<Click on chart for larger image> The Associated Press – White House predicts record $1.47 trillion deficit New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends. That’s actually a little better than the… Continue reading The Deficit
The Financial Times – Lex: To reserve and protect In a perfect world, there would be no foreign exchange reserves. If a country ran the occasional current account surplus or deficit, it would quickly be neutralised by a stronger or weaker currency. Any policymaker with an interventionist bent would be banished to the corner, wearing… Continue reading Foreign Exchange Reserves
None Today
Comment Yesterday we hosted a conference call titled “Slowdown or Double Dip” (Handout Audio, Webcast) .
The Financial Times – Stock picks tough as asset paths correlate n mathematics, the number one has special properties. In financial markets it has taken on another significance. Since equities around the world peaked and then tumbled in April and May, analysts have noticed something unusual: sharply higher correlation. According to Barclays Capital, the level… Continue reading Asset Correlation
The Financial Times – Jean-Claude Trichet: Stimulate no more – it is now time for all to tighten The acute fiscal challenges across all industrial economies are no surprise. Our economies are emerging from the worst economic crisis since the second world war, and without the swift and appropriate action of central banks and a… Continue reading The Austerity v Stimulus Debate Continues
Calculated Risk – European Stress Tests and Bond Spreads The Committee of European Banking Supervisors (CEBS) will release the stress test results for 91 European Banks. The results will be released at 6:00 PM CEST (Central European Summer Time). That would be noon ET, although a few reports have suggested earlier release times (perhaps time… Continue reading The Stress Tests Are Here!
The New York Times – Mortgage Securities It Holds Pose Sticky Problem for Fed The Federal Reserve provided most of the money for new mortgages in the United States last year, effectively lending more than $1 trillion to American homeowners. Now the legacy of that extraordinary intervention is hanging over the central bank as it… Continue reading Federal Reserve Mortgage Holdings
The Financial Times – Lex: US Treasuries Japan’s bank deposits get an unfair press. A one-year Japanese bank account will deliver you a yield of 1.03 per cent after inflation; that is much better value than a two-year US Treasury bond, which, after the latest rush to buy bonds, is offering a real yield of… Continue reading Bernanke Says QE2 Is A Possibility
The Economist – Buttonwood: Losing confidence Looking at the dollar in the old-fashioned way The credit crunch also laid bare a conflict in central banking that goes back to the days of the gold standard. As well as safeguarding the value of the currency, central banks act as lenders of last resort. When push comes… Continue reading Gold And The Dollar
The Financial Times – Volatility gauges suggest trouble is brewing Ben Bernanke looks to have taken a leaf out of Donald Rumsfeld’s book. The former US Secretary of Defense spoke of “unknown unknowns” when quizzed before the Iraq war on whether Baghdad had tried to supply terrorists with weapons of mass destruction. This week, Mr… Continue reading Volatility
The Economist – China’s financial markets: Premium puzzle Enthusiasm for Chinese companies abroad but not at home OF THE many oddities surrounding Chinese stockmarkets, the most glaring has long been the premium mainland investors pay for shares listed domestically over what those same shares trade for in Hong Kong. Now the puzzle is why the… Continue reading China