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from MacroScope:

Showdown for Hollande

French President Hollande and Finance Minister Sapin take part in the assizes for financing and investment at the Elysee Palace in Paris

The French government faces a confidence vote in the national assembly after President Francois Hollande and his prime minister, Manuel Valls, ousted dissident ministers in a signal perhaps that they are prepared to push ahead with unpopular structural reforms to breathe life into a moribund economy.

Rebel lawmakers in Hollande’s Socialist party say they may abstain. On top of the reshuffle, they are angry at Hollande's policy switch in January to favour tax cuts to business in a bid to revive the economy - a move that has failed to kickstart a flatlining economy.

Hollande looks like he has the numbers to get home but a more profound rebellion could force him to dissolve parliament and call new elections. The Socialists have a one-seat majority in parliament.
Socialist party managers put at 30 the number of hard-left deputies set to abstain. A revolt of that order would allow the government to scrape approval from the 577-seat assembly with support from centre-left allies outside the Socialist Party.

It’s a big week for Hollande. On Thursday, he will seek to shore up his domestic approval ratings - at 13 percent the worst for a French leader in polling history - in a televised news conference set to last up to three hours.

from Counterparties:

MORNING BID – Spending concerns and car sales

Coming data on same-store sales will help illuminate whether the modest upward tick in prices is something that is being replicated throughout the economy and signalling a stronger overall economy or perhaps one that remains more weighted to the most wealthy in the United States. According to Thomson Reuters data, Costco is poised to post the strongest same-store sales figures among the retail chains, though its 4.6 percent estimated increase would fall short of the 5 percent rise a year ago. The figures have a bit less utility than in the past given the likes of Wal-Mart stopped supplying this data years ago, but you work with what you have. Either way, it's notable that the discounters have been weak this year - a sign of lackluster spending outlooks for lower income Americans.

The lower-income sector has seen its share of economic growth diminish over recent years, a trend that has been accelerated in part by the weakness in housing prices in most parts of the economy, poor overall demand and lack of spending among all but the upper tier of consumers, and no real growth in wages -- though this morning's data on productivity and labor costs does show finally some wage growth.

from MacroScope:

Will French numbers add up?

French President Francois Hollande’s cabinet meets to adopt a new debt reduction plan.

After outlining 50 billion euros of savings for 2015-2017 to help pay for consumer and business tax cuts, the government is due to sign off on already delayed deficit reductions to bring it, eventually, to three percent of output as demanded by Brussels.

from Alison Frankel:

Why shield corporations from disclosing political spending?

I'm going to confess right here that I don't possess the requisite statistical skills to hazard an opinion on whether shareholders benefit when their corporation engages in lobbying and campaign expenditures. If you have a more powerful appetite for numbers than I do, John Coates of Harvard Law School offers a bibliography of academic studies that conclude corporate political spending is bad for shareholders at the Harvard Forum on Corporate Governance (including his own influential 2012 paper for the Journal of Empirical Legal Studies). Want a different view? A pair of economics consultants from Sonecon disputed Coates and those who think likewise in a 2012 paper for the Manhattan Institute that found corporate political spending has "a generally positive effect" on a company's value, in terms of market returns. You can pick whichever analysis suits you because I'm not going to argue the merits of either. I do believe, however, that regardless of the benefits of lobbying and campaign contributions, shareholders have a right to know when and how their money is being spent on politics.

Coates does too, which prompted his post Friday at the Harvard corporate governance forum. Coates was reacting to the Securities and Exchange Commission's decision in November to table consideration of rules that would require disclosure of corporate political spending; the Harvard prof called the SEC's move "a policy and political mistake" that permits large corporations to lobby secretly against Dodd-Frank regulations, using other people's money. As you probably know, corporate disclosure of political spending has been kicking around in shareholder proposals for about a decade, but the SEC was pushed into the debate in 2011, when a group of 10 law professors with varying views on the impact of such spending joined together to petition the SEC to develop disclosure rules.

from MacroScope:

A question of liquidity

The Federal Reserve’s decision to keep printing dollars at an unchanged rate, mirrored by the Bank of Japan sticking with its massive stimulus programme, should have surprised nobody.

But markets seem marginally discomfited, interpreting the Fed’s statement as sounding a little less alarmed about the state of the U.S. recovery than some had expected and maybe hastening Taper Day. European stocks are expected to pull back from a five-year high but this is really the financial equivalent of “How many angels can dance on the head of a pin”. The Fed’s message was little changed bar removing a reference to tighter financing conditions.

from MacroScope:

A Marshall Plan for Greece

The spectacular failure of "expansionary austerity" policies has set Greece on a path worse than the Great Depression, according to a study from the Levy Economics Institute of Bard College.

Using their newly-constructed macroeconomic model for Greece, the Levy scholars recommend a recovery strategy similar to the Marshall Plan to increase public consumption and investment.

from MacroScope:

Fed on guard over low U.S. savings rate

As Federal Reserve Chairman Ben Bernanke delivered what may have been his last testimony on monetary policy before Congress, most of the world’s attention was focused on what hints he might give about the timing of an eventual reduction in the pace of asset purchases.

Tucked in the actual semi-annual monetary policy report Bernanke delivered to lawmakers on Capitol Hill was a little-noticed reference to growing worries about the potential for an extended period of low savings, associated in part with long-stagnant wages, to thwart long-run economic progress.

from Global Investing:

Emerging markets to fuel airline spending trajectory

Emerging markets may not have all the technological know-how in civil aerospace, but from China across the world to Brazil, they do have the cash.

The civil aerospace sector performed well in 2013, according to Societe Generale data, trading at a 4 percent premium over the MSCI world index, while the defence sector has steadied, and in the medium to long term civil aerospace should be supported by strong orderbooks from emerging economies.

from Global Investing:

It’s all adding up – emerging markets to drive global spending

The world's leading ad agencies are positioning themselves  in Brazil, Russia and China -- countries that are expected to provide almost a third of the growth in global advertising over the next three years. That's according to a report by S&P Capital IQ Equity Research, a unit of publishing giant McGraw Hill.

Most major advertisers already have a foothold in these BRIC economies, where the advertising market is projected to grow by an average 10.7 percent  a year over the next three years -- more than three times the growth rate in  the developed world.  Over the next 15 years,  big emerging markets will add $200 billion to the global ad spend, S&P Capital IQ reckons.

from Global Investing:

‘Ivanovs’ keen on new cars despite high inflation – Sberbank

Sberbank's hypothetical Russian middle-class family metric - the 'Ivanovs'- shows the average Russian family is concerned about high inflation, though that is still barely denting some peoples' aspirations of getting behind the steering wheel of a new car.

April's Ivanov index, a survey of more than 2,300 adults across 164 cities in Russia with a population of more than 100,000, notes people are still concerned about persistently high inflation, which in Russia is at around 7 percent.

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