I reckon it must be quite tough at the moment to be an analyst or a money mover/manager. This is not only because of difficult markets and a very opaque economic outlook, but more so because as we move into year's end we are flooded by a veritable tsunami of' [...]
If the theoretical discussion in the context of monetary policy, through most of 2009, has been centered on the different tools disposable to central banks in the form of unconvetional measures it seems almost certain that 2010 will be all about putting theory into action. Most notably is of [...]
[Update: Ok, that was an unduly quick write-up; the worst spelling errors and typos have been corrected accordingly]
[Update 2: This post is also featured over at Seeking Alpha where the comments are coming in nicely. Go have a look although I should warn you that some of the comments [...]
The excellent research edifice at the Bank of International Settlements have conjured up one of those papers which needed to be written (by Claudio Borio and Piti Disyatat) on the back of the myriad of different monetary policy responses we have observed in the contex of the economic crisis. [...]
"In my view … it is impossible to understand this crisis without reference to the global imbalances in trade and capital flows that began in the latter half of the 1990s." Bernanke (2009)
Executive Summary
As I am preparing for a tournament this weekend in Sweden I only have time for some random shots, but then again; taking random shots seem to be exactly what the markets are all about at the moment. The first such random shot came from today's release of the
Update 2: Mr Singh has left a comment below in response to my piece. Go check it out.
Update: Mr. Singh posts the third and, as far as I know, last installment in the series on Asia's outlook written on the basis of the Regional Economic Outlook for the Asian' [...]
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It is indeed an old adage that while goods things are to be preferred over bad things it is possible to get too much of the former. Looking at recent comments from the governor of the Reserve Bank of Australia it is not difficult [...]
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Last week, we learned that industrial production rose yet again in Japan clocking in at 1.4% month-on-month in September after having increased by 1.6% in August.
Companies said they planned to increase production in October and November as well, indicating the recovery from a [...]
As a puny yet honest attempt to show you that I actually read other things than plain economics I thought that I would share this piece with you on declining nomadism amongst Americans; it is written for Newsweek by author Joel Kotkin. I am not quite sure whether he [...]
... at least not yet that is. Let us see how the rest in Europe will fair.
U.K. gross domestic product unexpectedly dropped in the third quarter as enduring slumps in services, manufacturing and construction kept the economy mired in its longest recession on record.
Gross domestic product dropped 0.4 [...]
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Nothing good lasts forever, or so at least many would have us believe. I shall neatly leave it aside of whether this is true in a general sense but merely note that it appears that we are moving closer [...]
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After a nice and entertaining week in Barcelona where I had the privilege not only to hold a seminar at the Universitat Autònoma de Barcelona, but also to meet a host of interesting people, I thought that it would be about time that I finished [...]
I know that I tend to harp quite a bit about this theme, but I also trust that my readers by now will be well be used to it. One of the main interesting things about the notion that ageing might be related to export dependency is that while it [...]
I am not an ardent watcher of the Australian economy so I shall leave it neatly to the side of whether this was expected or, Bloomberg so famously puts it, unexpected.
Australia’s central bank unexpectedly raised its benchmark interest rate from a 49-year low and signaled further increases [...]
I am a sucker for a good argument presented with the correct dose of eloquence and cold facts, and John Hempton's latest tour of the balance sheet of the Spanish bank BBVA is just that. Essentially, John sets out to address the question of whether Spanish banks are hiding [...]
The analysis that follows accompanies Manuel's political overview, over at GEM, of the recent events in Germany as well as Edward's economic survey of the current state of play in the German economy. Essentially we are going to have a look at, arguably, one of the more salient [...]
In case you had not noticed, Germany has spent this Sunday electing a new government and judged by the incoming bulletins the current chancellor Angela Merkel will be getting another term, with another coalition mind, and thus the dubious honor of leading Germany out of its worst recession in [...]
I should immediately reassure my readers that I am not going to re-account or even continue Macro Man's story of 2007 in which Sherlock Holmes was looking for a vanishing bid in risky assets. Also, I am not sure that we are actually looking at a bid which [...]
This one should really go on Beta.Sources, but I thought that it derserved attention over and above the fold too. It is a couple of years old, but still well worth a look; hat tip (an old BW blog post).
We investigate the consequences of demographic change for business [...]
As the discourse is slowly but surely tilting towards exit strategies, by part of central banks, from ultra low interest rates and unconventional measures the BOJ opted to day to maintain a very cautious stance towards the incoming green shoots and whether they will prove enough to lift Japan [...]
What follows is the reason that last week was completely quiet here at Alpha.Sources. Essentially, I was working away on a detailed look at the ECB's balance and the related question of whether we can call, what it is that ECB the is doing quantiative easing or not? Needless to [...]
Sorry for the hiatus, but I am preparing a large note on the ECB, whether it is conducting QE or not, what QE at the ECB is, and finally what the prospects of an exit strategy is. This has taken most of my time the last week. I will be [...]
Much pomp and circumstance was certainly made in relation to the fact that Japan actually grew in the second quarter at a full annualized 3.7 percent in the second quarter of 2009. Yet, the underlying numbers to suggest a recovery are still sorely missing. Deflation now seem to have taken [...]
[Update: Some additional comments have been posted on this, not least the response of VP which can be found in its full length (+the Iberian Equity piece) here and here. Edward adds some points on AFOE and FT's Alphaville elaborates further as well.]
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Who does not like [...]
I am rushing but would be remiss, of course, if I did not mention Sunday's landslide victory of the DPJ in Japan which marks an end to a +50 year reign of the conservatives.
from the BBC;The DPJ has won 300 seats in the 480-seat lower house, ending 50 years [...]
Before I left for my summer break in Greece I asked, among other things, whether Hungary was trying to escape original sin or more specifically (and implicitly) whether Hungary is using the current relatively favorable market environment to claw back control over monetary policy. Recent comments from central [...]
A preliminary apology is in order. What follows is uber wonkish and should be consumed preferably in small quantities. In fact, I am not sure that I have gotten everything right yet. Of course, we never are but in this case it is an important point to make up front. [...]
With fear of stating the obvious, I have returned from Greece and baring any unforseen events, regular services shall return at Alpha.Sources within the next few days. I am preparing a bumper piece on a the theoretical link between export dependency and ageing (very long and very wonkish!), so [...]
Just as most people, not to mention school children, wind up, here in Denmark, to re-emerge from their holiday I will be pulling the plug and kick start my two weeks break. Especially this last bit about pulling the plug will of course be difficult and I [...]
Not everything should evolve around economics and finance here and thus to prove to you, my dear reader, that I also do take an interest in other matters I thought that I would share the video below of a lecture given by Professor Christopher Dye (go here for full [...]
China! China! burning bright
In a bubble, Day and Night
Is it Bust or is it Boom
That frames thy fearful asymmetry?*
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Can you feel it? That calm and soothing feeling of low volatility and heaven bound risky assets driven by green shoots and second derivatives. Well, [...]
According to the well known textbook in international economics by Maurice Obstfeld and Paul Krugman [1] the notion of original sin refers to the fact that many developing economies are not able to borrow in their own currencies but are forced to denominate large parts of their sovereign debt [...]
Edward is already plugging this article by Daniel Gross over at Demography.Matters but I think it is important enough to deserve circulation here at Alpha.Sources too. Basically, Daniel gets to the heart of the matter in terms of Japan when he argues that one of the principal reasons [...]
Update: Warren Sanderson who is one of the authors of the paper discussed in this entry has dropped a comment with some additional information about the data they use and where to go if you want more of this kind of population wonkery.
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As many of the readers of this space [...]
Like I noted in the small snippet I posted on Facebook on this (hint: add me), I really don't want to beat a dead horse here and although I already gave it a kick in the context of the release of the May consumer price data I do' [...]
Please note that all pictures can be seen in a bigger format by clicking on the which will open a new window or tab.
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"Being a Keynesian means being a Keynesian in both the good and bad times."
Andres Velasco (Finance Minister in Chile) [1]
It has been a while since I last [...]
The latest piece of news of Japan does not make for happy reading I am afraid and although we have seen some tentative signs, as of late, of a stabilisation this has to be very preoccupying for Japanese policy makers. As Edward pointed out recently, the rise in [...]
I should of course extend an apology to my readers for not posting more in a week when Macro Man has been speaking of a "catalyst" and when both the Fed and the ECB made important announcements (although I am not so sure what the Fed [...]
Here at Alpha.Sources and elsewhere, I am harping a lot about the economic effect of demographic changes. However, demographic changes not only entail economic changes, but also social changes and quite often these two go hand in hand. A recent piece by Nicholas Kulish in the NYT provides a [...]
It is not often that you come along a piece with which you disagree so strenuously as I do with the analysis fielded by MoneyMorning's Martin Hutchinson on Germany, so when it happens you should of course not miss the opportunity to pick a fight. Now, I should tread [...]
I will forgive my readers if they think that my coverage of the recent debacle surrounding the potential for an imminent devaluation in Latvia has been a bit asymmetric. I mean, here I was; throwing fuel on the bonfire when it looked as if the cracks would make the edifice [...]
[Update: Macro Man chimes in on Monsieur Steibrueck comments;
Perhaps the most amusing comment from the weekend came from German FinMin peer Steinbrueck, who warned of further credit dislocations in Europe, putting his marker down to cover his ass in case it all goes wrong. Evidently, winning "European Plonker" [...]
[Update: Stefan Karlsson discusses a similar issue in the context of the entire Eurozone]
I am passing on the mic to FT's columnist Wolfgang Munchau this afternoon. Consquently, I think this is a very well argued piece which gets to the heart of the matter on the global economy' [...]
As Brad Setser points out today, it is difficult to find the alleged green shoots and second derivatives in today's release of Korea's trade data. True, exports in Korea did pick up in April but are now down in May on a monthly basis and on an annual basis [...]
Peering out of the window on a rainy and cold Sunday (election) afternoon in Copenhagen it is difficult not to paraphrase, yet again, one the Economist's many classic cover stories but really; it sure has been one hell of ride this week in Latvia. One wonders whether politicians [...]
Update: As you can imagine I am writing these things on the fly, so I have corrected a few minor things. First and foremost I have amended the issue about the original limit set by the IMF for the budget deficit at 7% which is not quite right. Secondly I [...]
Is actually the name of an econblog off of which Alpha.Sources get a substantial amount of backlinks. However, it is also a fitting emblem on a day when the hitherto biggest automaker in the world (GM) finally, one is tempted to say, files for bankruptcy. Of course, it will [...]
It is not the premiership title and it is certainly not the CL, but we will take what we can get. A big congratulations to the boys and Mr. Hiddink who sadly will be leaving the club. A nice season after all although Chelsea, of course, [...]
It appears that there is still some green shoots left in the news from Japan even though the underlying picture is one of deteriorating fundamentals. We learned recently how Q1 was absolutely horrid in Japan with out declining at an annualised 15.2% which, I a dread to say, are [...]
Even when liars tell the truth, they are never believed. The liar will lie once, twice, and then perish when he tells the truth.
One thing which is certain at the moment is that the rumour mill is grinding hard and that it is very difficult to get a clear picture [...]
Daedalus warned his son not to fly too close to the sun, nor too close to the sea. Overcome by the giddiness that flying lent him, Icarus soared through the sky curiously, but in the process he came too close to the sun, which melted the wax. Icarus kept flapping [...]
[Update: Brad Setser comments below noting that it is not necessary for an economy with a (the) reserve currency to run a deficit. Clearly, he is right here and I stand corrected. However, as I also argue, I still think that whoever will become the new reserve currency (be [...]
Sitting here on a murky Sunday morning in Copenhagen your author has had one of these recurring, but important epiphanies. He just realized, again, that the internet is a wonderful place; you think you know most of the interesting sites and most of the places which are compatible with your [...]
[Update: When I first published the article, the original Bloomberg piece by Ron Harui and Yasuhiko Seki was undergoing an update (I think), so I could not include the quotes I really wanted. I have done that below and I would add that it is actually a very interesting piece [...]
In one of his recent columns the Economist financial markets pundit Buttonwood declared the end of carry trade pointing towards the fact that the low volatility environment which characterised the glory days (2002-2007) of the strategy has now ended. In a way, I agree and in then again not [...]
One cannot fault the good journalists for trying, one really can't. Yet, as hard as they tried they could not get President Trichet to concede that the ECB has now entered some form or state of quantitative easing as well as they could not wring an answer' [...]
This certainly looks interesting. I am talking about a recently held conference sponsored, in part, by the Stanford center of Longevity about ageing in Asia, its implications, manifestations and consequences. The list of panelists is impressive and includes the likes of David Bloom from Harvard and Andrew Mason [...]
It is no secret that the author of this space, at times, has been rather critical towards the ECB. The reason has not been so much for its de-facto inability to amend the situation in the sense that this is an inbuilt characteristic of the system, but more so because [...]
There certainly has been a lot of commotion surrounding the emergence and rapid spread of the recent new strain of flu known as H1N1 (or Swine Flu). The way I see we can only hope that this particular flu does not get too much out of hand and that [...]
[Update: Stefan Karlsson responds to this small snippet, taking me to task on the fact that I ascribe the relative overperformance of Chile's economy to sound government policy. Specifically, he notes that the reason the Peso might have performed better in recent months (i.e. during the worst bouts of' [...]
ARE carry trades back in Vogue? With all the talk about second derivatives, equity rallies, and for my own part spring sensation in the market place this question is, I think, a natural one to ask. And by all means, I am not the only one who is asking [...]
It is out (hat tip: Econbrowser) or at least chapters 3 and 4 are whereas ch. 1 and 2 won't be available until the 22nd of April. The main page can be found here, where there are also links to webcasts where senior staff economists at the IMF' [...]
In case you were wondering why comments are suddenly shooting up on my posts I am sad to announce that it is not as a result of Alpha.Sources morphing into a discussion forum à la Macro Man or Economist's View. Rather, I have been Pommered the same way as [...]
First of all, I hope that my readers have passed a nice couple of days with their families and friends and that they are ready to pick up the baton again here after Easter. One who sadly will not be joining us as we move forward [...]
Even though the big news of this week undoubtedly is represented by the one trillion session in London and the smaller than expected nudge from the gents at Kaiserstrasse I am going to wonkishly stay on the topic with respect to my latest long piece on the [...]
Last time I had Japan under the loop I asked whether there was no end in sight for Japan's economy and as I wind up for another close look, I must say that it is still very difficult to find good news if any at all.' [...]
WHO is Raising rates? The immediate answer to this question would seem to be; not many. On the contrary, most major central banks and now also their peers in the emerging world seem to have come to the conclusion that to counter the crisis, they need to apply both conventional [...]
I am moving in blindly behind Macro Man in his reiteration of the shock and awe effect of today's announcement by the Fed that they are going to do pretty much what it takes and most important that they now will be buyers of [...]
Update: Well, to think that the SNB's nudge towards QE would have a "lasting impact" on the market's view on the condition in the CEE was perhaps a bit too optimistic. At least, it seems so and thus I reiterate Nigel Rendell's comments, (Nigel is senior emerging-market currency strategist' [...]
"Only takes one tree, to make 1000 matches Only takes one match, to burn A thousand trees, A thousand trees" - Stereophonics
I have on occasion been turning to the lyrics of the English rock group Stereophonics when events in the economy and the market have eluded and essentially confused [...]
Quantitative easing is certainly all the rage at the moment after this week saw the Bank of England move interest rates down 50 basis points to the level of 0.5% and, effectively, into QE. Over at Morgan Stanley, Manoj Pradhan talks about a new global QE scheme even [...]
The following is a joint effort by me and Edward Hugh and if we are both individually prone to writing long and (sometimes excessively) winding entries a combination is bound to be long and ugly; well, the former at least. Surely, it seems, in Macro Man's words that [...]
It appears that many of us have had quite a bit of a weekend these past days. Sitting here in Barcelona’s airport I can look back at some very nice dinners and conversations in the company of friends and colleagues as well as the odd stroll down La Rambla. I [...]
As my readers may have noticed I am pretty much letting my colleague Edward running the show at the moment in terms of detailing the fall from grace of European economies. It is funny to think about how it is under a year ago that the notion of decoupling was [...]
“If you gaze long into an abyss, the abyss will gaze back into you.” - Frederic Nietzsche
“When you get that close to the abyss, you can always jump tomorrow.” - Unknown
For reasons your author shall not belabour his readers with, he is feeling none to good this [...]
It is not only economic data and the punditry and commentary following this which is all at rage at the moment, so is a growing mixture of more or less interesting debates amongst (academic) economists about public spending v. tax cuts, bloodletting v. actually doing something and, as it were, [...]
Actually my good friend Veronica Preotu beats me to it , but since I think it is important I believe an additional shout is in order. It has been a couple of months since I let my subscription lapse on the Economist, for no particularly reason really. I [...]
[Update added below; RGE's analysts take a thorough view on the emerging world]
... is getting increasingly difficult at the moment. Take Hungary for example. I take it that most economic commentators and analyst know that it is bad in Hungary and together with Ukraine I would submit that' [...]
[Update: I have added a couple of graphs (PMI and another one on industrial production); especially the former is really interesting as a forward looking indicator.]
As I wind up, post exam session, for some serious economic analysis it is to an economic landscape which is increasingly looking like a surreal [...]
Exams are almost over and thus I will be winding up work again here at Alpha.Sources. One immediate question is of course where the h'll to start? Clearly, the situation has went from bad to worse and 2009 looks set to become the economic year to forget.
The first thing I' [...]
I don't know whether anyone ever had the temerity to argue that central banking is boring. Of course, one could always argue that central banking and monetary policy are supposed to be boring in the sense that the central bank should be blindly following some version of a Taylor rule [...]
The following describes the menu of five courses which will be served for a select number of students during the month of January 2009. Students from the Erasmus program has been free to choose their own menu but in the following only slight deviations will occur from the more general, [...]
The ink on the post below suggesting that I would wind down for Christmas (and exam preparation) has hardly dried before I am forced back into action (more or less that is).
And the occasion?
Well, I am not going into too much background here, but one event important to remember (out [...]
With the danger of stating the obvious it is quite clear that the posting has been a bit low here at AS this latter part of 2008. This unfortunately will last a little longer although I hope that I will have time to move in on occasion with some observations.
Markets [...]
Once again, I am flattering an entry with a picture taking here in Switzerland where I am currently entertaining courses at HEC Lausance. As you can see, it is a beautiful place and also, as it were, very interesting with respect to tail fume [...]
Today it is precisely one month ago that yours truly noted that he was swamped. He still is, but even though your author is still struggling to meet the quantitative demands of neo-classical graduate economics (especially, the statistical vintage) he still thinks that now might be as good a [...]
I guess you may have noticed that activity has hit a trough here at Alpha.Sources. The reason? Well, apparently, you author has managed to position himself right smack in the middle of a viper's nest in the form of the first year courses of the MSc in Economics at HEC' [...]
This is really an update to the post below, but since I am not blogging as much as I would like to at the moment (school is tough this semester) I thought that I would attempt to ensure as much above the fold milage as possible. As such, and as [...]
Needless to say that yours truly is finding it rather difficult to sit at the library doing advanced statistical derivations and proofs on a day where global central banks decided to collectively pull out the big sledge hammer in the continuing effort to quell the worst financial crisis since [...]
Update: It is hardly as if financial markets are leaving us with much time to catch our breath at the moment. However, if you want to peruse the topics below further, this entry already has 4 comments and the edition over at Seeking Alpha many more. Plenty of [...]
That didn't go as expected now did it?
U.S. stocks and oil plunged and Treasury bonds rallied the most in two weeks after U.S. lawmakers rejected the Bush administration's $700 billion financial rescue.
The Standard & Poor's 500 Index fell as much as 7.2 percent, the most since Oct. 26, 1987, [...]
It is not as if financial markets are short on action at the moment, and financial pundits and analysts are certainly being served an ample amount of ammunition from which to draw inspiration. In this light, I am sorry to report that your author here at Alpha.Sources is still [...]
It has been a while since I last had Japan under the spotlight where and where I noted that Japan almost certainly would be tumbling into or very close to recession. Since then, data have been pointing only one way really and with the recent downward revision of an [...]
So goes the title of one of Shakespeare's plays, and as I am slowly adjusting to life in Lausanne and its beautiful environnements I am forced to admit the truthfulness of this axiom. Consequently, and while I have now settled down in a nice [...]
;)
Unlike Edward who spends part of his holiday in and around the lighthouses of Costa Brava keeping track of the Eurozone economy, I am actually going radio silent for the next week or so. As you can consequently learn by dissecting my site profile the autumn/winter [...]
Like I said in my weekend thematic summary I have been working on a country analysis/outlook for Chile. Now, why the heck am I writing about Chile now, you might ask. Clearly, some are already busy telling me to shut up all together, or to stop saying [...]
