The
best articles from the ending week. Last week’s ‘best’ here.
Previously on MoreLiver’s:
EUROPE
Are we nearly there yet? – alphaville / FT
The short answer, when
it comes to eurozone adjustment post-crisis, is No. David Mackie and team at JP
Morgan reckon we are maybe halfway there.
Procyclical Policy for Germany – Krugman / NYT
Strange arguments
against fiscal expansion.
German
Constitutional Court: Hearing in June unlikely to provide definitive answers on OMT – DB Research
EU shifts policy focus in quest for growth – Reuters
After three years of
deep spending cuts, the European Union confirmed a shift in policy on
Wednesday, telling countries they must focus on structural economic reforms to
boost growth, while not abandoning budget discipline.
Banking union’s house of
twigs (with cut out and keep optionality) –
alphaville / FT
JP Morgan’s Alex
White: It has been clear for some time that this is not fully achievable in the
near term, because of the extent of the institutional journey required (likely
including the prospect of Treaty change).
ECB
OECD: ECB needs to come to
euro zone's rescue again – Reuters
Calling for bold steps
beyond just interest rate cuts.
Euro zone private loans contract, pressuring
ECB to act – Reuters
Loans to the euro
zone's private sector contracted for the 12th month in a row in April, raising
pressure on the ECB to take fresh policy action to help lift the bloc out of
recession.
Statistical press release:
Monetary developments in the euro area – ECB (pdf)
Press release: Financial
Stability Review May 2013 – ECB
Full pdf, key risks: 1) A further decline in bank
profitability, linked to credit losses and a weak macroeconomic environment 2)
Renewed tensions in sovereign debt markets due to low growth and slow reform
implementation 3) Bank funding challenges in stressed countries 4) Reassessment
of risk premia in global markets, following a prolonged period of safe-haven
flows and search for yield.
UNITED STATES
Too-Big-to-Fail Myths, Goldman Sachs Edition – View / BB
Too-Big-to-Fail Myths, Goldman Sachs Edition – View / BB
The largest U.S. banks keep rolling out new arguments to
counter the growing impression -- among lawmakers especially -- that they
present an unacceptable threat to the economy.
FED
Taper bomb-proofing – alphaville / FT
If or when the Fed
starts to taper, where will the pain land first? Barclays analysts Guillermo
Felices, Michael Gapen and Sreekala Kochugovindan have taken a shot at
answering that question expecting the Fed to start backing itself out at the
start of 2014
The New Tapering Normal Optimism In Charts – ZH
That all the increase
in risk assets has been on the back of multiple expansion for the past year is
by now not news to anyone. What may come as a surprise to some who have not
been paying attention, as Morgan Stanley conveniently reminds us, is that
corporate profits have been declining not for one or two quarters, but for two
full years now.
The Fed's tricky messaging:
Tapering is not tightening – Wonkblog / WP
Rosengren’s comments
signal yet another way the Fed could tailor its bond purchases to the economy
and do more with less. Maybe not only is tapering not the same as tightening,
but tapering could eventually lead to more easing.
ASIA
Primer on Japan in Four Posts – Marc to Market
Abenomics to make or break Japan – Nordea (pdf)
Or the summary.
Rethinking Abenomics – WSJ
What's going on in Japan? – Buttonwood / The Economist
Another sharp fall in Japan's stockmarket this morning (5.2% on the
Nikkei, 3.8% on the Topix) raises broader questions about the euphoria that
greeted the introduction of Abenomics.
Is This China's 'Minsky Moment'? – ZH
SocGen: Since 2009, China’s credit growth has outpaced nominal GDP growth
in every quarter except one (Q4 11)… The increase in credit demand is
disproportionally larger compared to the recovery in investment appetite so
far. This raises the question whether activity growth will really follow and if
so by how much?
CENTRAL BANKING
The view from Pimco – Buttonwood / The Economist
Artificially assisted growth and purchased financial stability may breed
shortfalls and asset bubbles * International and regional systems may fragment,
and growing income inequality may destabilize geopolitics * Supply shocks and
currency debasements may lead to higher and less stable inflation * Absent a
growth revolution, haircuts may increase over the secular horizon
Global Central Bank Focus May
2013: Into the Woods – PIMCO
Excess liquidity,
falling net issuance and higher correlations among assets complicate the
eventual exit that the Federal Reserve and other central banks must make from
their extraordinary policies. The Bank of Japan’s ideology has completely
changed to “tackling deflation” from “tolerating deflation.” The key focus in
the coming months will be how private sectors react. Investors who depend
chiefly upon central bank activism may put themselves at risk. They may need to
hedge volatility by ensuring their investments are built more on solid
fundamentals and reasonable valuations.
Three Measures of Central
Banks’ Effectiveness – The Big Picture
Fed, BoE, ECB, BoJ
compared.
There's
a problem with the transmission.... – Coppola Comment
Not only does QE fail when damaged banks aren't lending normally, but it
actually impairs the transmission mechanism itself. This might explain why QE
seems to become less effective the more of it you do. It's like hard water. It
gradually clogs up its own pipes.
OTHER
FX
Comment: take a breath! – Nordea
OECD
Economic Outlook – OECD
The global economy is moving forward, but divergence between countries
and regions reflects the uneven progress made toward recovery from the economic
crisis…Historically high unemployment remains the most serious challenge facing
governments.
IMF Searches Soul,
Blames Europe – WSJ
In the second of its mea culpas, the IMF examines past debt
restructurings and what could be improved in the future.
The IMF Revisits
Sovereign Debt Restructuring, Not the SDRM – PIIE
Stress Indicators:
Fixed income carnage? – TradingFloor
Steen Jakobsen: This week our Stress Indicators show signs of panic in
fixed income. The CRB commodity index is broken and the super cycle looks to be
confirmed while the US Index has decisively changed. Meanwhile, the IMF and EU
continue to play pretend-and-extend.
Things
That Make You Go Hhmm... – Grant Williams / ZH
37 pages of
goodies.
FINNISH
Koottu IMF-aiheinen tietopaketti
suomalaisille – Henri
Myllyniemi / US Puheenvuoro
Määritelkää vihapuhe – Hannu
Visti
’Kaipaatko devalvaatiota? Olet siis neuvosto- eikun
siis eurovastainen. – Tyhmyri
Euro-ovet sulkeutuvat yksi kerrallaan – Henri
Myllyniemi / US Puheenvuoro
Suomi ei saanut Kreikalta
vakuutta – HS
Kreikan uusi
lainajärjestely on todennäköinen, koska valtion velkaantuminen kiihtyy