Over the last few months, the risk premia on Italian government bonds have increased considerably. This column uses data on sovereign credit default swaps and governments bonds denominated in different currencies to disentangle fiscal risk from redenomination risk (i.e. the risk of Italy leaving the euro). Redenomination risk appears to be responsible for about half of the overall increase in the spread, suggesting that playing with the idea of exiting the euro can be costly even if public finances remain under control.
Bernanke and his Fed justify a second thank-you note for being overly cautious and using QE to address “too big to fail” by recapitalizing banks through the back door. Finally, thank every dour headline from the past nine-plus years for helping keep euphoria at bay and stocks’ fundamental strength a secret.
The market share of a company does not have a strong influence on its financial performance, a new study in marketing at the Faculty of Management, Economics and Social Sciences of the University of Cologne shows. Companies should instead invest in building customer relationships and a strong brand.
Markets don’t care who the president is. People may not like to hear this but it’s true. Investors care about earnings, interest rates, trends, and sentiment. The stock market and the economy are bigger than any one person or one administration.
The euro area economy is in its fifth year of recovery, unemployment is close to its pre-crisis level and the output gaps of most countries have closed. Yet, core inflation continues to be low, notwithstanding temporarily high headline inflation due to higher energy prices.source
Tyler Cowen argues that international capital mobility is holding US wages down.