The money markets do recognise integrity … eventually | Robert Shiller

Vanguard Group founder Jack Bogle’s investment strategy was simple, successful and principled

The death on 16 January of Jack Bogle, the founder of the investment company Vanguard Group, was met with a slew of flattering obituaries. Of course, obituaries often praise their subjects. But Bogle’s seemed more laudatory than usual. And I think there is a reason: Bogle was an unusually morally directed man.

Of course, we cannot judge his success by his personal wealth. When Bogle established Vanguard in 1975, he set it up as a nonprofit. The company has no outside shareholders; all profits are reflected in lower fees, not dividends.

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Stock markets slip amid signs global economy is weakening

US markets dropped sharply following falls from Europe and Asia as the IMF trimmed its economic forecasts for 2019

Stock markets across the world fell Tuesday amid further signs that the global economy is weakening.

US markets dropped sharply following falls across Europe and Asia as the International Monetary Fund (IMF) trimmed its economic forecasts for 2019 and 2020 and pointed to risks including trade tensions and rising interest rates. China’s government said its economy grew in 2018 at the slowest pace since 1990.

Related: Shareholders received record dividends of almost £100bn in 2018

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Davos 2019: Financial risks and climate dangers loom over global elite – business live

Rolling coverage of the first day of the World Economic Forum in Davos, including appearances from Brazil’s Jair Bolsonaro, Prince William, Sir David Attenborough and New Zealand PM Jacinda Ardern

One of the co-chairs at this year’s Annual Meeting is being Mohammed Hassan Mohamud – a refugee.

Mohammed has spent the last 20 years confined to Kenya’s Kakuma camp. He has no passport, no official date of birth and has never been anywhere outside the semi-arid climate of Sub-Saharan Africa – until this week, when WEF have brought him to Davos.

I don’t know what you’re afraid of. Refugees are real people.

We are just like other people. We have aspirations, we have dreams and we have needs.

It surprises me that money and capital moves around the moves in seconds, but it takes a refugee decades – or in the case of my mother, she never got out. Waiting for 25 year for a change to call somewhere home.

Davos attendees may be worried about climate change, but many are still choosing to arrive by private jet.

Davos doesn’t have its own airfield and, whilst we have several clients who fly into the town by helicopter, the four main airfields that private jet users attending the forum use are Zürich, Dübendorf, St. Gallen-Altenrhein and St. Moritz.

“Working with WingX, we looked at private jet activity at those airports over the six days of each WEF week since 2013 – from one day before the event to one day after. Last year was the busiest year for private jets so far, showing an 11% increase on 2017, with more than 1,300 aircraft movements. If we see a similar increase this year, we could be looking at almost 1,500 aircraft movements over the six days.

Roland Rudd is in Davos and has been speaking about Brexit. The veteran PR man says the UK would “feel the pinch” very soon if the UK leaves the EU without a deal and that the rest of the world is “amazed we’re having this conversation”.

CEOs are “genuinely flabbergasted” that a no-deal Brexit could be a possibility, PR veteran Roland Rudd says https://t.co/3rj7uHLbSq #wef19 pic.twitter.com/JtwsGkH7Mx

An early Davos mystery…..

Swift changover of panel sessions in the Davos conference centre. Next panel briefly advertised Goldman boss David Solomon, but he’s no longer listed. They even wheeled out a chair and name display for him but organisers have since whisked it away

Davos Man and Woman are discussing the impact of strategic changes on their businesses.

And after the raw greed and avarice that led to the financial crisis, it’s refreshing to hear a bank boss argue in favour of financial regulation:

Bank of America boss Brian Moynihan says a lack of banking regulation would inevitably lead to a loss of people’s cash. “It’s the same reason you have a speed limit on a highway” pic.twitter.com/4LRIZJWiJL

Google’s CFO Ruth Porat says the tech giant is supportive of data and tax rules like GDPR and the OECD’s broad tax initiative. She says Google wants users to “trust” that the firm is “doing what we should” #Davos

We just caught up with Christy Hoffman, the general secretary of the UNI global union, which represents 20 million service sector workers – from cleaners to Hollywood film directors – in 150 countries.

She said her message to the executives gathered in Davos was the need for a new social contract to revive collective bargaining, manage the change brought about by new technology and spread the benefits of growth more widely.

“Workers think globalisation for the elite, that Davos is for the elite. Where does that leave our global institutions and global trade. If we want a globalised economy it can’t just be for corporations.”

Related: World’s 26 richest people own as much as poorest 50%, says Oxfam

“There is no sense of sacrifice. There needs to be a transfer of wealth from one set of pockets to another.”

Global growth fears appear to be weighing on investor minds this morning, with European markets down in early trading following falls in Asia.

The International Monetary Fund cut global growth forecasts on Monday, warning that a sharper slowdown in China and a no-deal Brexit are the biggest risks in 2019.

China’s “significant” slowdown is the biggest global business worry just now, according to Adair Turner of the Institute for New Economic Thinking https://t.co/3rj7uHLbSq #wef19 pic.twitter.com/FKyvv02xcV

Disappointingly, this year’s Davos is missing several key world leaders.

Donald Trump pulled out earlier this month, to focus on the US government shutdown.

Good morning from Davos, where the first day of the World Economic Forum’s annual meeting is underway.

Related: David Attenborough tells Davos: ‘The Garden of Eden is no more’

Related: Pre-Davos survey shows sixfold rise in global CEOs’ gloom

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A burst of good news can’t hide the economic hazards ahead in 2019

Doomsayers warn of a slump as early as next year – and it might be too late to prove them wrong

Almost as soon as the world’s most eminent economic doomsayers began to warn about an impending slump, possibly as soon as 2020, policymakers were out of the blocks, racing to avert the worst effects.

The new year message from the International Monetary Fund (IMF) and a string of similarly gloomy commentators struck a chord, apparently within weeks of sounding the alarm that a global recession and possibly a credit crunch to rival 2008’s was on the way.

Related: What are biggest risks to the global economy in 2019? | Kenneth Rogoff

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Trade deal hopes grow as US treasury secretary ‘considers lifting China tariffs’ – business live

Rolling coverage of the latest economic and financial news

Mnuchin’s apparent offer of help to China comes just a few days after Beijing announced it would cut taxes to help businesses, many of whom are struggling in the trade war.

Related: China unleashes tax cuts in bid to halt economic slowdown

Airline stocks aren’t joining today’s rally, after Ryanair hit shareholders with another profits warning.

Related: Ryanair issues profit warning as winter fares fall

A trade war breakthrough may be coming, but it won’t be coming at Davos next week.

President Donald Trump has cancelled plans to send US officials, including treasury secretary Mnuchin and trade representative Robert Lighthizer, to the World Economic Forum.

Related: Trump intensifies feud with Pelosi by calling off her trip abroad

European stocks have opened higher, hitting their highest level since early December….

Optimism over the US-China trade talks have pushed commodity prices to their highest levels in months.

The most traded iron ore on the Dalian Commodity Exchange gained 3.2% to close at 528 yuan ($78.01) a tonne, just below the day’s peak of 530 yuan, its highest since early March last year.

“The signs out of the recent trade talks in China are promising and have boosted market optimism, despite the lack of concrete outcomes,” ANZ Research said in a note.

Stocks jumped across the Asia-Pacific region overnight, following the WSJ’s report.

China’s benchmark Shanghai Composite rallied by almost 1.5%, with Japan gaining 1%.

Investors are hopeful that Steve Mnuchin could calm the trade war, says Adam Cole of Royal Bank of Canada:

Optimism of trade policy again dominates overnight price action, with a report in the Wall Street Journal that Treasury Secretary Mnuchin (a free trade proponent, in contrast to Lighthizer and Trump) has proposed easing tariffs on China to support markets.

The Treasury denied the report, but stock futures are still 0.3% higher.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.

“No new tariff decisions have been made.

We are focused on the current 90 day period and the expected high level visit by China Vice Premier Liu He at the end of this month.”

Officials deny report Mnuchin proposed lifting China tariffs https://t.co/6IRB67xhme

Good morning and happy Friday … European stock markets called to open higher as risk sentiment is boosted by reports US Tres Sec Steven Mnuchin was considering the idea of lifting some of even all of extra tariffs on Chinese imports to facilitate trade negotiation with China https://t.co/E2X7w9nwjc

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Japan calls for fight against protectionism as trade war fears bubble – business live

Rolling coverage of the latest economic and financial news, as Japanese finance minister Taro Aso hits out at protectionism and unfair trade practices

Trade war concerns are weighing on the markets today.

China’s Shanghai composite index has dropped by 0.5%, following the news that Huawei is being probed by US authorities.

The negative start follows reports that US Federal Prosecutors are investigating Huawei Technology for allegedly stealing trade secrets.

The move comes as US – Sino relations were improving amid a 90-day truce. It goes right to the heart of the unresolved IP issues with China. China are unlikely to shrug this off which is creating a risk off environment. Signs of retaliation from China could see stocks sink further.

Chinese technology giant Huawei is at the heart of the dispute between Washington and Beijing.

Huawei and the Department of Justice declined to comment on the media report.

However, Huawei noted that “Huawei and T-Mobile settled their disputes in 2017 following a US jury verdict finding neither damage, unjust enrichment nor willful and malicious conduct by Huawei in T-Mobile’s trade secret claim.”

Newsflash: One of China’s top political leaders will head to Washington later this month to continue trade talks.

Chinese Vice Premier Liu He will visit the United States on January 30 and 31 for the next round of trade negotiations with Washington, China’s commerce ministry says.

BREAKING: China announces its economy czar, Vice Premier Liu He, will visit Washington on Jan. 30-31 for trade talks.

Aso’s comments came as one of Japan’s many tech companies revealed it had been hurt by the US-China trade dispute.

Nidec, a Japanese precision motor maker, slashed its profit forecast by a quarter and warned that the trade war is deterring clients from spending.

“The company is seeing an adverse ripple effect of the current U.S.-China trade friction on its operations in many countries, particularly in China,”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

“Dissatisfaction with economic inequality is growing. There is a serious risk that we will revert to a closed and fragmented world.

“Protectionism and unfair trade practices lead to instability and perverse economic outcomes. We must renew our commitment to international cooperation and openness.”

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Mark Carney: Sterling rebound reflects expectations that no-deal Brexit less likely – business live

Rolling coverage of the latest economic and financial news, as Bank of England governor Mark Carney appears before the Treasury committee

Christopher Smart, head of macroeconomic & geopolitical research at Barings, thinks Mark Carney is right — the markets do believe the Brexit date could be extended, and that a hard Brexit can be avoided.

Smart writes:

“Theresa May has been the Energizer Bunny of British politics. She just keeps going, in spite of all obstacles. Everyone hates her plan, but they hate the alternatives even more. Lots of people want her job, but they don’t want it now.

With this vote, however, she may be coming to the end of her rope. Even if she wins the confidence vote tonight, it’s just hard to imagine that in consultation with other party leaders she can develop a fresh approach that will garner broad support.

This chart shows the pound’s rebound last night which Carney alluded to.

As you can see, sterling weakened steadily through Tuesday as the meaningful vote loomed, only to bounce back off the mat once the scale of May’s defeat became clear.

Uh oh…. Mark Carney is now talking about potential problems in the financial system.

This includes the growth in leveraged loans and loan securitisation (bundling debt into new securities – a popular and dangerous practice that led to the 2008 crisis).

Mark Carney said he’s “concerned” about leveraged loans: “This is very clear evidence of a steady decline in underwriting standards.”

@bankofengland Mark Carney, taking about potential for sub-prime crisis repeat, makes important point that UK and #euro banks must retain a portion of any loans securitised and sold on. In US, lending originators “don’t have any skin in the game” once loans are sold. US at risk!

Conservative MP Colin Clark turns to the trade dispute between the US and China.

Q: Has the UK already been hurt by the trade war?

Q: What’s a bigger threat – Brexit, or China’s slowdown?

Alex Brazier, BoE executive director for risk, says the Bank doesn’t rank them — it trie to ensure that the financial system is strong enough to cope with both.

Brexit isn’t the only risk facing the UK economy, of course.

Mark Carney is now outlining how an economic shock in China could hurt Britain, as it’s such an open economy.

We are looking to avoid a situation where the financial system makes the next downturn worse, Carney says.

He points out that the Bank has forced commercial banks to hold more capital (through its counter-cyclical capital buffer). That cash is effectively on standby for an economic shock, and could be released to support lending.

Labour MP Catherine McKinnell is quizzing Mark Carney over the Bank’s predictions that interest rates could rise sharply if Britain crashes out of the EU without a deal.

The governor explains, at some length, that the bank’s “mechanical formulae” models how such a shock would ripple through the system, and the actions policymakers should take.

We have confidence that the core of the system is resilient to the kinds of shock we could see.

Nice to see that @catmckinnell isn’t buying the @bankofengland line that it would jack up interest rates in the midst of a no-deal #Brexit. Mark Carney says it would save the banks. But neglects to say it exacerbates the dive in GDP, rise in unemployment and home repossessions

Just in: UK inflation has fallen to its lowest level in almost two years — giving households some relief as they brace for possible Brexit upheaval.

The consumer prices index shows that prices rose by 2.1% year-on-year in December, down from 2.3% in November, thanks to falling fuel costs.

*U.K. DECEMBER INFLATION RATE FALLS TO 2.1%, AS FORECAST

Bank off England governor Mark Carney has told the Treasury select committee the markets reacted positively to last night’s Government defeat because they anticipate the Article 50 process will be extended.

Carney adds that he wouldn’t put ‘too much weight’ on short-term market moves.

Mark Carney begins his session by talking about the financial markets’ reaction to last night’s Brexit vote.

The governor says that market sentiment across a range of markets are affected by Brexit developments, particularly in parliament.

Public market commentary, consistent with our market intelligence, that rebound appears to reflect some expectation that the process of resolution would be extended and that the prospect of no-deal may have been diminished.

Pound sterling plummets then rallies as Commons overwhelmingly rejects PM Theresa May’s Brexit deal | The Independent https://t.co/j9GyDN5RQQ

The markets, like the country, are looking to parliament for direction, and one could expect continued volatility.

Mark Carney’s hearing is underway now. It’s being streamed live here.

Newsflash: Environmental threats, and politicians inability to tackle them, are the biggest risk to the global economy, the World Economic Forum has warned.

WEF’s annual global risks report, just released, cites extreme weather events, natural disasters, and failure to address climate change as the three biggest threats.

Is the world sleepwalking into a crisis? Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening…

Nine out of 10 respondents expect worsening economic and political confrontations between major powers this year. Over a ten-year horizon, extreme weather and climate-change policy failures are seen as the gravest threats.

Related: Global tensions holding back climate change fight, says WEF

The pound is calm now, but may rally if Theresa May wins today’s no-confidence vote, called after last night’s historic Brexit deal defeat.

Kit Juckes of French bank Société Générale says:

The UK voted for Brexit, markets priced it in (to a large degree) and now are watching, slack-jawed, as the Government tries to find a path to the exit which it can rally politicians behind.

Today’s confidence vote isn’t quite a done deal and so if the Government survives, sterling should get a bit of a lift.

Credit rating agency Moody’s isn’t considering cutting the UK’s credit rating, yet anyway, following the Meaningful Vote on the Brexit deal last night.

It says:

The outcome of the vote further extends the period of uncertainty over the UK’s relationship with the EU, a credit negative for many rated debt issuers.

However, the vote against the deal is not, in itself, sufficient grounds for Moody’s to shift its base case to a no-deal scenario in which the rating agency would formally review the UK’s credit profile and other affected issuers

City analysts and fund managers have been scrambling to update clients on the Brexit situation, after Theresa May’s withdrawal deal was resoundingly rejected by MPs.

David Lafferty, chief market strategist at Natixis Investment Managers, says the drubbing highlights the PM’s weak position:

“From our view, the most likely outcome is that May acquiesces and either delays or revokes article 50, effectively pushing the ‘pause button’ just before the train flies off the tracks. UK businesses and consumers should expect to live under continued uncertainty for quite a while longer.

It is important to recognize that the Brexit referendum was about an ideal – a United Kingdom independent of the EU. So far, that ideal has not been matched by a realistic plan or process to deliver it. Until such a plan emerges, the withdrawal process will probably be put on hold.”

At this stage we do not advocate taking directional views on sterling and UK assets. The reaction of the pound following the vote would suggest that markets are not currently increasing the risk of an adverse outcome.

For the time being, we expect that uncertainty will remain high and UK markets will stay volatile. Within portfolios, exposure to sterling-denominated assets should be maintained at benchmark levels until more clarity emerges.”

As Mrs May licks her wounds after last night’s humiliating defeat what matters now is how hard she tries to build a consensus on the basis that a large majority in the Commons including half her ministers (and possibly herself but she is not saying) are determined to avoid ‘no deal’. She has her work cut out as nobody really trusts her competence or veracity any more (ironically, rather like Mr Trump, whom she no doubt fastidiously disdains as her mirror image).

She may genuinely be taken aback by the intensity of division both in Parliament and amongst voters but as Prime Minister she has to deal with it responsibly in order to limit the economic and social damage.The scale of the defeat means there is little point in her persisting with the current deal as Europhile MPs who loyally supported her yesterday will now feel able to go their own way. This, in turn, means that Brexit will not take place on 29 March, if at all.

Mark Carney will be quizzed today about the Bank of England’s latest Financial Stability Report, released at the end of November.

That report predicted that the UK banking sector could survive a disorderly Brexit, thanks to the Bank’s work since June 2016 (if only the rest of the system had worked as efficiently….)

The FPC has reviewed a disorderly Brexit scenario, with no deal and no transition period, that leads to a severe economic shock.

Based on a comparison of this scenario with the stress test, the FPC judges that the UK banking system is strong enough to continue to serve UK households and businesses even in the event of a disorderly Brexit.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Theresa May suffers historic defeat in vote as Tories turn against her

Unable to command her party or parliament, Theresa May limps on, sustained by #Brexit policy chaos on all sides, lack of an obvious replacement. But her options & time running out. Also hard to see her surviving a 2nd referendum scenario. #BrexitVote

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Flybe’s sale is right for staff and passengers | Nils Pratley

Shareholders in the stricken airline may feel aggrieved at the hurried sale but it was long overdue

What a day for democratic debate! Well, not at Flybe. Shareholders, still reeling from the board’s decision last Friday to accept a takeover offer at 1p a share, or just £2.2m, have now learned they won’t get a meaningful vote on the deal. The directors have instead agreed to flog the regional airline’s assets almost immediately at the same price to the same bidder, a consortium comprising Virgin Atlantic, Stobart and investment firm Cyrus.

Is that even legal at a public company? It seems it is, or rather it will be on Thursday, which is when Flybe switches its stock market listing from “premium” to “standard” status. The latter does not require shareholders to approve major asset sales.

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