Links: 2013-02-03
News links for 3 February 2013
Japan Finance Minister Models Policy After 1930s Stimulus – Bloomberg
“Japanese Finance Minister Taro Aso says the government is imitating his Depression-era predecessor, Korekiyo Takahashi, who told the Bank of Japan (8301) to underwrite government debt to fund deficit spending.
“There is no one in the government, the bureaucracy or the BOJ who has experience in anti-deflation policy,” Aso said today in an interview on NHK television. “We can only learn from history,” he said, adding that the new administration is looking to Takahashi.”
“EXPECTATIONS are rising that Ireland could issue a new 10-year benchmark bond for over €2bn as early as this month in what would be a seismic step in its exit from the bailout.
Fergal O’Leary, a director of Glas Securities, said “There is speculation that the timing of a deal is likely in the coming weeks, perhaps before the end of February. The new issue will most likely be a syndicated bond.”
Dolmen Stockbrokers analyst Ryan McGrath said he “expects Ireland to issue new 10-year benchmark bond in early February, likely to be €2bn to €3bn in size and issued via syndication.””
This rally has legs, so ignore the naysayers and top up – Telegraph
I am not this bullish. In fact, I expect a significant correction (in US shares). But this is the bullish case for UK equities. It’s something you need to see to get a different view.
“slowly but surely over the next 12 months we are likely to see a rotation out of bonds and into equities. The worst fears about a bursting of a bond bubble are probably overstated but I do think that shifting asset allocation will provide a prop to shares this year.
Related to this, I am encouraged by the persistently poor sentiment towards equities (and interestingly towards UK equities in particular). The allocation of UK pension funds to UK equities is at a record low of under 10pc – partly that’s a result of a regulatory push to encourage greater ownership of bonds but it also reflects a greater preference for overseas markets.”
The Secular Bear Market in Stocks Is Over
Here is the bullish case for US equities. Definitely read it, even though I still think this is a secular bear market. This gives you a sense of what equities have in their favour.
“many institutions had record stock exposures at the 2000 bubble peak with a low exposure to bonds. Since then we have come full circle where many are now proclaiming the death of equities. Was that not the BusinessWeek magazine cover just a few years before the greatest secular bull market in history?”
Manufacturing expands for 11th month – Irish, Business – Independent.ie
“Ireland’s manufacturing sector expanded for the 11th straight month although the flow of new orders contracted for the first time in a year, a survey signalled yesterday.
While the sector is still expanding, the NCB Manufacturing Purchasing Managers’ Index dropped to 50.3 in January from 51.4 a month earlier, a shade above the 50pc mark that separates expansion from contraction.”
Twitter Hacked, 250,000 User Accounts Potentially Compromised – Mike Isaac – Social – AllThingsD
“Twitter disclosed on Friday evening that its systems had been attacked in the past week by an unidentified group of hackers. As a result of the the attack, the hackers may have had access to the usernames, email addresses and other sensitive information of nearly a quarter of a million twitter users.”
“The news had more than one report of Chinese hackers targeting United States media companies this week including the Wall Street Journal and the New York Times, and according to a blog post from Twitter, it seems the social media company faced security threats as well.”
“The story goes something like this – man has Android phone stolen, thankfully has Cerberus Security installed, proceeds to snap photos/video/audio recordings of the thief, informs police multiple times, police eventually arrive at thief’s house a day later, knock on door, thief hides, they enter, find phone, and return it to owner. But what’s so brilliant about the entire situation, is the 60+ page forum thread that goes along with it. “
La tasa de paro de Grecia supera a la española por primera vez en la crisis | Economía | EL PAÍS
Greek overall unemployment reached 26.7%, putting it ahead of the Spanish level for the first time since the crisis began. That means that unemployment in Greece is up 7% in just the last year alone. Yet, the country continues with austerity policies.
It’s not a collateral shortage, it’s a scarcity of collateral | FT Alphaville
“The key takeaway from Singh’s presentation: it’s not a shortage of safe assets plaguing the system, but a scarcity of assets that’s the problem.
And there is a big if subtle difference between the two.
In Singh’s mind, collateral is money-like. It has its own velocity as well as its own multiplier effect.
The issue, consequently, is not a shortage of assets per se, but rather the declining reuse rate of assets that already exist.”
Is the Euro Crisis Over? by Jean Pisani-Ferry – Project Syndicate
“The current change in market sentiment is also motivated by two significant policy changes. First, European leaders agreed in June 2012 on a major overhaul of the eurozone. By embarking on a banking union, which will transfer to the European level responsibility for bank supervision and, ultimately, resolution and recapitalization, they showed their readiness to address a systemic weakness in the monetary union’s design.
Second, by launching its new “outright monetary transactions” scheme in September, the European Central Bank took responsibility for preserving the integrity of the eurozone. The OMT program was a serious commitment, and markets interpreted it that way, especially as German Chancellor Angela Merkel backed it, despite opposition from the Bundesbank. Moreover, Merkel visited Athens and silenced the voices in her coalition government who were openly calling for Greece’s exit from the euro.
Unfortunately, however, there remain three reasons to be concerned about the future. “
More bad debts loom for cleaned-up Spanish banks | Reuters
“Spanish banks face rising bad loans in a deep recession that shows no sign of easing after getting through the worst of a deep clean of rotten property assets that gutted profits last year.”
The Big Mac index: Bunfight | The Economist
“At market exchange rates, the Canadian version of the burger costs $5.39, compared with an average price of $4.37 in America. By our reckoning, then, the Canadian dollar is roughly 24% overvalued relative to its American counterpart. In Mexico, by contrast, a Big Mac is just $2.90 at market exchange rates, suggesting the peso is 33% below its long-run value relative to the dollar. The greenback buys much more Big Mac south of the border than north of it.
The Big Mac index suggests that currencies are particularly overvalued in Norway, Switzerland and Brazil (see chart).”
Interfering with Traffic on Vimeo
US urban planners don’t plan for people, they plan for cars.
“Even if you’re not killed or injured, you can’t help but find much of suburban America inhospitable to walking. Just this week, Ben Ross reported in Greater Greater Washington that it took him eight and a half minutes to cross legally to the other side of a Maryland street, traversing 28 traffic lanes along the way. Two pedestrians had been severely injured at the same intersection earlier this month. Is it any wonder that, in the US, those with a choice choose to drive even the shortest of distances?”
Slovenia, Croatia Close to NLB Solution as EU Entry Nears – Bloomberg
“Slovenia and Croatia made progress toward resolving a dispute over Nova Ljubljanska Banka d.d., easing concern that Slovenia would fail to approve its former Yugoslav partner’s entry into the European Union.
The two countries are “close to a solution” in the dispute over savings of NLB’s predecessor, Slovenian Foreign Minister Karl Erjavec and his Croatian counterpart, Vesna Pusic, said late yesterday after talks in Brussels. Both ministers will meet again on Feb. 6 in Slovenia along with banking experts from the two nations to finalize an accord.
“After that meeting, I expect we will be able to start the approval process of Croatia’s European Union entry,” Erjavec told reporters.”
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