Article: Pimco: Asia’s hunt for energy will drive bond issuance
Pimco: Asia’s hunt for energy will drive bond issuance http://blogs.ft.com/beyond-brics/2013/05/21/pimco-asias-hunt-for-energy-will-drive-bond-issuance/
THE house-price boom that preceded the financial crisis was remarkable for its scope and scale. With few exceptions, there seemed only one way for prices to go: up. Things have been more diverse since then. In The Economist’s latest round-up of residential house prices, property markets are both reflecting and reinforcing the “three-speed” global economy. Prices are rising at a robust rate in developing countries like South Africa, where they are up by 11.1% over the past year. America’s battered housing market is recovering with price gains of 9.3% in the past 12 months. But house prices are falling across much of Europe. The housing bust is no longer largely confined to the distressed economies of southern Europe but has spread to core northern members of the euro area like the Netherlands, where prices have fallen by 7% over the past year. Outside Europe, Canada’s market looks particularly vulnerable to a housing bust because of overstretched valuations.
IT IS a lesson of the past five years that benchmarks in unregulated markets can fall victim to the incentives they create. Subprime mortgages bundled into securities often won high scores from ratings agencies that stood to profit in a busy market. The London Interbank Offered Rate, LIBOR, was sometimes underestimated by banks which were cast in a healthier light by lower interest rates. Has something similar been going on in energy?
Critics of quantitative easing (QE)—whereby central banks push down interest rates and buy up safe assets to stimulate flagging economies—have long worried about the possible unintended consequences. The point of QE is to push down the yields on safe assets like government bonds so that investors put their money in riskier assets where it can do more economic work; the worry is that too much money in risky assets could blow up in investors’ faces.
NEW figures from Europe reveal that both GDP and inflation in the euro area are falling, while unemployment is steadily rising. The mix of pain calls for monetary easing, and at its last policy meeting the European Central Bank did indeed reduce its main interest rate to 0.75%, a record low for the single-currency area. Yet as a recent Free exchange columnexplained, low ECB rates aren’t having the desired effect around the struggling periphery:
In 2008, as the euro zone started to contract, the ECB slashed its main rate from 4.25% to 1%. But because investors were worried about the state of the banks, the returns that banks had to offer on their own bonds rose. This offset the ECB’s easing, so that firms’ borrowing rates fell by less than normal.
Article: If You Want To Be Successful, Don’t Spend Too Much Time Planning: A Case Study
If You Want To Be Successful, Don’t Spend Too Much Time Planning: A Case Study http://www.forbes.com/sites/actiontrumpseverything/2013/05/19/if-you-want-to-be-successful-dont-spend-too-much-time-planning-a-case-study/
Article: How to Hire Great Employees
How to Hire Great Employees http://www.forbes.com/sites/kateharrison/2013/05/18/how-to-hire-great-employees/
Asia-Pacific may soon have more outstanding corporate debt than the US, the euro zone and the UK combined - Quartz
For better or worse, Asian companies are loading up on debt at a staggering rate. By 2017, Standard & Poor’s estimated in a report this week, non-financial corporate debt for Asia-Pacific countries will balloon to $29.9 billion, assuming corporate debt is issued at the rate of economic growth (as pictured above). And that’s the conservative estimate. If debt outstanding grows at a rate of 1.2 times the region’s growth rate, the region’s corporate debt will hit $32.5 billion. Using either estimate, in 2017 the Asia-Pacific region will have more debt outstanding that US, the euro zone, Canada and the UK combined.