economist.

FRANKFURT—An extended period of low inflation in the eurozone would be very harmful, the European Central Bank’s chief economist Peter Praet said Monday, underscoring the monetary authority’s readiness to pump more cash into the economy, if such action were needed to boost price pressures.

The most recent data published last week showed the inflation rate in the currency bloc was minus 0.1% on the year in March, well off the central bank’s medium-term target of just below 2%. Den Rest des Beitrags lesen »

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Campaign Talk Misses Signs That Forces of Globalization Are Sputtering

Posted by hkarner - 5. April 2016

Date: 04-04-2016
Source: The Wall Street Journal

Contrary to political rhetoric, economic internationalization, once thought unstoppable, appears to be slowing

Manufacturing jobs in the U.S. declined every year from 1998 to 2009, but over the past six years, employment in the sector has edged up.

On the campaign trail, presidential candidates in both parties depict an America under siege from cheap imports, job-stealing globalization or waves of illegal immigration.

The reality since the global recession is far more complicated. Across a range of measures, the forces that once pointed to an inexorable internationalization of the world’s economy have slowed, stuttered or swung into reverse.

The slowdown points to deeper economic challenges far different from the political alarms. Much of the world is struggling with a sluggishness that is clouding the U.S. outlook, driven by aging demographics, slumping labor productivity and policy makers lacking the tools or the will to pump more life into the global economy.

Whatever the causes, signs abound that the forces of globalization have slowed. Den Rest des Beitrags lesen »

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Goldman Sachs and Bear Stearns: A Financial-Crisis Mystery Is Solved

Posted by hkarner - 30. März 2016

Date: 29-03-2016
Source: The Wall Street Journal

Source of CNBC report revealed in commission report

Kyle Bass is sworn in before testifying at a Financial Crisis Inquiry Commission hearing in January 2010.

It has been called the bombshell that blew up Bear Stearns.

It happened on Wednesday, March 12, 2008, shortly after 9 a.m. in an interview broadcast on CNBC. There, reporter David Faber asked Bear Stearns chief Alan Schwartz to respond to reports that Goldman Sachs wouldn’t “accept the counterparty risk of Bear Stearns.”

Mr. Schwartz said the firm’s counterparties still were trading with Bear Stearns. Hours later, CNBC reported that Goldman was indeed still doing trades with Bear Stearns. Den Rest des Beitrags lesen »

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The Markets Have a Message: Don’t Believe This Rally

Posted by hkarner - 29. März 2016

Date: 29-03-2016
Source: The Wall Street Journal

As risky assets have rebounded since mid-February, the havens to which investors rushed during the earlier panic haven’t had an equivalent selloff

Amid the epic recovery in risky assets since mid-February, one thing has been missing: an equivalent selloff of the havens to which investors rushed during the earlier panic. Instead of the usual reckless rally, this has been a very cautious comeback.

Some of the highest-risk assets chalked?up spectacular gains?during the recovery. The J.P. Morgan Emerging Markets Currency Index rose 8%, a gain matched in such a short time only once since the index was created in 2000. U.S. junk bonds leaped 8% in price, the biggest jump in the Bank of America Merrill Lynch benchmark over such a short period since the summer of 2009, when the country was just emerging from recession.

U.S. shares didn’t miss out. From its February low, the S&P 500 recorded its biggest gain over an equivalent period since late 2011, rising more than 12% by the middle of last week; it is still up 11%. Den Rest des Beitrags lesen »

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Germany Doubts a British Divorce Would Be Amicable

Posted by hkarner - 24. März 2016

Date: 24-03-2016
Source: The Wall Street Journal By SIMON NIXON

Berlin doesn’t share the confidence of Boris Johnson about how easy it would be to deliver a mutually satisfactory trade deal

Johnson CC2Boris Johnson, the London mayor who favors a British exit from the European Union, spoke at a Treasury Select Committee in London on Wednesday.

According to Boris Johnson, the U.K. has nothing to fear from a British exit from the European Union because it would overwhelmingly be in the bloc’s interests to strike a generous free-trade deal with the U.K.

Indeed, the pro-Brexit mayor of London told the House of Commons’ Treasury Committee on Wednesday that if the U.K. voted to quit the EU in June’s referendum, “it would not be beyond the wit of man” to conclude a deal very quickly that largely preserved existing arrangements.

After all, the U.K. imported £291 billion ($413 billion) of goods and services from the Continent last year, resulting in a sizable U.K. trade deficit with the rest of the EU. It would, Mr. Johnson said, be “very curious, bizarre [and] totally self-destructive” for the EU not to strike a deal.

Indeed, this is the central claim of the Brexit campaign. But Mr. Johnson’s confidence about how easy it will be to deliver a mutually satisfactory post-Brexit trade deal isn’t shared in Germany, the EU country with the most to lose from a messy divorce. Den Rest des Beitrags lesen »

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At J.P. Morgan, $9 Million in Assets Isn’t Rich Enough

Posted by hkarner - 20. März 2016

Date: 19-03-2016
Source: The Wall Street Journal

Firm’s private bank is doubling the minimum to $10 million in investible assets for clients

The shift to a higher minimum of $10 million could affect about 10% of J.P. Morgan’s private bank clients.

J.P. Morgan Chase & Co. is making its private bank even more private.

Clients of the firm’s private bank later this year will be required to have at least $10 million in investible assets, twice the current minimum of $5 million, said people familiar with the matter.

The move is one of the boldest yet among banks that are increasingly focused on managing the money of wealthy clients, who generate more fees and entail less risk than middle-class and lower-income customers. However, because wealthy clients typically require more attention, banks are being more discriminating when deciding who qualifies for such personalized service. Den Rest des Beitrags lesen »

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U.S. Stocks Notch Fifth Straight Week of Gains

Posted by hkarner - 19. März 2016

Date: 19-03-2016
Source: The Wall Street Journal

Market improves as oil prices rebound and data show U.S. economy continuing to expand

S&P 500 2016The S&P 500 erased its losses for the year Friday, joining the Dow industrials in positive territory as major indexes notched their fifth straight week of gains.

The week’s advance accelerated after the Federal Reserve on Wednesday signaled a more gradual path of interest-rate increases. The Dow Jones Industrial Average, which has risen for six sessions in a row, gained 2.3% this week. The S&P 500 added 1.4%.

Government bonds also rallied this week, spurred by the Fed’s hesitance to lift rates. The yield on the 10-year Treasury note posted its first weekly decline in five weeks and the yield on two-year Treasurys logged its biggest weekly decline since October. Bond yields move inversely to bond prices.

The Dow and the S&P 500 have risen roughly 12% from their lows on Feb. 11, as oil prices recovered and economic data showing that the U.S. continues to expand helped calm fears of a recession.

“We don’t think [gains] are going to be nearly as dramatic from here,” said Steve Weeple, who oversees about $6 billion as a global portfolio manager at Standard Life Investments. “The reversal was pretty fast,” he said. Den Rest des Beitrags lesen »

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In Brexit Debate, U.K.’s Lack of Influence in EU is Greatly Exaggerated

Posted by hkarner - 18. März 2016

Date: 17-03-2016
Source: The Wall Street Journal By SIMON NIXON

Simply counting up times the U.K. was outvoted tells us nothing useful about Britain’s sway in the bloc, Simon Nixon writes

One of the most powerful arguments advanced by campaigners for a British exit from the European Union is that the U.K. is increasingly marginalized in the bloc. They say Britain lacks influence over EU decision-making, that the EU passes laws despite British opposition, and that this trend is getting worse.

The main evidence used to support these claims is a report produced last year by the euroskeptic Business for Britain campaigning organization, which found the U.K. voted against 55 pieces of EU legislation since 1996 but was outvoted each time. What’s more, it said 21 of those British objections were registered since 2010 alone and the U.K. has been outvoted far more times than any other EU member.

These claims matter because they go right to the heart of the so-called Brexit referendum. There is a reason why pro-Brexit campaigners constantly harp on about “control.” Research by pollster Populus shows that only 28% of voters think they could explain to a friend what sovereignty means, 20% could explain the single market, 14% the Schengen agreement and 17% the concept of an “ever-closer union.” In contrast, the idea that the U.K. could regain more control over its destiny is simple to explain and harder for the Remain campaign to refute. Yet the truth is that the U.K. is far from marginalized or lacking in influence. Den Rest des Beitrags lesen »

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