Central Banks

The Exchange: Inflation nation

22 Sep 2020

The Fed’s new rate-setting philosophy is a game-changer, and hawks have become an endangered species in D.C. So argues David Kelly, chief global strategist at JPMorgan Asset Management. The central bank may boost inflation, he suggests – but its blunt tools could cause damage.

Corona Capital: Newspaper rivals, College football

17 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: the Wall Street Journal hits up the New York Times’ printing presses; U.S. college football’s Big Ten makes a comeback.

Corona Capital: Fed’s optimism, Package holidays

16 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: Jay Powell and crew at the U.S. central bank reckon the nation’s economy is doing better, just, than they expected; Anglo-German travel company TUI may raise 1 bln euros as the virus whacks new bookings.

Jay Powell kills inflation-focused central banking

27 Aug 2020

The Fed chief will now accept overshoots above the 2% target that his monetary policy has in any event failed to hit. Instead, the U.S. central bank’s new mission statement targets robust labour markets more aggressively. It's a recipe for ultra-easy policy more of the time.

Fed policy review will leave market put untouched

26 Aug 2020

Chair Jay Powell’s every utterance is being scoured for hints of whether a new framework will introduce innovations like average-inflation targeting. But one thing won’t change. Rate setters will backstop markets, as they have done for a decade, and investors are counting on it.

Guest view: Freeing Abenomics from Abe

26 Aug 2020

Japanese Prime Minister Shinzo Abe’s return to hospital has raised concerns about a change of power. His signature economic policy fell short even before the pandemic. A strong successor could reinvent it, but that seems unlikely, argues ex-BOJ policy board member Sayuri Shirai.

Norway’s $1.1 trln fund is a bad toy for hedgies

24 Aug 2020

Nicolai Tangen’s appointment as boss of the gargantuan rainy-day fund hangs in the balance. Norwegians mostly worry about the big investor’s conflicts, but his likely approach is a larger concern. Active trading of so much money could pointlessly disrupt global markets.

Corona Capital: Dividends, Zoom, Big-screen blues

24 Aug 2020

Concise views on the pandemic’s corporate and financial fallout: As company bosses try to conserve cash, investors are feeling the pinch; Zoom has a back-to-school problem; and a mediocre debut for Russell Crowe’s new road-rage movie shows Hollywood is stuck in the slow lane.

EU banks’ sovereign-debt relapse brings new risks

24 Aug 2020

Lenders from Italy’s Intesa Sanpaolo to Spain’s BBVA have boosted holdings of domestic government bonds, helped by cheap ECB funds. The exposure leaves them vulnerable if euro zone breakup fears return. And it makes completing Europe’s banking union and cross-border M&A harder.

U.S. stocks send a mostly mathematical message

20 Aug 2020

Record highs for the S&P 500 Index can co-exist with a weak and unpredictable economy. Sure, businesses are emerging from shutdowns; on the other hand, joblessness remains high. But stock markets arguably just reflect the new distorted reality – one with squashed interest rates.

Temasek MAC attack draws Singapore’s bailout line

12 Aug 2020

The sovereign fund escaped a $3 bln deal for rig-builder Keppel, citing a “material adverse change”. It avoids setting an unrealistic valuation that would complicate consolidation. Singapore’s offshore sector can get its fix without turning patient capital into reckless capital.

Does $20 trillion buy much inflation?

11 Aug 2020

The market’s answer is a firm no. Global stimulus worth over 20% of world GDP has been unveiled, on Bank of America’s numbers. Future price expectations are rising but have yet to bust central bank targets. These low readings show the continuing mystery of inflation’s causes.

China bank failure fires quiet warning shot

10 Aug 2020

Beijing will let Baoshang Bank go under in the first such insolvency since 2001. The liquidation of the lender, used as a piggy bank by an insurer, will raise credit costs for small peers, pushing more of them to the brink. It’s an overdue cleansing, but a risky time to do it.

At least U.S. GDP trajectory is a known unknown

30 Jul 2020

Output crashed at a 33% annual pace in the three months to June. The current quarter looks less bad. The size and durability of gains in activity and jobs are, though, anyone’s guess. Real-time data speeds measurement. And the Fed, and especially Congress, can shift the outcome.

Can the Fed help close the racial prosperity gap?

22 Jul 2020

Economists advising U.S. presidential hopeful Joe Biden have proposed making racial equity part of the Federal Reserve’s mandate. That chimes with the zeitgeist. But if it means rate-setters ignore too-high inflation for too long, it could hurt those Biden aims to help.

The Exchange: Brave new credit world

21 Jul 2020

The crisis unearthed land mines in the fixed-income market – many of which Arena Investors Chief Executive Dan Zwirn had previously identified. He now explains how to navigate this opaque universe with deep dives on leveraged finance, liquidity crunches and an activist Fed.

Investors emerge faster than emerging economies

21 Jul 2020

Fitch Ratings may soon label more countries in the world as junk than investment grade. And Covid-19 has added to the problems that many poorer countries already faced. Even so, falling U.S. bond yields are forcing money managers to raise their exposure to riskier markets.

China’s jobless recovery risks debt indigestion

16 Jul 2020

Output rose 3.2% last quarter, as a record $1.7 trln in loans kicked in. But investment is tepid, employers are shedding jobs, and retail remains anaemic. Beijing is also running low on distressed credit buyers. With bad debt set to rise, pressure to find alternatives will build.

Chinese tax initiative strains overseas reach

15 Jul 2020

Beijing wants citizens to pay full whack no matter where they earn in the world, just as the United States does. The top bracket, at 45% for incomes over $137,000, makes low-tax Hong Kong less attractive at an odd time. Enforcing the rule further afield, though, could be tough.

Corona Capital: Lockdown diets, Beating the Fed

14 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Covid-19 is prompting diets for both animal and human; and the Fed takes a hit on a garbage deal.