Reuters blog archive

from Ian Bremmer:

Alibaba, Weibo and China’s potential for growth

In recent weeks, there has been a surge in Chinese tech sector IPOs -- including Alibaba, Weibo and -- all planning to list on American exchanges. They’re smart to list away from home: doing so will give them access to more liquidity, and allow them to avoid certain restrictions -- like the rule that companies cannot IPO in China if they haven’t yet turned a profit.

There are also compelling reasons for global investors to get excited about these offerings. China’s domestic consumer market is rapidly growing, and e-commerce is perhaps the most robust segment. There were over 6 billion parcels delivered in China in the first nine months of 2013 -- up a staggering 61.2 percent from the same period a year prior. Online shoppers received half of those packages.

President Xi Jinping’s reforms are ambitious and unprecedented, and seek to transform the Chinese economy from a state-stimulated growth engine to a digital age, middle-class, consumer-driven economy in a country of more than 1.3 billion people. If these economic reforms succeed, they will unlock huge opportunities for tech companies that benefit from rising domestic consumption and a growing middle-class that has embraced the Internet.

Yet warning signs surrounding the economic reforms are giving potential investors pause. Recently, we’ve seen wealthy Chinese leaving China. Key leaders are concerned that Xi’s anti-corruption campaign is going too far, threatening to create fissures among powerful political factions. And investors are worried that faltering economic growth --  a “new normal” of 7 percent growth, rather than the 10 percent or more of past years -- will force China’s leadership to return to traditional stimulus measures, instead of continuing with the current pace of reform.

from The Great Debate:

Ryan and the code words of race


It’s official. The House of Representatives has passed the federal budget for fiscal years 2015 through 2023 that was submitted by the House Budget Committee -- a.k.a. the Ryan budget, after the Budget Committee’s chairman, Representative Paul Ryan (R-Wis.) -- and the troops are on the march.

The subject line of one e-mail from the Democratic Campaign Committee’s rapid response team is: “1,000,000 Strong Against the Ryan Budget.” They are soliciting signatures to demand rejection of “any Paul Ryan budget” that “puts Big Oil and billionaire tax breaks before the 47 percent.”  There will be an “important debate,” says Representative Chris Van Hollen (D-Md.), ranking member on the Budget Committee, about the Ryan budget’s “lopsided set of priorities.”

from Financial Regulatory Forum:

Forget HFT; “High Intelligence Trading” is the new frontier for technology, markets, regulation


By Henry Engler, Compliance Complete

NEW YORK, Apr. 10, 2014 (Thomson Reuters Accelus) - While fast is good, smart is better, and with untold resources of computing power and memory banks in the clouds, the new frontier in electronic trading combines sophisticated intelligent software with rapid-fire processing, enabling traders to stay one step ahead of the regulators.

“What’s the difference between pure speed and adding intelligence to that speed?” asked Terry Keene, head of iSys, a technology integration firm, at a conference focused on high performance computing. The answer is “big data analytics” that brings decision-making and trading to a “near-time” environment, he added.

from Breakingviews:

Jamie Dimon hits final stage of grief: acceptance


By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

In coping with the tragedy of the financial crisis, no Wall Street executive has exhibited the five stages of grief like Jamie Dimon. The JPMorgan chief executive has passed through phases of denial, anger, bargaining and depression. His latest annual letter to shareholders finally shows a desire to accept what’s happened and move on.

from Financial Regulatory Forum:

Clearinghouses’ default “waterfall” offers no panacea against their potential failure


By Bora Yagiz, Compliance Complete

NEW YORK, Apr. 10, 2014 (Thomson Reuters Accelus) - The push of derivative contracts into central counterparties (CCP) – also known as clearinghouses -- has been underway for more than five years, yet it remains unclear how these entities would fare under stressed market conditions in the U.S.

In the U.S., the CCPs mostly come in two forms – either as derivatives clearing organizations (DCO) that clear financial instruments such as options, futures, and swaps or securities clearing agencies (SCA) that clear securities for its members. The former group is regulated by the CFTC, the latter by the Securities and Exchange Commission, while other types of clearing entities (such as CHIPS or DTCC) that carry a state member trust charter fall under the jurisdiction of the Fed.

from Reuters FYI:

Bionic bunnies, frothy flowers and problematic pot


A New York University student celebrates in the Washington Square Park fountain after graduation ceremonies in New York. REUTERS/Shannon Stapleton

Tackling the tidal wave of college costs 

The average amount U.S. families are saving for tuition has risen along with stock prices.

from The Human Impact:

Election day, a time of hope – and concern – over Indonesian women’s rights


Tri Widayati is the first woman in her family - and her village too, she thinks - to find employment. At 18, soon after graduating from high school, she left her small village in Klaten regency in Central Java for Bekasi, a satellite town of the capital, Jakarta.

“Every woman in my village, once they get married, they just stay at home and look after the children,” including her mother and sister, Tri said.

from Breakingviews:

Greek bond fever may do economy few favours


By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Greece’s first bond in four years has met roaring demand. The 3 billion euro deal suggests past bondholder losses and present economic woes are forgiven and forgotten. But the country still has big problems. Excessive investor enthusiasm could reduce the pressure to reform.

from Global Markets Forum Dashboard:

Greece storms back to bond markets

Greece has made the headlines plenty of times in recent years due to its high debt levels,  two bailout packages from the European Commission, the European Central Bank and the International Monetary Fund - collectively known as the ‘Troika’ -  and the accompanying painful austerity programme.  The first bailout package worth 110 billion euros was sanctioned in May 2010 after Greece found itself unable to access international debt markets to raise funds to service those spiraling debts and a second followed in February 2012 along with a debt restructuring.

Today, four years after the first bailout package was announced, Greece stormed back into the bond markets with a 3 billion euro issue of  5-year bonds, offering a yield of just 4.95 percent, the second lowest borrowing costs for a bailed-out euro zone state returning to market. The sale signaled a positive phase for the struggling country, especially as the sale drew demand of more than 20 billion euros, with around 90 percent of the paper going to foreign investors.

from Counterparties:

MORNING BID – Dot Matrix

The Federal Reserve did it again, giving back to the markets at a time when it wasn't expected, and showing once again that the early months of a new Fed chair's tenure are fraught ones, in terms of interpreting monetary policy.

Janet Yellen probably didn't mean to suggest rate hikes could come as soon as six months after the bond-buying program ends for good. And the release of the Fed minutes also demonstrated that the Fed - even in discussing projections - worried about how it would all look, specifically the "dot matrix" that showed several Fed members saw higher rates before long, and really, that it was all just kind of overstated. (Yellen even said this at her press conference - that the dots did not mean what you thought they meant).