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from Breakingviews:

Fragility is bigger worry than volatility for the markets

By Rob Cox

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

It has been impossible to escape the V-word for the past week. Turn on the television, and it is easy to conclude that central bankers, corporate chiefs, investors and politicians think volatility is the biggest problem vexing global markets. The rollercoaster ride recently experienced by financial assets is nettlesome. But it’s merely a symptom of a bigger malady: the fragility of widely accepted assumptions about where the world is headed.

The see-sawing of markets is succinctly illustrated by the Chicago Board Options Exchange Volatility Index, or VIX. It uses the prices of S&P 500 Index options to give an indication of investors’ expectations of near-term swings in the stock market. Conventional wisdom suggests that the higher the index goes, the greater the fear is among investors that markets will forge an unstable path in the weeks ahead.

Market volatility makes it hard for people in the real economy to plan ahead. So, a fund manager fearing zigzagging prices may be better off keeping funds invested in cash. Company executives may hold back on hiring new staff or buying new equipment until things calm down. And central bankers pondering what to do about interest rates may have a change of heart.

from Hugo Dixon:

Markets right to worry about euro zone

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

The markets are right to worry about the euro zone, the epicentre of last week’s fright. Its three big economies – Germany, France and Italy – are, in their own ways, stuck.

from Edward Hadas:

Surge pricing and the just economy

By Edward Hadas

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

Surge pricing is what car service Uber calls its reliance on the market mechanism. The use of price to balance supply and demand is a perfect example of standard economic theory in action. It is also a good example of why market economics can have an anti-social edge.

from Breakingviews:

Twitter free-speech chirps carry overtone of risk

By Reynolds Holding

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

Twitter’s chirping about corporate free speech carries an overtone of risk. After its UK super-injunction tiff, the microblogging service is fighting for the right to disclose secret U.S. demands for data. The two cases show firms have power to resist being muzzled – or forced to speak. That helps check judicial and government overreach, but it could also undermine useful regulation.

from Edward Hadas:

Call that money-printing?

By Edward Hadas

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

Finance doesn’t get the disrespect it deserves. Nothing about money and credit is sacred – certainly not quantity of currency outstanding. The political and monetary authorities should feel free to add and subtract money as needed to help the economy function better.

from Breakingviews:

Cameron takes deficit amnesia to a new level

By Ian Campbell

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

David Cameron crowed when UK opposition leader Ed Miliband forgot the deficit in a keynote speech last week. Yet Britain’s prime minister has now taken deficit amnesia to a new level, insisting on the need to tackle the country’s biggest problem while simultaneously pledging a tax giveaway. It’s an electoral bribe he can’t afford.

from Hugo Dixon:

UK faces unpalatable election choice

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

The UK faces an unpalatable choice in next May’s general election. The Labour opposition, which is currently ahead in the polls, has a somewhat anti-business agenda. Meanwhile, the Conservatives want to hold a referendum on Britain’s EU membership. If the people vote to quit the EU, industry will lose full access to its biggest external market.

from Breakingviews:

Tax clampdown could deter half-baked pharma M&A

By Neil Unmack and Robert Cyran

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

The U.S. clampdown on tax-driven cross-border M&A should deter half-baked pharma deals. Some U.S.-led transactions, like AbbVie’s recent agreement to buy UK-based Shire, may survive on strategic logic. But pure tax-avoiding combinations look tricky.

from Edward Hadas:

The economic lessons from Scotland

Adam Smith, one of the leading figures of the 18th century Scottish intellectual enlightenment, liked free markets and restrained governments. The 21st century campaigns for and against a Scottish political liberation show that governments have acquired an economic importance which Smith could hardly have imagined.

If the government’s economic role was as limited as Smith would have liked, the debate preceding the Sept. 18 independence referendum would mostly have been about national identity and the advantages and difficulties of becoming a small country in a big world. The economy would hardly be an issue, since only the most rabid Scottish nationalist would accuse the English of cruelty in that domain.

from Breakingviews:

No-debt mania continues to dictate German policies

By Olaf Storbeck

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

Angela Merkel’s rhetoric on higher public investment is changing for the better. But the German chancellor remains unruffled by growing calls from her euro partners and the European Central Bank to change tack on fiscal policy. Germany’s excessive focus on balanced budgets remains unchanged and is likely to prevent any swift and significant increase in public infrastructure spending.

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