Germany gets economic rebalancing only half right

September 29, 2016

The country no longer depends on exports for growth. Strong domestic demand is the key driver these days, a government-commissioned report says. Yet the current account surplus is still rising. Blame not only Angela Merkel’s fiscal restraint but also weak corporate investment.

Deutsche Bank has airbags – but only one matters

September 27, 2016

The German lender’s market value has shrunk below 14.5 bln euros on fears of big fines. Yet markets seem calm about knock-on effects. It’s less that post-crisis bank rules are fit for purpose, and more that Chancellor Merkel would have to be brave or foolish to let Deutsche fail.

Fed “forward guidance” blows too much smoke

September 22, 2016

The U.S. central bank again declined to raise rates, leaving what hedgie Dan Loeb called the crack cocaine of loose monetary policy in place. The Fed counts talking to the market as one of its tools. But its story has changed so much that it might do better being less chatty.

BOJ buys time and friends with yield-based reboot

September 21, 2016

The Bank of Japan has ditched its money-printing goals, pledging instead to keep 10-year interest rates at zero until inflation exceeds 2 pct. The central bank’s latest overhaul means it is less likely to run short of debt to buy, and eases the financial sector’s pain.

Scarce bonds and bank pain limit BOJ’s next move

September 19, 2016

The Bank of Japan faces a conundrum in its battle to revive inflation. It can’t keep buying $800 bln of bonds a year for much longer, but negative rates are deeply unpopular. This week’s big policy review might require the BOJ to make other concessions to the financial industry.

Trump’s economic plan built on typical hyperbole

September 15, 2016

The Republican White House nominee says his proposals to cut taxes and red tape would boost output growth to 3.5 pct a year and create 25 million jobs over a decade. The huge potential cost of Trump's plans only shrinks thanks to heroic assumptions about their likely benefits.

Carney guessing game feeds bond market distortion

September 13, 2016

The Bank of England has revealed corporate bonds eligible for its 10 billion pound buying spree. Its requirement that companies make a material contribution to the country still throws up some anomalies. Second-guessing the central bank makes capital markets less efficient.

China tosses trading partners some import scraps

September 9, 2016

In August, for the first time in 22 months, imports turned positive. But most foreign exporters and China bashers can keep the bubbly on ice. The data's timing has a whiff of diplomacy. Beijing will keep its aggressive trade policies in place so long as they serve other goals.

Global leaders test limits of spreading wealth

September 6, 2016

“Inclusion” was the buzzword at the G20 conflab. A fairer distribution of the fruits of growth is urgent when globalisation is under attack in the West. The challenge for politicians is to reduce inequality within rich countries without the rest of the world suffering.

China is wrong venue for an SDR revival

September 1, 2016

Beijing wants to revive interest in Special Drawing Rights, the IMF quasi-currency it is about to join. The World Bank will sell $2 bln of SDR debt in China to help. Global investors badly need an alternative to the dollar but China's rickety bond market is a poor place to start.