FT Alphaville

Bernanke’s testimony to the Joint Economic Committee

Cardiff Garcia — Wed, 22 May 2013 14:18:14 +0000

It’s starting now, and you can watch it live at C-SPAN.

We have a feeling that the nuances of this passage will be lost on some members of the Committee:

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A Japanese frenzy?

Paul Murphy — Wed, 22 May 2013 14:17:30 +0000

Yes, the rally in Japanese equities has caught many an eye. There’s been hardly a step backwards in six months.

Yet prices seem to be accelerating from here. With the Nikkei 225 already up 1.6 per cent on Wednesday, closing at 15,627. Here is the after-hours action, courtesy of the CME:

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Swiss negativity, free lunches and the IMF

David Keohane — Wed, 22 May 2013 10:32:18 +0000

Everyone has an open mind about negative rates these days… Swiss National Bank chief Thomas Jordan has said he certainly does following this piece of repeat advice from the International Monetary Fund’s annual report on Switzerland (our emphasis):

The conjuncture of Switzerland may render some of the potential drawbacks [of negative interest rate] less relevant than in other countries. Activity in the interbank market is already very low, as all banks have excess liquidity. Switzerland is experiencing strong credit growth, particularly in the mortgage market. The impact of negative interest rates on mortgage rates depends on the pass-through.

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Markets Live: Wednesday, 22nd May, 2013

Paul Murphy — Wed, 22 May 2013 10:02:44 +0000

Live markets commentary from FT.com

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The (early) Lunch Wrap

FT Alphaville — Wed, 22 May 2013 09:46:33 +0000

Bank of Japan maintains asset-buying programme || Sony board discusses Daniel Loeb proposal || Taxing Apple || RICO and SAC || Gupta challenges U.S. wiretaps in appeal || Japanese trade data disappoints || Dimon prevails on dual role || Immigration legislation sent to Senate || Temasek raises stake in ICBC as Goldman exits || Fiat Industrial aims to move its tax residency to the UK from Italy || Italy considers plan for older workers to ‘handoff’ to younger generations || Markets || FTAV's latest

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About China’s capacity to absorb more capital

Kate Mackenzie — Wed, 22 May 2013 09:30:50 +0000

We’ve all heard, many times, the story that China’s capital stock is nowhere near that of more advanced economies, therefore it will inevitably increase. And we can count on continued efforts to build roads, buildings, airports, and other infrastructure — just look at how the less-developed eastern provinces have been pouring money into new projects, the argument has gone, more recently. Or went.

We really hope it’s not necessary, here, to go into the weaknesses of that argument. Here are a few places to start, but it’s partly a causal problem — does growth cause increased capital stock or vice versa? What kind of growth are we talking about, anyway?

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The 6am Cut London

Kate Mackenzie — Wed, 22 May 2013 04:38:20 +0000

Asian stocks held gains, the Nikkei rose 1.1% and the MSCI rose 0.3%, headed for its highest close since June 2008. (Bloomberg)

Bank of Japan maintains asset-buying programme: The May monetary policy statement made no mention of recent rises in JGB yields, and said its decision came amid signs of “positive movement” in the economy. (Financial Times)(Statement)

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BoJ maintains, but Abenomics is still hard

Kate Mackenzie — Wed, 22 May 2013 04:23:06 +0000

The Bank of Japan’s May statement on monetary policy is out, and it’s basically a big MAINTAIN on its ‘quantitative and qualitative easing’ (QQE) programme.

If anyone was anticipating the BoJ might take this opportunity to point out it is mindful of recent rises in government bond yields — and apparently some were expecting this sort of reassurance, possibly even tweaking maturities purchased — they would be disappointed. Equities traders just seemed relieved that their rally will continue.

However one member, Takahide Kiuchi, proposed the 2 per cent inflation target shift to a “medium to long term” and the new QQE plan itself be designated as “an intensive measure with a time frame of about two years”. Kiuchi’s proposal at this meeting was voted down by the other eight board members. The central bank has, however, already revealed that some members are concerned about the risks of its QQE plans hurting retail investors in Japanese government debt.

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The Closer

Joseph Cotterill — Tue, 21 May 2013 21:24:11 +0000

FURTHER FURTHER READING

- Why Jamie Dimon remains both chairman and chief executive of JPMorgan: because he makes money, and because he makes money. (But is that a chairman’s job?)

- No more economist superstars?

- Watch what they do, not what they say, Dodd-Frank lobbying edition.

Continue reading: The Closer