Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Categorized | Economy

Stimulus would serve Germany’s interest

Posted on September 20, 2016

German finance minister Wolfgang Schauble©EPA

Finance minister Wolfgang Schäuble is intent on running a balanced budget

For years, Germany’s government has resisted calls to end its ideological attachment to thrift and do more to support domestic demand. At last, there are signs that the eurozone’s largest economy is rebalancing: growth in exports has slackened and consumer spending is rising at the fastest rate in almost 20 years. This is a welcome development, yet the domestic upswing owes little to government policy. There is far more Berlin could do to boost demand — to the mutual benefit of the eurozone and its own voters.

Consumers have considerable inducement to head out shopping. After decades of pay restraint, in which earnings increased at a far slower pace than productivity, workers are now enjoying wage growth above inflation (although union negotiators could still be more ambitious in areas of high employment). The fall in oil prices has helped household budgets. People do not need to dig into their savings in order to spend more. Employment has been rising, with the number of people in work the highest since reunification — and this has lifted consumer confidence, according to a recent survey, to its highest level since 2001.

    There has also been a modest boost from fiscal policy. Although finance minister Wolfgang Schäuble remains intent on running a balanced budget
    , rising tax revenues have made this commitment to the “black zero” compatible with higher refugee-related spending, an increase in social transfers and modest tax cuts.

    However, Germany’s consumption boom owes far more to the stimulus delivered by the European Central Bank than it does to domestic policy. German savers may decry the ECB’s policy of negative interest rates, but a dislike of eurozone monetary policy does not stop people taking advantage of cheap mortgage rates. House prices are rising, as is associated spending on furniture and durable goods.

    German politicians have also been loath to recognise the degree to which their pursuit of fiscal prudence has been aided by the ECB’s action to drive down the cost of public borrowing. Rather than carping at the ECB, they would do
    better to use the fiscal space the central bank has helped to create.

    Mr Schäuble has taken a step in this direction, saying he sees scope for some €15bn of tax cuts, aimed at people on low and middle incomes, after next autumn’s elections.

    FT View

    Rethink asylum rules for age of mass movement

    Refugees queue in order to receive some goods at a makeshift camp for migrants and refugees at the Greek-Macedonian border near the village of Idomeni on April 21, 2016. About 50,000 people remain stranded in Greece since the closure of the migrant route through the Balkans in February. Over 10,000 of them are stuck in a slum-like camp at Idomeni on the border with Macedonia. / AFP / JOE KLAMAR (Photo credit should read JOE KLAMAR/AFP/Getty Images)

    May’s call for reform of postwar policy is sensible but insufficient

    This seems a strange inversion of the pressure most governments feel to cut taxes in the run-up to elections, and tighten the purse-strings afterwards. Both German politicians and the German public believe in the need to practise the austerity that has been imposed on the EU’s indebted periphery. Yet other than the self-imposed constraint of running a surplus, there is little reason to delay a fiscal stimulus. It is true that German voters do not always support tax cuts — but it is hard to imagine them opposing a drive to invest in public infrastructure.

    Again, the government has already taken some steps in this direction, publishing plans for long-term investment in transport infrastructure. But it has not committed funds. This is short-sighted. Despite media reports of crumbling bridges and ageing railways, German infrastructure remains a huge national strength, but it will remain so only if the money is made available to maintain it. Moreover, there are other areas in which Germany risks falling behind — it is lagging, for example, in internet connection speed and other aspects of digital infrastructure.

    A well-directed fiscal stimulus would not only aid the eurozone recovery: more important, it would be in Germany’s best interests.