Institutional Investor (February 6)
“Markets across much of Asia, including in China and Korea, will be closed in observance of Lunar New Year this coming week, providing a break for investors concerned over cooling growth in China.”
Tags: Asia, China, Cooling growth, Investors, Korea, Lunar New Year, Markets
Wall Street Journal (February 5)
“The January jobs report wasn’t as bad as the markets seemed to take it… But then it wasn’t stellar either.” New jobs didn’t rise as much as expected, but there were wage gains and the labor participation rate rose as well. “We’ll hope for the best,” though the “overriding problem continues to be a lack of business confidence and investment.” This “leads to slower growth, which gives the U.S. economy a lower margin for absorbing growth shocks from around the world.”
Tags: Confidence, Growth, Investment, Jobs report, Labor participation, Markets, Shocks, U.S., Wage gains
Wall Street Journal (January 27)
“Beijing’s decision to stop propping up stock prices is a positive sign that leaders are getting serious about reforming its markets. The expected appointment of Chongqing Mayor Huang Qifan, one of China’s most prominent free-marketeers, to oversee regulators would restore confidence once the market finds its real floor.”
Tags: Beijing, Chongqing, Confidence, Huang Qifan, Markets, Reform, Regulators, Stock prices
The Economist (January 23)
Oil price slumps usually do “the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.” This time, however, the abrupt 75% drop in the price of oil is testing the old paradigm. “Producers are suffering grievously. The effects are spilling into financial markets, and could yet depress consumer confidence. Perhaps the benefits of such ultra-cheap oil still outweigh the costs, but markets have fallen so far so fast that even this is no longer clear.”
Tags: Benefits, Consumer confidence, Costs, Growth, Markets, Oil, Price slumps, Producers, Suffering, Ultra cheap
Wall Street Journal (December 9)
“Rather than reform the markets, Beijing wants to inflict pain on the brokers to assuage public anger over the crash.” This sort of meddling by the government helps explain why China’s financial markets remain dysfunctional. “China’s largest brokerage is now missing six of its eight top bosses” who are widely assumed to to “have been detained by police.” Numerous others have disappeared under similar circumstances. “But political interference risks repeating the boom and boost cycle. Putting brokers in prison won’t strengthen markets unless it is part of a new commitment to consistently enforce the law.”
Tags: Beijing, Brokerage, Brokers, China, Crash, Dysfunctional, Government, Markets, Public anger, Reform
Wall Street Journal (November 5)
“The drumming you hear in Washington, Frankfurt and Tokyo is the accompaniment to the Central Bank Limbo, as the world’s monetary maestros line up to see how low they can go. The Bank of England (BOE) joined the queue Thursday with its announcement that a rate increase will again be delayed.” BOE Governor Mark Carney warned a year and a half earlier “that a rate rise could come ‘sooner than markets currently expect.’” Nevertheless, “Britain’s monetary-policy committee reverted to dovishness at its meeting this week.”
Tags: BOE, Carney, Central bank, Dovish, Frankfurt, Limbo, Markets, MPC, Rate increase, Tokyo, Washington
Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, China, Collapse, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Prices, Production, Rare earths, Scarcity, Substitutes
Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Production, Rare earths, Substitutes
Institutional Investor (September 24)
In the U.S., mounting unfunded liabilities of state retirement systems now total $1 trillion. The states desperately need to “find ways to slash costs,” but the “figure is expected to keep growing as states continue to put off pension and liability payments, and investment returns from capital markets sit in the low single digits.”
Tags: Costs, Investment returns, Markets, Pensions, Retirement systems, States, U.S., Unfunded liabilities
The Economist (September 12)
“The last time the Federal Reserve raised its benchmark interest rate, there was no one to tweet about it.” That was in June 2006 before Twitter’s IPO. “Nine years on, as the Fed readies itself to raise rates again, the public debate between hawks and doves is much noisier.” Even though markets are counting on least one rate rise this year, “it does not pay to go early: a rise now would needlessly risk America’s recovery.”
