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MARKETS
EUR
rates: Draghi delivers - Market impact and thoughts – Nordea
The ECB
almost emptied the chamber yesterday and markets in general were surprised by
the scope of the measures introduced. Huge question marks remain, not least on
the efficacy of the policies. New record lows for shorter rates and a massive
steepening of curves. Inflation swaps are bid, and real rates take another
tumble. We favor paying – but in specific segments and forms.
Fools
rush in: Why an all-equities portfolio is a loser´s bet – TradingFloor
The famous
Kelly betting formula applies to stocks as well * Based on S&P 500 data,
you should only bet 30% of your capital on equities * The smart investor plans
for the long term
Charlie
Munger’s Investing Principles – A
Wealth of Common Sense
Commodity
trading: End-to-end game – The
Economist
Banks,
harried by regulators and short of capital, are fleeing the commodities
business.
Screening
for stock trading candidates 1 – Adam
Grimes
Screening
for stock trading candidates 2 – Adam
Grimes
ECONOMICS
Three
meanings of "printing money causes inflation" – Worthwhile
Collateralising
your FDI – FT
Private
capital flows generate political risk — “haha, all your FDI are belong to us” —
and, without some sort of collateral, flows from rich countries to poor
countries will be held back.
Fiscal
pessimism – Pieria
When both
conventional “money” and other financial assets are highly liquid and fungible,
monetary and fiscal policy become indistinguishable. What does that imply for
price stability and the role of central banks?
Simplistic
theories of inflation
– Mainly
Macro
Money in
a Time of Zero – Krugman
/ NYT
Inflation,
Septaphobia, and the Shock Doctrine – Krugman
/ NYT
It's the
Inflation Fallacy, duh! – Worthwhile
Martin
Wolf’s ‘The Shifts and the Shocks’ – Review by Joseph Stiglitz – FT
The Nobel
laureate applauds a new analysis of the financial crisis by the FT’s chief
economics commentator
The
Exaggerated Death of Inflation – Project
Syndicate
Kenneth
Rogoff: Recognizing that inflation is only dormant renders foolish the
oft-stated claim that any country with a flexible exchange rate has nothing to
fear from high debt, as long as debt is issued in its own currency.
The
impact of capital requirements on bank lending – VoxEU.org
Since the
Global Crisis, support has grown for the use of time-varying capital
requirements as a macroprudential policy tool. This column examines the effect
of bank-specific, time-varying capital requirements in the UK between 1990 and
2011. In response to increased capital requirements, banks gradually increase
their capital ratios to restore their original buffers above the regulatory
minimum, reducing lending temporarily as they do so. The largest effects are on
commercial real estate lending, followed by lending to other corporates and
then secured lending to households.
‘Leaning
against the wind’: exchange rate intervention in emerging markets works – voxeu.org
Central
banks’ exchange rate interventions are typically attributed to precautionary,
prudential, or mercantilist motives. This column documents the prevalence of an
alternative motive – that of stabilising the exchange rate – in emerging
markets, where, despite heavy intervention, the Global Crisis saw important
deviations of the real exchange rate from its equilibrium value. Exchange rate
intervention is shown to be effective, but more so at containing appreciations
than depreciations.
Real GDP
per capita growth over the past 10 years: not what you’d think – FT
BIS says
we should follow the money – FT
One should
not ask what the real side of the equation means for its financial counterpart,
but what the financial side means for its real counterpart. The starting point
should be what happens in financial asset markets rather than in the goods
markets, domestically and internationally. Otherwise, there is a risk that the
financial side will be neglected.
Wage
stagnation: The big freeze – The
Economist
Central
bankers once used to inveigh against wage inflation. Guarding against a return
to the ruinous price-wage spirals of the 1970s was a constant preoccupation.
Now, throughout the rich world, wages are stuck.