Economics

World needs a higher renminbi – but not today

5 Oct 2009

China s too cheap currency helped cause global imbalances. But a sharp revaluation when trade is weak could have unhappy consequences, especially for Asian countries whose imports China processes. China badly needs a new growth model, but a major currency experiment can wait.

US jobs data shows recession not over yet

2 Oct 2009

The big 263,000 drop in nonfarm payrolls was not the only bad news. Shorter working hours and a big downward statistical revision show the US economy is in a recordbreaking hole. Recent signs of strength look like artificially stimulated blips. True recovery is far off.

Long bear market for stocks not yet over

1 Oct 2009

The third quarter was strong, but most equity indices are still where they were a decade ago. Stocks were so expensive then that even after a good decade for growth, they still aren t a bargain although they probably were in March. If it s any comfort, bonds look worse.

LSE can cut a precious cashless deal for Turquoise

1 Oct 2009

The London Stock Exchange is in pole position to buy its upstart rival. A deal would be small in size and may see no cash change hands. But a tieup would offer the LSE the chance to repair strained relations with Turquoise s founder brokers. That would be pretty valuable.

Tui Travel pays up to win convertible contest

29 Sep 2009

A busy day for new issuance in convertible bonds saw tour operator Tui Travel up against steel maker Salzgitter. Despite Tui Travel s weaker balance sheet, keen pricing made its issue more successful. Higherrisk credits are once again welcome in convertibles land at a price.

Yen strength doesn’t help deflating Japan

29 Sep 2009

The yen is strong but the Japanese economy is weak. The new government should try to put doubts in traders' minds. But it has more profound economic challenges after years of expensive and ineffective stimulus plans. Japan s quandary is also a warning for the West.

EBRD cash call is right, but also self-interested

29 Sep 2009

The European Bank for Reconstruction and Development wants to tap its 61country membership for E10bn to drive lending in eastern and central Europe. The plan is both welcome and worrying. And it suggests that the EBRD sees the crisis as a chance to bolster its mandate.

Bankers can sleep easy with G20 bonus fudge

28 Sep 2009

The world leaders offered an endorsement of their guidelines on bonuses, and promised to monitor the situation. But the banks are ready to justify big payouts with arguments the politicians are willing to believe. It looks like an opportunity for reform is being squandered.

Sterling may go to euro parity – for good or ill

28 Sep 2009

The euroapound line is in sight for the second time in a year. There are so many reasons for sterling to fall, from money printing to a willing central bank. A weaker pound will eventually help exports. But with the UK's finances as they are, the drop could go too far.

M&A rebound still mostly promise

25 Sep 2009

Cadbury, Disney and other headlinegrabbers may have made it feel like the merger business was back. Thirdquarter numbers tell a different, duller story. Surging share prices didn t inspire many bosses to act. They may be waiting for the economy to catch up with the market.

Hong Kong IPOs come down to earth with a bump

24 Sep 2009

The market s biggest listing this year, China Metallurgical, fell 12% on its debut. There are technical reasons why the stock was expensive. And investors are fickle. But as an antidote to complacency among issuers, buyers and underwriters, this reality check is overdue.

Putin call to Western gas groups shows desperation

24 Sep 2009

The Russian prime minister has invited oil and gas majors to invest in developing the gigantic Yamal peninsula gas fields. But he is in a weak negotiating position. The majors should demand tough legal and political changes before they get carried away by greed.

G20 Vadera appointment not just spin

24 Sep 2009

Shriti Vadera, one of the UK prime minister s closest allies, is leaving to advise the next G20 presidency. The process of turning the body into a global monitor needs a champion, and Vadera is up to it. Plus the move will help keep Gordon Brown s contribution in the limelight.

Fed monetary policy shift faces signal problem

23 Sep 2009

With stock markets strong, the economy recovering and commodity prices buoyant, the federal funds rate should probably be at 23%. However the Fed has gunned monetary policy for so long that it can t get there without inciting panic. It could try harder though.

EU financial watchdog needs King on board

23 Sep 2009

Bank of England governor Mervyn King is set for a senior role in the new EU body overseeing financial stability headed by ECB counterpart JeanClaude Trichet. The appointment is a nobrainer. Without the UK on top table, European efforts to monitor systemic risk would be feeble.

Eurozone recession is over but pain will persist

22 Sep 2009

The French economic model has excelled, but it has been very expensive. Meanwhile, Germany awaits an export revival. But the real pain is in Europe s periphery in economies that are uncompetitive, debtridden and unable to devalue. The eurozone s recovery in 2010 will be faint.

Canada’s loonie among the least loony currencies

21 Sep 2009

Canada has avoided excessive stimulus and government spending during the recession. Its banks are relatively sound, and its commodities emphasis is a strength, at least for now. It's no wonder the loonie is again approaching parity with the US dollar it's a logical investment.

Inflation’s return will test Fed – and markets

18 Sep 2009

US prices are about to change direction. A 2%plus inflation rate is possible by year end. But investors still expect the nearzero funds rate to continue for a long time. If they re wrong, financing conditions could get tighter fast, taking the bounce out of the bubbly markets.

Emerging markets on course – if richer places allow

17 Sep 2009

Their tight finances helped many avoid overdoing economic stimulus, and they now enjoy relatively cheap money and reviving trade. Risks include a renewed credit crunch and creeping protectionism elsewhere. They need to watch for these dangers as well as do the right thing.

LSE squares up to the competition – at last

16 Sep 2009

The London Stock Exchange is paying $30m for a specialist IT firm based in Sri Lanka. The deal is bigger strategically than financially. It shows that new CEO Xavier Rolet is ready to act to raise the LSE s competitiveness, and is alert to the huge threats facing the business.