News links for 12 Feb 2014
I will be going into a winter break on Sunday, so my owning posting may be sporadic next week. Other posts will appear as normal.
“The risks posed by emerging markets relate less to their own vulnerabilities than to deficiencies in the global financial architecture. Financial intermediation mismatches, volatility mispricing and co-ordination failure threaten a train wreck in emerging markets and an atypical spillover to the weakest developed economies. “
According to a recent study, inflation is the principal worry for citizens in Buenos Aires
Hospitals and clinics in Argentina are asking to raise prices in order to deal with increased costs from the recent devaluation. Either the government allows these kinds of price increases to go through or they will find some businesses shutting down and going out of business. This is the inflation predicament.
““Pesos are no use – the worst thing you can do is hold pesos.” “
“China is a big factor in this new dynamic. Today, the world is focusing on the implications of slower growth in China. But it also needs to start focusing on the role of Chinese banks as a source of liquidity for neighbours and emerging markets generally.”
” Many struggled to explain the unexpectedly buoyant trade figures, especially since Taiwan and South Korea both saw export sales slump in January, when the Lunar New Year holiday reduced the number of working days. Four separate purchasing managers’ indices also showed China’s factory and services sectors sliding to multi-month or multi-year lows in January as export and domestic orders fell.”
interesting viewpoint from China
Australia joins the group of countries saying monetary policy should be an offset to tighter fiscal. This is unbalanced and will end in tears.
““It’s simple — Kellogg’s is a highly profitable company and just wants to pay people less,” said Mr. Watts, who has worked at the plant for 28 years. “It’s just plain greed.””
“The National Federal of Independent Business said its small business optimism index edged up to 94.1 in January, returning to levels posted before the government shutdown caused the index to crater. Important for the economic outlook, small businesses owners are more upbeat about future sales and hiring plans.”
“The offering could be up to $3.5 billion with a final maturity of between 15 and 20 years, according to people familiar with the offering. Puerto Rico legislators have put forth a bill to authorize a sale of as much as $3.5 billion, according to an island government website. The final size hasn’t been determined and will likely depend on the level of investor demand, said investors.”
“Mr. Boehner’s retreat marks a major victory for President Barack Obama and congressional Democrats who have long insisted that the debt limit should be approved without conditions. Democrats and the White House contend increasing the borrowing limit is a routine measure needed to fulfill fiscal obligations already incurred. “The era of threatening default has to be over,” White House National Economic Council Director Gene Sperling said Tuesday at a breakfast hosted by the Christian Science Monitor.”
“Following strong performance in 2013, we expect low (1%–3%) defaults in leveraged finance markets this year. Issuance should remain healthy, and continued slow but steady growth in the U.S. economy should offer further stability to these companies. However, careful credit selection and monitoring of sector trends remain imperative. Investors with low tolerance for volatility and more interest rate sensitivity may emphasize loans, while investors with greater risk tolerance and a more benign outlook for rates may look to high yield.”
This interview is a train wreck
In anticipation of Hollande’s visit to the US, here are photos of French and American Presidents together over the last 50-60 years. Good photo review.