FT opinion article: “The energy crisis gives the US a chance to woo big European companies”. If cheap natural gas can’t come to Europe, Europe will have to go the cheap natural gas. Thread #markets#equities#bonds#energy#ESGft.com/content/0a78d7…
1/According to the author European heavy industry has endured a grim few months. Although the fuel crisis appears to be easing and companies invest in green energy/efficiency some are also rethinking their geographic footprint.
2/The US now has an opportunity to woo European multinationals, with energy costs clearly playing a role in new investments. US has an advantage over Europe because natural gas supplies are local, reliable and consistently cheaper.
3/As companies cut their carbon footprints fossil fuel prices should become less important but the US is trying to retain the advantage via wind, solar and green hydrogen. But energy is not the only thing. European corporates also want stable politics and skilled labour.
4/US culture wars are painful for outsiders to navigate and there is risk over problems for EU companies that must comply with Brussels-driven climate change mandates. Russia has handed the US an opportunity for direct investment. Unless politicians blow it.
5/IMHO at least the article is honest. If there is a winner from the invasion of Ukraine (doubtful) it is the US. A significant part of European heavy industry was built on cheap Russian gas which is no longer an option.
6/If cheap natural gas cannot come to Europe, Europe will have to go to the cheap natural gas.
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FT opinion article: “How shadow banks threaten the global economy”. The Fed seems to think the financial world is separate from the economy. See how that works out. Thread #markets#equities#bondsft.com/content/d22ec3…
1/The author points out that the next crisis will arise from shadow banking “institutions”. Especially those that lend to corporates. They have a lot of debt, especially in the US, and the cost is set to rise.
2/Private markets are taking over from public ones, with investors seeking yield. “Swing a stick in Manhattan and you’re bound to hit someone involved in private lending”. Debt is now much higher.
FT opinion article: “The dollar’s rapid rise increases risks for global economy - Dangers are particularly acute for developing countries already facing number of crises”. Our currency, but your problem #dollar#Fed#markets#bonds#equitiesft.com/content/099cf5…
1/According to the author the recent rise in the dollar has attracted less attention than it should. In theory it should help exports by weaker countries and ease US inflation.
2/This year the dollar is strongly up due to expectations of more aggressive Fed monetary policy, economic outperformance and safe haven status.
FT opinion article: “Let the Fed put money where it is really needed”. She means CBDC. The problem is that the Fed now needs to take money away, not add to it. This is not going to end well. Thread #Fed#monetary policy #markets#bonds#equitiesft.com/content/0c8636…
1/The author argues that the Fed has overreached its mission. It has fuelled a shadow banking system and an asset bubble and will now have to create a recession in order to control inflation.
2/And politicians have been happy to outsource the decisions because they can then claim they are not to blame. The Fed is being asked to do stuff it is not qualified to do (same as the Supreme Court).
Bloomberg opinion article: “Big U.S. Banks Get a Little Taste of the ‘Doom Loop’ - Deepening bond losses cut into capital ratios, which put cash payouts to investors at risk.” Not only payouts. Thread #equities#bonds#banksbloomberg.com/opinion/articl…
1/According to the author US banks are getting a little taste of the European style bond doom-loop. When bond prices fall owners have to mark them to market which for a bank eats into their capital base.
2/In weak European countries this led to the fear that the banks would have to be bailed out, leading to strains in government finances, increasing risk and pushing bond prices further down. A vicious circle that still haunts Europe.
FT opinion article: “Central bankers should think twice before pressing the brake even harder - The war against Ukraine has brought a new negative supply shock on top of the old one”. Harder? Thread #bonds#equities#centralbanks#monetarypolicyft.com/content/41c248…
1/According to the author the invasion of Ukraine has silenced the debate about “transitory” inflation. But where central banks stood impacts how they react. Initially the idea was that inflation was the result of supply issues that could be ignored. This view lost out.
2/Central banks made hawkish turns and have painted themselves into a corner, as the Ukraine crisis has brought a new supply shock. Central banks committed to tightening when the second shock made things worse.