Chutes and Ladders: Preview of BOE and ECB Meetings

The outcome of the Bank of England meeting will known first. Based on the dovish cast to the Sept BOE minutes and some recent comments, within the context of generally soft economic data, there is speculation that the BOE can resume its asset purchases program with a GBP50 bln purchase over the coming few months. This seems to be the consensus.

If the ECB does cut rates this week, the euro may respond positively as it may be associated with boosting risk appetite, especially ahead of the US jobs report, where the private sector is expected to have created about 90k jobs, half of which may be accounted for by returning strikers. A failure to cut rates may be euro negative on grounds that the crisis in the periphery is likely to worse, without easier monetary policy. Indeed both the ECB rate hikes this year triggered new widening in peripheral spreads over bunds

Hugh Hendry on the economy and the sovereign debt crisis

We’ve reached a very rare moment in economic history where the problem is greater than the ability of the politicians to respond

What can we learn from the policies that spurred the Industrial Revolution?

Some of the dominant policy issues of today – immigration, energy, the emergence of China – have their analogues in the great Industrial Revolution. The key government policies that laid the foundation for the Industrial Revolution in England include supporting the immigration of skilled workers, allowing for private ownership of farm land, weakening the unions of the day (the guilds), and addressing the energy crisis (in charcoal). And contrary policies in Italy and Spain – countries that were far wealthier and advanced than was per-Industrial Revolution England – derailed a similar revolution from occurring in continental Europe.
England would not have been anyone’s first bet as the cradle of the Industrial Revolution

Holders of Sovereign Debt

Here’s a great chart just released by the International Monetary Fund for Greece, Portugal, and Ireland as well as Japan, the US and the UK. Note that almost half of the US federal government debt is held by the Federal Reserve and the government itself, such as the Social Security trust fund. Add to that the 22 percent foreign official holdings (mainly central banks) and almost 70 percent of the debt of the U.S. government is held by non-market/non-profit oriented investors

Additional US dollar liquidity-providing operations over year-end

A statement by the Bank of England on market liquidity to be provided in co-ordination with other major international central banks

Increase in UK take home pay more subdued

Disposable personal income gains are moderating. In the UK, where the increase in consumer prices is the most elevated in the G7, income in real terms is declining and that has led to a gloomy picture of the UK economy’s prospects

Underwhelming Policy Response Continues

Markets stable but tone remains fragile. SNB expanded its sight deposit target; no EUR/CHF peg. BoE’s decision to stay on hold was unanimous. New measures announced by China boost CNY internationalization and integration with

After the FOMC, Norway and the UK

If the Fed does not do anything new, Bernanke and Co. risk disappointing the market and the fallout that may follow. QE3 at this juncture does not seem a likely and few observers disagree. After the FOMC meeting is out of the way, the policy focus will shift the Norway and the

Stagnant growth in UK take home pay

Annual growth on the VocaLink Public Sector Take Home Pay Index stands at 1.3% and in the private sector, growth has fallen to 2.9%

What Bernanke should have said?

These questions sound like Congress thinks the US will be the next Greece. And that makes them likely to turn the US into the next Japan. The Congressmen almost never ask questions. They are statements posed as questions to get Bernanke to back their ideological position. Here’s what Bernanke should do when he doesn’t want to answer questions. Why doesn’t he just do this: point to the debt ceiling debate and say to every single question he’s asked

Britain: public sector income growth lags private sector after pay freezes

Below are the findings of the recently released VocaLink Public Sector Take Home Pay Index. The VocaLink Take Home Pay Indices measure after-tax income as opposed to pre-tax gross income. So they are designed to reflect what Americans call disposable personal income

ECB in Focus

Dollar is little changed ahead of today’s ECB meeting and ADP report; stocks/commodities are steady. BoE holds steady, ECB is expected to deliver a 25bps rate hike; market focus likely to be on comments. Brazilian policy makers focus on verbal intervention; Hungary’s economic outlook skewed to downside