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from Edward Hadas:

Fear no robot overlords. They can become our best friends.

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The “konditorei” in Sankt Florian, Austria offers fine pastries and wonderful hot chocolate. It was the perfect location to interrupt a holiday for a bit of work. Over a slice of strudel, I spent a few minutes last week contemplating my colleague Andy Mukherjee’s well argued article about the danger robots pose for the modern economy. Looking around the bakery-cafe, I saw why Andy should be proven wrong.

He is worried about the ability of highly efficient robots to destroy many jobs very quickly. In Andy’s dark vision, the machines will save massive quantities of labour time and economies could suffer permanent damage: lower wage income and higher unemployment will lead to lower demand.

Such a dystopia can be avoided. Robots can improve the economy, as long as inefficiency is made welcome.

The konditorei helps explain what needs to be done. The establishment practically reeks of inefficiency, despite using high tech equipment. Baking in small batches is always relatively costly and labour is wasted when packages are wrapped by hand. Much could be done to push customers through more quickly. A fast food restaurant, where everything is optimised for speed and every cost is carefully scrutinised, could offer more cakes with fewer workers and lower prices. It would be far more efficient by any monetary measure.

from Morning Bid with David Gaffen:

We come to praise QE, not to bury it

So, that’s it. Seven years and $4.4 trillion later, the U.S. Federal Reserve will exit quantitative easing, despite what a few Fedsters have said about the possibility of QE4. Let’s remember that third sequels rarely, if ever, are satisfying, they tend to meet with shrugs from audiences, and don’t often include the original cast of characters. "Alien Resurrection" ring a bell? That’s what QE4 would be. But I digress.

After a few weeks of freaking out - from a toxic stew of weak European and Chinese data, uncertainty over the threat of a big Ebola outbreak, and some calculated, questionable chats from Fed officials that mostly confused people - the panic appears to be over.

from Morning Bid with David Gaffen:

Rousseff and the damage done

Few political developments in the last several months have been more binary than Brazil’s presidential election. It has been more polarized than the Federal Reserve, the European Central Bank, the Ebola scare, the U.S. Midterm elections, Ukraine and what-have-you.

With the narrow re-election of Dilma Rousseff over centrist candidate Aecio Neves, it wouldn’t be all that crazy to expect the Bovespa stock exchange to go through an extended round of weakness, not just on Monday, but for a few days after that, given the prevailing view of Rousseff’s policies as being lousy for markets.

from Morning Bid with David Gaffen:

Still feeling the fear trade

Fear remains in the markets and it is being tested again following the diagnosis of a New York-based doctor with the Ebola virus. Even though there are just nine documented cases of the deadly disease on U.S. soil so far and just one death.

Relating all of this to markets can’t help but seem myopic and flippant, but it cannot be ignored, either. So the best method is to merely present the information and move on. U.S. stock futures dipped around 8:30 p.m. ET after news that the test had come back positive – about a 0.5 percent drop. That's similar to the activity during the day’s trade when the first news of the doctor hit through the New York Post.

from Global Markets Forum Dashboard:

China economic reforms may result in $14.4 trillion GDP, growth at 6 percent – Asia Society report

Sweeping economic reform initiated by China President Xi Jinping in November 2013 marked a turning point for the world's second biggest economy. If implemented fully, China's potential GDP growth can be sustained at 6 percent through 2020. One risk: Falling short of that growth rate could result in growth at half that projection, or worse, leading to a new economic crisis, according to a new study.

Dan Rosen, founding partner, Rhodium Group

Dan Rosen, founding partner, Rhodium Group

Dan Rosen, author of a report for the Asia Society Policy Institute, argues that China's growth model is no longer working. The drivers that contributed to China's post-1978 growth are weakening, with existing investments showing diminished returns and overall total-factor productivity, or TFP, falling. TFP is an economic term that broadly measures efficiency using input factors such as labor and capital. "Demographic dividends propelled China through the 1980s, 1990s, and 2000s, but the labor force is now at its largest and is poised to shrink," he writes.

from MacroScope:

Franco-German meeting

German Finance Minister Schaeuble and his French counterpart Sapin attend news briefing after talks in Berlin

The big question of the week is whether financial market gyrations continue, worsen or calm. European stocks are being called higher at the open.

Greece has been effectively shut out of the bond market. If it and others on the euro zone’s southern flank come under persistent market pressure, in a way that hasn’t happened for two years, the onus on the European Central Bank to act will grow and grow.

from MacroScope:

Putin – is he ready to deal?

Russian President Vladimir Putin and Ukrainian President Poroshenko are due to meet on the sidelines of the EU/Asia summit in Milan today to try to find a way out of the Ukraine crisis.

Germany’s Angela Merkel and French President Hollande will also meet the pair as part of a four-way contact group. The Kremlin has just said Putin and Merkel have "serious differences".

from Morning Bid with David Gaffen:

Ebola and market pressures

There’s a glut of various stresses operating in the markets right now: Europe’s inability to get out of its own way, the sharp fall in oil prices that probably says more about supply issues and lackluster demand in Asian markets than the United States, the uncertain path of the Federal Reserve and a nagging concern that weak inflation figures show the economy really isn’t healing all that much.

But make no mistake about it - Ebola is a pressure point for markets at this moment, and one only need look at the “scare” moments in markets to really see it.

from Morning Bid with David Gaffen:

Buyers get out of the way

Time to sit up and pay attention. Monday's end-of-day regurgitation of 100,000 futures contracts in a five-minute span around 3:30 p.m. (1930 GMT) would have been more nerve-wracking had we not already seen the same thing writ small, when about 30,000 contracts were dumped in the waning seconds of last week's trading action.

In each case, the activity was striking and a bit disturbing. See, it's never a great sign when the only thing that ends the selling on a given day is the moment when they turn the machines off (a la Randolph and Mortimer Duke), and Monday wasn't all that much different.

from Breakingviews:

Markets finally side with economy on bad news

By Edward Hadas

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

Market historians could call the last five years the QE period. Quantitative easing, a polite term for money creation by central banks, has pushed free and ultra-cheap money into almost all financial markets, supporting or pushing up prices. The era is coming to a close. As investors overcome their monetary dependence, they have to look at the real economy. It’s not encouraging.

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