Global Investing

Phew! Emerging from euro fog

October 27, 2011

Holding your breath for instant and comprehensive European Union policies solutions has never been terribly wise.  And, as the past three months of summit-ology around the euro sovereign debt crisis attests, you’d be just a little blue in the face waiting for the ‘big bazooka’. And, no doubt, there will still be elements of this latest plan knocking around a year or more from now. Yet, the history of euro decision making also shows that Europe tends to deliver some sort of solution eventually and it typically has the firepower if not the automatic will to prevent systemic collapse.
And here’s where most global investors stand following the “framework” euro stabilisation agreement reached late on Wednesday. It had the basic ingredients, even if the precise recipe still needs to be nailed down. The headline, box-ticking numbers — a 50% Greek debt writedown, agreement to leverage the euro rescue fund to more than a trillion euros and provisions for bank recapitalisation of more than 100 billion euros — were broadly what was called for, if not the “shock and awe” some demanded.  Financial markets, who had fretted about the “tail risk” of a dysfunctional euro zone meltdown by yearend, have breathed a sigh of relief and equity and risk markets rose on Thursday. European bank stocks gained almost 6%, world equity indices and euro climbed to their highest in almost two months in an audible “Phew!”.

Is end-game approaching for Turkey’s policy experiment?

October 24, 2011

In less than two months, Turkey will mark the first anniversary of the start of an unusual monetary policy experiment, and it may well do so by calling it off.  The experiment hinged on cutting interest rates while raising banks’ reserve ratio requirements, and as recently as August, the central bank was hoping  it would be able to slow a local credit boom a bit but still protect exports by keeping the currency cheap.  Instead, an investor exodus from emerging markets has put the lira to the sword, fuelling at one point a 20 percent collapse in its value against the dollar.  That has forced the central bank to roll back some of the reserve ratio hikes and last week it jacked up overnight lending rates in an attempt to boost the currency. It has also sold vast quantities of dollars and is promising  to unveil more  measures on Wednesday.

from MacroScope:

Economic Ties?

February 2, 2010

Ties

As rare as it is to get any two economists to agree, the chances are even slimmer of hearing three Nobel economics laureates concur.

Bosch Boss Bashes Bloated Bank Bonuses

January 27, 2010
Bosch CEO Franz Fehrenbach

Bosch CEO Franz Fehrenbach

Everyone complains about fat banker bonuses, but Bosch Chief Executive Franz Fehrenbach is taking the debate to a new level. The head of the world’s biggest car parts maker is going to review ties with its financiers and may break off business with those that pay excessive bonuses, he told reporters. “We find it irresponsible if some big banks more or less go back to business as usual before the crisis despite what we have gone through,” he said.  He cited HSBC and JP Morgan as positive examples of good corporate behaviour. Of course it’s easier to be picky when you are unlisted and generate huge cash flow.

I blame the fund managers

October 13, 2009

I’ve been building up a couple of dummy funds on Reuters’ new Portfolio tool. Not only is it a welcome diversion from actual work, but it allows me to test the mettle of the fund managers we speak to, and check out the guidance offered by the Lipper Leader fund rankings.

Another nail in the Malthusian coffin?

September 22, 2009

All the talk of addressing the global imbalances throws a spotlight on contrasting demographic trends in the world’s two most populous nations — China and India.

Rebasing investors’ confidence

May 26, 2009

Interesting change by State Street in its monthly sounding of its institutional investor clients. The firm has gone back over all its data and rebased it in order to get an indicator that not only marks up and down changes in investor confidence but also suggests what regime investors are in. Ken Froot, the Harvard professor who co-developed the index, describes the move thus:

More auto worker protests over Bush concessions

January 14, 2009

Around 200 union workers and some local politicians protested wage cuts and other givebacks required by the Bush administration’s bailout of General Motors and Chrysler.
    
“The call for wage cuts is an attack on the middle class,” said Rex Lux, a truck driver at Chrysler who said he had come to the rally to show his support for organized labor. “The middle class send their kids to college, they buy cars and they keep the American economy going.”
    
“Why break the middle class?” he asked.
 
The protest in Warren, Michigan, came two days after a smaller rally (pictured above) outside the Detroit auto show by members of the United Auto Workers union.
 
The $17.4 billion federal bailout for the U.S. automakers includes concession targets such as making union-represented workers’ wages competitive with foreign manufacturers by December 2009 and eliminating the union jobs banks, which pays laid-off workers.

Sen. Corker to Chrysler: best hope is merger

January 13, 2009

Tennessee Sen. Bob Corker (right, in the driver’s seat next to Mark Fields, Ford’s president of the Americas), who pushed for tough conditions on the $17.4 billion U.S. government bailout for General Motors and Chrysler, said at the Detroit auto show that he hoped Chrysler would find a merger partner to survive.