Commentaries

Volatile volatility

Agnes Crane

Nov 4, 2009 15:22 UTC

I was struck by the phrase “volatility itself has been volatile” in the FT article this morning. It pretty much sums up both the confusion and concerns in the market about whether risky assets are at an inflection point or taking a breather before embarking on another leg up.

The central bank meetings this week certainly aren’t helping, but the FOMC, the ECB or the BOE aren’t likely to do anything that’s going to signal a shift in policy. FOMC should keep the phrase “extended period,” while ECB isn’t likely to given any new insights on the euro or interest rates. The BOE could add more fuel to its quantatitive easing program, but that would hardly be earth-shattering news given its losing streak on growth.

There is the U.S. employment report later in the week, but no one is expecting a turnaround there either. In fact, most have their eyes on the magic 10, as in 10% unemployment that seems simply inevitable given the lousy job market.

Still, the VIX – the fear gauge that measures equity market volatility – is, well, looking pretty volatile.

Euro at $1.50 — a disaster or an alibi?

Paul Taylor

Oct 20, 2009 15:11 UTC

The French can never resist blaming a strong currency for their misfortunes. So it should come as no surprise that Henri Guaino, President Nicolas Sarkozy’s influential political adviser, has said that having the euro at $1.50 is “a disaster for European industry and the economy”. Since the euro stood at just above $1.49 as he spoke on Tuesday, Guaino presumably sees the single currency area as on the edge of the abyss. 

This is manifest nonsense. European exports to the rest of the world, including the dollar zone, were booming in mid-2008 when the euro stood at just short of $1.60. The euro area had a trade surplus with the United States at the time. The steep slide in exports over the last 15 months has been due to a collapse in demand, even though the euro fell as low as $1.25.

Don’t worry about the weak dollar

By John M. Berry

There’s no way to shut off the incessant warnings about a weak dollar from foreign officials and some economists, but it’s perfectly safe to ignore them.

You can also yawn the next time Treasury Secretary Timothy Geithner repeats the mantra, “It is very important to the United States that we continue to have a strong dollar.”