Modi victory rally in Indian stocks is premature 10 Apr 2019 The Nifty 50 benchmark hit a record high on expectations the prime minister’s BJP party will get five more years. Valuations are already toppy amid an economic slowdown and weak investment. That can improve only if the winner repairs a huge trust deficit with the “bollygarchs.”
Fed has little need for what Cain’s serving 4 Apr 2019 As a governor, Herman Cain’s business nous might help the U.S. central bank, which can suffer from economist group think. He excelled at Burger King and Godfather’s Pizza. Yet Cain is a political figure who once backed the gold standard. Some ideas are too far outside the box.
Indian rate cut discounts ballot box splurging 4 Apr 2019 The central bank has trimmed the cost of borrowing to counter hints of cooler consumption. Governor Shaktikanta Das is betting back-to-back reductions will filter through to households. But politicians' profligacy ahead of a coming election means he may have moved too soon.
Twitchy sterling sends traders running for cover 3 Apr 2019 Speculative bets on the pound are at their lowest level since 2012. Little wonder given that Britain could crash out of the EU, postpone its departure, or cancel Brexit in the next few weeks. The first signs of clearer direction will trigger a huge move on the foreign exchanges.
Turkey’s attack tactics are worst form of defence 27 Mar 2019 Ankara is making it harder to bet against the lira, but overnight swap rates of 700 pct also make hedging prohibitive. Probes by the bank watchdog mean a research drought. Investors will dump Turkish assets rather than stay exposed, especially when experts are opting to keep mum.
“Japanisation” of ECB will blight Europe’s banks 25 Mar 2019 Weak economic activity is raising the chances of the European Central Bank copying its Japanese counterpart, which has kept rates ultra-low for two decades and adopted ever more radical measures to boost inflation. Lenders in Japan show European peers the heavy toll that takes.
Trump takes politics to heart of Fed with nominee 22 Mar 2019 The president wants to put conservative commentator Stephen Moore on the central bank board. The former campaign aide helped draft the administration’s tax cuts and has called for Fed Chairman Jerome Powell to resign. It’s a troubling shift from more expert, independent choices.
Thailand’s vote may solve just one problem 21 Mar 2019 A poll on Sunday will end five years of military rule. The best outcome would be an uncontested one, even if the junta leader stays on. A democracy of sorts could well encourage some private investment, but none of the likely winners seem ready to tackle a sclerotic economy.
Fed waves white flag on normalization 20 Mar 2019 The U.S. central bank held interest rates steady, cut its forecast for hikes and will stop shrinking its balance sheet in September. There are signs of slowing global and domestic growth, but the package looks more like a market wish list than the result of data-driven analysis.
ING’s Italian ban is model in dirty-money fight 18 Mar 2019 The Bank of Italy has barred the Dutch lender from accepting new clients in the country until it tightens money-laundering controls. The sanction lacks the punch of ING’s recent $900 mln Dutch fine. But bans may be more effective when forcing Europe’s banks into action.
Hadas: A bluffer’s guide to the MMT debate 6 Mar 2019 So-called modern monetary theory might be gaining respectability, after the radical approach was touted along with a huge “Green New Deal” by U.S. Democrats. Mainstream economists are fighting back. The debate, riddled with politics, hinges on at least five questions.
UK banks’ Brexit flak jackets look durable 12 Mar 2019 The Bank of England has told some lenders to triple their liquid assets in case of a hard Brexit, according to the FT. Lenders have quadrupled their easy-to-sell securities to 1 trillion pounds over a decade. Standby central bank funds provide extra armour in a no-deal scenario.
French banks’ pain may worsen 8 Mar 2019 The Bank of France may raise capital buffers to dampen loan expansion. That is justified given credit is growing much faster than the economy is expanding. But combined with pitiful lending margins, the move would add to the profitability problem which is plaguing Gallic banks.
With friends like Draghi, banks don’t need enemies 7 Mar 2019 European Central Bank President Mario Draghi is going to offer lenders new long-term loans. But his plan to keep policy rates at record lows for longer makes their lives harder. And if growth turns out to be as weak as the ECB now expects, more of the loans they make may go bad.
Resurgence of carry trades is riddled with risk 6 Mar 2019 Borrowing low-rate currencies to invest in higher-yielding ones is back in vogue. That’s because major central banks are deferring policy tightening and volatility is low. One or the other of these reasons may all too easily vanish, leaving followers of the trend high and dry.
ECB stimulus flows show why Draghi works so hard 6 Mar 2019 President Mario Draghi bought 2 trln euros of government bonds to boost the economy. But some proceeds were used to buy debt issued by non-euro zone companies, or left in bank deposits, the BIS says, diluting the impact. Though mainstream, money-printing remains an imprecise tool.
Mario Draghi is boxed into being generous to banks 5 Mar 2019 The European Central Bank boss is expected to announce more cheap loans in the coming months. New regulations may otherwise cause a credit crunch just as the euro zone economy is slowing. Monetary policymakers will have little choice but to paper over a two-tier banking system.
Zimbabwe offers a way to test blockchain’s worth 5 Mar 2019 Even after a 60 pct devaluation, Harare’s monetary credibility is irreparably broken. That should make it an ideal test case for distributed ledgers replacing ropey central banks. Yet citizens’ justifiable distrust of the state doesn’t mean ceding monetary control is an easy fix.
Kashmir attack exposes the limits of India’s clout 20 Feb 2019 New Delhi has vowed to secure the “complete isolation” of Pakistan after one of the deadliest assaults in years. Yet Islamabad’s strategic value to Beijing and Riyadh makes that unrealistic, leaving Premier Narendra Modi with few options to show strength ahead of an election.
Review: The People’s Republic turns left 15 Feb 2019 China’s slowing growth has rattled markets around the globe. In “The State Strikes Back”, Nicholas Lardy argues it’s because Beijing has strayed from the path of reform. His persuasive analysis raises fundamental questions about the relationship between politics and the economy.