Reuters blog archive

from Breakingviews:

U.S. farm credit looks safer than houses

By Daniel Indiviglio and Kevin Allison

The authors are Reuters Breakingviews columnists. The opinions expressed are their own. 

The $200 billion-plus U.S. farm credit system looks safer than houses. Washington’s implicitly backstopped agricultural lending complex resembles its ill-fated housing finance counterpart in some ways, complete with a rural equivalent of Fannie Mae and Freddie Mac. That’s cause enough to scrutinize Washington’s little-known farm lending apparatus. But despite a hot land market, the system looks ruggedly capitalized enough to avoid a similar fate.

Prices of prime Midwest land have more than doubled since 2005, according to agricultural lender Rabobank, with the price of corn shooting from less than $2 per bushel to a record-beating $8 per bushel in 2012. Until recently, the real estate boom was largely the result of scarce crops, as supply failed to keep up with growing demand from protein-hungry Asian consumers and government-mandated ethanol production. A bumper 2013 harvest finally tipped the market into surplus, leading to sharp falls in prices.

But land prices have kept on climbing this year, fueling worries about a farmland bubble. Near-zero interest rates have kept mortgage costs down and made financial returns from farmland competitive with yields on government securities.

from Mark Jones:

Pity Moscow’s gourmands as Putin’s sanctions bite deep

Pity Moscow’s gourmands as Putin’s sanctions bite deep

from Mark Jones:

Betting on (expensive and over-owned) Indian equities

Betting on (expensive and over-owned) Indian equities

from Global Markets Forum Dashboard:

Bank of England MPC members break rank

Pedestrians walk past the Bank of England in the City of London The Bank of England delivered today's surprise with minutes of this month's policy meeting showing two of the nine-member rate-setting Monetary Policy Committee had unexpectedly voted to hike interest rates. Sterling rose, reversing some of the previous day's falls recorded on a lower-than-expected inflation print, and equities headed south, but the market action was relatively subdued suggesting that traders were focusing more on the majority on the panel who opted to keep rates on hold. 

"A majority vote for a rate hike still looks more like Q1, at the earliest," said forum regular ADM Investor Services International strategist Marc Ostwald in a note to clients. "But at least (BoE Governor Mark) Carney gets his wish on short rates re-establishing a higher risk of 'earlier rather than later', though sentiment on the rate outlook will doubtless continue to swing quite sharply."  

from Breakingviews:

Latest blunder hits StanChart where it most hurts

By George Hay

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

Standard Chartered’s latest blunder hits the UK bank where it hurts most. New York State’s Department of Financial Services has slapped a $300 million fine on the emerging markets-focused lender for compliance lapses. It reinforces the disturbing impression that StanChart’s top brass aren’t on top of things.

from The Great Debate:

Pity Moscow’s foodies as Putin’s sanctions bite deep


I find Vladimir Putin annoying at the best of times, but this month my distaste has blossomed into unbridled loathing. By imposing sanctions on food imports from the United States, European Union, Canada and Japan, Russia’s kefir-drinking head of state scuppered my chances of making a decent plate of cacio i pepe or a batch of brownies for the next calendar year. The specter of Soviet-era scarcity is already making itself felt in eerie ways in supermarkets all over Moscow.

An entire section of the once expansive dairy aisle at one market is empty and shuttered with a sign citing “technical difficulties” where once Irish butter, French creme fraiche and Finnish skim milk stood proudly alongside Russian sour cream, kefir and milk. The Indian host of a sushi restaurant in my neighborhood, hugely popular with Japanese businessmen and diplomats, shook his head in despair, as he relies heavily on fish imports from Norway for his delectable sashimi and sushi. Heading back to Moscow from Italy yesterday, I loaded up my suitcase with 10 pounds of parmesan, vacuum-packed smoked ham and elegant jars of sage, rosemary, basil and mushroom pesto. Less than a week ago, they were all available at select grocery stores and wholesalers. Now, everyone is scrambling.

from Edward Hadas:

Time to retire unemployment

Edward Hadas

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

Give Janet Yellen credit. The chair of the U.S. Federal Reserve is keen to use monetary policy to help get more people into good jobs. Her priority – work is more important than finance – is reflected in the subject of this week’s get-together for the world’s central bankers: “Re-Evaluating Labor Market Dynamics.” One item should be on the agenda of the distinguished guests at Jackson Hole, Wyoming: how to replace the concept of unemployment.

from Breakingviews:

Fed adds urgency to Indonesia’s fuel reform test

By Andy Mukherjee 

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

The U.S. Federal Reserve is adding urgency to Indonesian President-elect Joko “Jokowi” Widodo’s first big test: Rethinking the country’s massive energy subsidies.

from Counterparties:

The high cost of Ebola

West Africa’s Ebola crisis is not just about the death toll — it’s also an economic disaster in the making. The UN’s World Food Programme declared Guinea, Sierra Leone, and Liberia to be at the highest level of food emergencies last week. The Thomson Reuters Foundation reports that “hunger is spreading fast as farmers die leaving crops rotting in fields. Truckers scared of the highly infectious disease halt deliveries. Shops close and major airlines have shut down routes, isolating large swathes of the countries.” A million people live in the Mano River region, the epicenter of the disease.

The spread of the disease is also, in part, an economic issue. Steven Hoffman and Julia Belluz at Vox write that annual healthcare spending in West Africa comes out to less than $100 per person, compared to $8,000 per person in the U.S. Ebola is spread through body fluid contact, and is thus relatively easy to avoid with the right precautionary measures. However, “aid workers on the ground... report that they don't have access to the basics to protect themselves and their patients,” say Hoffman and Belluz.