Monthly Archives:

May 2016

Robert Gordon’s “The Rise and Fall of American Growth”. An interview, and win a copy of his book.

Professor Robert Gordon of North-Western University was in town this week to give speeches at Prospect Magazine (which is ace by the way) and the LSE.  His latest book, “The Rise and Fall of American Growth” was released earlier this year, and is a tremendously powerful antidote to the wave of techno-optimism we might feel when we see shiny electric cars and gadgets coming out of Silicon Valley…

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China’s rising domestic bond defaults could spell offshore bond market rout

Chaori Solar and Baoding Tianwei will forever remain in the history of China’s bond market. In March 2014 the former became the first defaulter in the country’s onshore bond market whilst the latter turned out to be the first state-owned enterprise (SOE) default in China in April 2015. Since then, 24 other bond defaults occurred in the country, the majority of which in the manufacturing, metals…

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Will the €500 note trade at a premium or discount once the ECB stops printing them? The poll results are in…

Earlier this week Richard Woolnough wrote a blog about negative rates and tax on interest.  In it he also suggested that once the ECB stops printing the €500 note and ends issuance of its existing notes at the end of 2018, the legacy notes will trade at a premium.  The argument is that because the notes will remain legal tender across the Eurozone, demand for a note with the lowest storage cost…

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Negative rates – a tax on saving? Don’t forget about actual tax

There has been much discussion recently that by introducing negative rates central banks are effectively taxing savings. This is self-explanatory, and is one of the criticisms of how negative rates can distort economic behaviour. This however is not a new phenomenon.  Let’s not forget that money has always been effectively clipped by the traditional enemy of savers – inflation. Fortunately, hol…

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How severe is the current energy sector default cycle?

To date the defaults we’ve seen in the US high yield market have largely occurred in the energy/commodity sectors. To see whether this trend is likely to persist I spent some time comparing the current default cycle with that of the US telco sector in the early 2000’s (see also James’ recent blog for the parallels between today’s high yield market and that of 2001).

The telco bust occurred slig…

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