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Draghi will push to include Greek and Cypriot junk bonds in ABS drive

Markets

MADRID | The Corner | The ECB president announced his intention to push for the central bank to accept Greek and Cypriot bank loans with “junk” ratings to bolster the frail recovery in the Eurozone’s periphery.

 

In Europe

ECB’s QE: how it can really work (or fail)

MADRID | By Javier Arce |  The true danger of a third recession in the eurozone can dissipate, and quickly. Only if after the stress test and the banking union, the euro’s depreciation, the EQ, the takeover of Juncker and its new Commission… we realize that we live in El Ejido, and not in Hernani. Let me explain that.

BCE's QE
Markets

Hedge funds face the scrutiny of the market

WASHINGTON | By Pablo Pardo | Steven Cohen, James Simmons, Ray Dalio, John Paulson… And, above all, of course, Julian Robertson and George Soros. Hedge fund managers have been lionized, adored, despised and hated. And for good reason: the success of those investment vehicles is unparalleled. According to the New York Times, there are currently 10,000 hedge funds in the world, and the number is growing, with assets of $2.8 trillion (€2.2 trillion).

 

World economy

Steady progress toward US full employment

LONDON | By Rajiv Setia and Anshul Pradhan at Barclays | Developed rates markets rallied globally over the past week, led by the long end, largely in response to the across-the-board underperformance of risk-assets. Figure 1 shows changes in ED-implied rates on the day of the September FOMC meeting, as well as the change from pre-FOMC levels to now. 

US full employment
World economy

Forsaking the Fluff, China Joins the Cloud

BEIJING | By Qin Min via Caixin | Government agencies are leading a shift to cloud-based computing to save money and promote a new industry.

china-sculpture-dragon-house-sky-clouds
World economy

The degree of “great” in “Great Stagnation” is a choice variable

SAO PAOLO | By Marcus Nunes via Historinhas | Scott Sumner writes “What kind of Great Stagnation?” It seems to me that the Krugman/Summers view has three big problems: The standard textbook model says demand shocks have cyclical effects, and that after wages and prices adjust the economy self-corrects back to the natural rate after a few years. Even if it takes 10 years, it would not explain the longer-term stagnation that they believe is occurring.

great stagnation
In Europe

Catalonia independence: not a divorce, but a fiscal pact

MADRID | The Corner | There is nothing better than politics to add volatility to the markets. After Catalan leader Artur Mas formally convoked a Nov. 9 referendum for Catalonia independence, the Spanish government is holding an emergency cabinet meeting Monday to launch a lawsuit aimed at blocking the vote. In the short term this clash could widen spreads in Spain and affect domestic banks with exposure to Catalonia, Morgan Stanley pointed out. The most probable scenario is a fiscal agreement, they believe.

catalonia independence