Opinion

James Saft

Toyota bounty shows Abenomics snags

Nov 6, 2013 21:44 UTC

Nov 6 (Reuters) – Toyota’s sparkling earnings show how
Abenomics may be good for Japanese companies now, but perhaps a
bust for investing in Japan over the long term.

Toyota, the world’s biggest car maker, reported a
70 percent jump in profits last quarter, as it got a boost from
this year’s 12 percent drop in the yen against the dollar
.

A look under the hood, however, shows that Toyota’s gains
may not translate into the sustained expansion Japan hopes
Abenomics will spark. Named after Prime Minister Shinzo Abe,
Abenomics is an attempt to use government spending, radical
monetary policy and competitive reform to finally rescue Japan
from a 20-year-plus slump.

The first step was to hammer the yen lower, making Japanese
exporters more globally competitive. A weaker yen has helped
Toyota, but not perhaps in the way policymakers want.

Two things have to happen for Abenomics to succeed. First,
external demand prompted by a weaker yen needs to drive a
self-sustaining consumer expansion. That requires wage gains.

The QE deflation puzzle: James Saft

Nov 5, 2013 20:00 UTC

Nov 5 (Reuters) – When it comes to creating inflation, bond
buying by central banks may actually ultimately be
counterproductive.

Called quantitative easing, it continues to be a mainstay of
the policy reaction to the ongoing economic malaise. Yet here we
are five years later and the evidence that QE can kindle
inflation, much less revive the economy, is decidedly mixed.

In part that may be because everyone realizes that QE isn’t
forever: ultimately the bonds the bank buys will have to be
repaid. It is also true – and here we can consider the
remarkable valuations of Twitter and Pinterest – that QE causes
bad investments, which ultimately must be deflationary.

Column: Europe faces deflation threat – James Saft

Oct 31, 2013 19:20 UTC

By James Saft

(Reuters) – Europe faces a threat of deflation, which it seems unlikely to be willing to fight.

Core inflation in the euro zone fell sharply in October to just 0.8 percent a year, the lowest since early 2010 and a level which sets the red deflation light flashing.

Deflation, or even low inflation, is particularly bad news for Europe, whose particular burden is too much debt. Inflation eats away at the real value of debt, thus making it easier to bear. Deflation does the opposite.

Europe faces deflation threat: James Saft

Oct 31, 2013 19:18 UTC

Oct 31 (Reuters) – Europe faces a threat of deflation, which
it seems unlikely to be willing to fight.

Core inflation in the euro zone fell sharply in October to
just 0.8 percent a year, the lowest since early 2010 and a level
which sets the red deflation light flashing.

Deflation, or even low inflation, is particularly bad news
for Europe, whose particular burden is too much debt. Inflation
eats away at the real value of debt, thus making it easier to
bear. Deflation does the opposite.

Early holiday courtesy of Fed

Oct 30, 2013 21:46 UTC

Oct 30 (Reuters) – Gorge on Halloween candy, Thanksgiving
turkey and risk: the Fed has declared an early and extended
holiday.

The Federal Reserve left policy unchanged at its meeting on
Wednesday, maintaining its $85 billion per month schedule of
bond buying and making only a few changes to the accompanying
statement.

The Fed said it wanted to see more data before making any
changes to policy, while noting that the recovery in housing has
slowed and inflation remains below target.

UK shouldn’t be banker to world: James Saft

Oct 29, 2013 19:00 UTC

Oct 29 (Reuters) – Bank of England governor Mark Carney is
kidding himself if he thinks Britain can become banker to the
world without paying high costs and taking even higher risks.

Carney, the newly minted BOE head, gave a remarkably
pro-finance speech last week in London, introducing some
sensible reforms while sounding an extremely relaxed tone about
the prospect of Britain’s finance sector more than doubling
relative to the economy. (You may at this point need reassuring
that yes, we are still in 2013, and yes, we did just undergo a
damaging crisis in which the risks of an overdeveloped banking
sector were terrifyingly demonstrated.)

“Five simple words describe our approach: we are open for
business,” Carney said, describing the central bank’s
willingness to provide cash to banks more easily, less
expensively and by pledging a wider array of securities while
making a case that institutions other than banks should be
allowed access to BOE financing. (here)

Column: Pinterest and Blackstone as QE’s children – James Saft

Oct 24, 2013 20:33 UTC

By James Saft

(Reuters) – Two groups with particular reason to be grateful about the Federal Reserve’s never-never taper are the people at Blackstone and Pinterest.

Blackstone, with its pioneering and soon to be AAA-rated securitization of single-family house rents, and Pinterest, which is valued at $3.8 billion and has no reported revenues (zero, nada, niente), both could serve as poster children for extraordinary monetary policy.

Each, in its own special way, is the beneficiary of the loose conditions which the Federal Reserve sees fit to maintain.

Pinterest and Blackstone as QE’s children: James Saft

Oct 24, 2013 20:31 UTC

Oct 24 (Reuters) – Two groups with particular reason to be
grateful about the Federal Reserve’s never-never taper are the
people at Blackstone and Pinterest.

Blackstone, with its pioneering and soon to be
AAA-rated securitization of single-family house rents, and
Pinterest, which is valued at $3.8 billion and has no reported
revenues (zero, nada, niente), both could serve as poster
children for extraordinary monetary policy.

Each, in its own special way, is the beneficiary of the
loose conditions which the Federal Reserve sees fit to maintain.

Greenspan+margin debt=danger

Oct 23, 2013 20:43 UTC

By James Saft

(Reuters) – Alan Greenspan says stocks are heading higher. Margin debt is at an all-time nominal high with investors borrowing another 5 percent against their brokerage accounts last month alone.

Do the math.

In this case one discredited former Fed chief plus legions of leveraged investors might just equal a coming correction.

First, there is Greenspan, who has come back with a new book telling us that it didn’t happen, wasn’t his fault and anyway he predicted it all at the time.

This is Dimon’s job: James Saft

Oct 22, 2013 12:12 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – There is no contradiction: Jamie Dimon remains at JP Morgan not despite it being in line for a record $13 billion fine, but because of what that fine demonstrates.

Dimon, the JPMorgan Chase & Co CEO, has negotiated a tentative $13 billion payoff to settle a number of U.S. investigations into mortgage bonds the bank, and banks it bought during the meltdown, sold to investors.

Though much has been made of the apparent contradiction between leading a bank while it is doing such wrong and holding on to your job after such an expensive penance, the answer is simple: both the before and after are what he is paid to do.

  •