Here are the ”best” from my posts of the ending week. Last
week’s edition here.
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EUROPE
Europe’s Bogus Banking Union – Project Syndicate
Europe's banking union may soon exist on paper. In
practice, the eurozone banking system is likely to remain fragmented along
national lines and divided between a northern “core,” where governments
continue to stand behind local banks, and a southern “periphery,” where
governments have run out of cash.
EUROPEAN CENTRAL BANK
ECB models trillion
euro asset purchase program: newspaper – Reuters
ECB has modelled the effects of buying a trillion Euros of assets to
ward off deflation, a German newspaper reported on Friday, a day after the
ECB's president said radical policy action might be needed.
Draghi Deflation
Fight Seen on Different QE Path to Fed – BB
While U.S. firms tap markets for about three quarters of their lending,
companies in the euro region rely on loans from banks for the same proportion
of their borrowing. That makes it harder for the ECB to use asset purchases as
a way to improve credit conditions for small-and-medium sized enterprises
A note
on the Feasibility ECB Quantitative Easing – Place du Luxembourg
If the idea is to increase consumption and investment where it is most
needed, it would make most sense to purchase Greek, Slovakian, Portuguese,
Spanish, Irish, Italian, Slovenian, Dutch and French assets, rather than
German, Belgian, Austrian or Finnish.
Has
the ECB actually moved closer to QE? – Open Europe
While there may be
‘unanimous commitment’ to using such measures when needed, it’s still not clear
what the criteria are for such action and it is even less clear that all
members of the GC agree on when such action would be needed.
The
€1,000,000,000,000 question, revisited – FT
Just because there is unanimity about being prepared to use nonstandard tools
does not mean that ECB governors agree on how bad things need to get to trigger
a policy response
Draghi’s
Hunt for QE Assets Leaves ECB Scouring Barren Market – BB
The ECB’s focus on ABS for monetary easing risks guiding it toward a
policy that might be slow to evolve and far smaller than the 1 trillion euros
($1.4 trillion) in bond purchases it has already simulated. Draghi has said
international regulators must change the rules on ABSs, yet those officials are
steering against the easy creation of complex products because of the role they
played in the global financial crisis.
So What Exactly Can
The ECB Do, Anyway? – Forbes
Frances Coppola: Like monetary easing, credit easing in the Euro area is
not as straightforward as it appears. The ECB’s hands are tied by the
institutional construction of the Euro, the lack of fiscal and banking union,
and above all by political intransigence. Unless there is a significant change
in attitude on the part of Euro area governments, I remain unconvinced that the
ECB can do much to ease either monetary or credit conditions in the Euro area.
Draghi Seen Easing
Policy by June as ECB Readies Rate Cut – BB
Almost two-thirds of respondents in the Bloomberg Monthly Survey
predicted the European Central Bank president will ease policy by June. Of
those economists, just under half said he may implement multiple measures
ranging from interest-rate cuts to asset purchases and long-term loans.
UNITED STATES
FEDERAL RESERVE
Hilsenrath:
Fed Worried About Misleading on Interest Rates at Policy Meeting – WSJ
ASIA
China says no major stimulus planned; March trade weak – Reuters
Chinese Premier Li Keqiang ruled out major stimulus to fight short-term
dips in growth, even as big falls in imports and exports data reinforced
forecasts that the world's second-largest economy has slowed notably at the
start of 2014.
MARKETS
Profit
Margins: The Death of a Chart – Philosophical Economics
Killing a chart, but
not the margin question – FT
Pivot Points, Tick and Vwap in
Day Trading – Fat Pitch
Simple is essential, because
timeframes are short and decisions have to be made quickly. There are a lot of
ways to day trade; this post is about just one of those. We can do everything
with just three tools: pivot points, tick and vwap.
The
Modern View of the Stock Market – Morningstar
The great insights of the 1960s, half a century later.
Mind the European
Equities Gap – WSJ
European equities have performed strongly over the past year. Unlike
earnings, which have broadly flattened out after drifting lower since 2011. The result is a widening gap
Guide to the Markets Q2 2014 – J.P. Morgan
Worldview
1Q 2014 – J.P.
Morgan
Blogs review: High frequency trading – Bruegel
Michael Lewis’ new
book “Flash Boys: A Wall Street Revolt” has unleashed a huge controversy about
the economic benefits and costs of high frequency trading (HFT). For the
author, this new breed of traders use sophisticated algorithms and fast
computers to effectively front-run trades, a practice that is illegal if
performed by humans but which remains legal if performed by computers.
ECONOMICS
World
Economic Outlook: Recovery Strengthens, Remains Uneven – IMF
Unconventional
Monetary Policies Spell Success in Any Language, Fed Paper Says – WSJ
Central banks in the U.S., Japan, the U.K. and Europe all have resorted to
unconventional policies in recent years to combat the global financial crisis
and recession. The details have differed across international borders, but in
all four cases, they’ve proven successful in terms of easing overall monetary
conditions, according to new research from the Federal Reserve.
FINNISH
Minkä
hintojen soisitte nousevan, pääjohtaja Liikanen? – Jan
Hurri / TalSa
Arkielämän alituinen kallistuminen ärsyttää
tavallisia kuolevaisia mutta ei keskuspankkiireja. Heistä hintojen on syytäkin
nousta, jotta "hintavakaus" säilyy ja talous pysyy vauhdissa. EKP
harkitseekin inflaation kiihdyttämistä "kysyntää kannustavaan" nousuun.
Se on jäänyt kertomatta, minkä hintojen olisi hyvä nousta – ja mitä iloa siitä
olisi kansalaisille.