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slow growth china

Will slower growth in China trigger labour market trouble and strong policy response?

World economy

ZURICH | UBS analysts | Stable employment growth has always been a key macro policy consideration for China’s government. In the past, the government often used stimulus to maintain rapid GDP growth in order to create enough jobs and maintain social stability. Labour market resilience in the past couple of years may help explain why the government is tolerating slower growth. Despite slowing economic growth China has continued to achieve its annual new urban job creation target, even if non-farming employment and wage growth have cooled.

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 worth $2.8 trillion (€2.2 trillion).

 

Five Years After Start Of Financial Crisis, Wall Street Continues To Hum
Markets

Monetizing tax revenues: A new calling for central banks?

By Benjamin Cole via HistorinhasThe Swiss National Bank gave up trying to peg the Swiss franc to the Euro, and let the Swiss currency shoot to the moon. Some bankers were squeamish about a large SNB balance sheet, which the bank was garnering by printing Swiss francs and buying non-Swiss bonds.

falling-money-wallpaper
In Europe

Draghi’s D-Day

MADRID | By JP Marín ArreseThe ECB unleashed a monetary onslaught yesterday aimed at breaking the stubborn deflationary pressures and sluggish growth have shown up to now. The massive artillery barrage mercilessly pounded enemy lines  with tons of fresh money, leaving defenders no other option than  unconditional surrender. With all ammunition and reserves engaged in this breathtaking D-Day, the ECB would find itself helpless should its gamble fail. As previous landings ended in disaster, the issue now is whether this assault will work as planned. 

In Europe

What next Greece?

By Gabriel Sterne via MacroPolisIt is easier to write down big questions on Greece’s future; harder to answer them: (1)   Will Syriza win with an overall majority?; (2)   Will a new programme be agreed in time?; (3)   To what extent will it stay on track?; (4)   How much additional debt relief and financing will the Troika give to Greece, and in what circumstances?; (5)   If and when the wheels come off the programme, is an exit inevitable? Would it be managed or chaotic? One thing we can be sure about though. The scene is set for a political showdown, the likes of which the Euro-crisis has not yet seen.

48 Hour General Strike In The Greek Capital
In Europe

QE European style: €60bn monthly bond-buying until Sept 2016

MADRID | By Ana Fuentes | Amid huge market expectation, ECB’s president Mario Draghi unveiled THE operation aiming to spur growth in the eurozone: the European QE will consist of €1.1tn sovereign bonds purchases, or €60bn a month until September 2016, beginning in March. A crucial move in exchange for low risk sharing (only 20% of bonds purchased by ECB, 80% by national central banks; and Greek bonds are expected to remain out). The euro touched an intraday low of  1.1451 dollars.

Press Conference
In Europe

“NCB risk bearing should be traded-off against a big QE”

MADRID | By Ana Fuentes | Hours before ECB’s president Mario Draghi unveils its big easing program, we spoke to think tank Bruegel central banks’ expert Silvia Merler about an eventual national risk bearing. It could be a way to make QE more acceptable by Germany, she believes, although “it should be traded-off against a significant size” (meaning more than the €50bn purchases per month some market watchers are talking about).

QE wordcloud