Aug. 31, 2012

HIGHLIGHTS FROM THE FEDERAL
RESERVE CONFERENCE IN JACKSON HOLE

  • Additional quantitative easing (QE) could be in the future, if required.
  • Monetary policy (Federal Reserve) needs to be supported by fiscal policy (government). The Federal Reserve can only nudge the market.
  • Unemployment over 8% is too high and is their primary focus at this time.
  • Mr. Bernanke estimates that the bond purchasing program has lowered the US government bond yields between 0.80% and 1.20%.
  • Mr. Bernanke reiterated that they will maintain low rates through to the end of 2014 and said that ‘our future is manageable’ and he does not see any bubbles in the US currently.
  • Lower interest rates support higher asset prices, which provide growth and should lead to stronger employment numbers.

EUROPE

  • It is rumoured that the EU will give the ECB sole power to grant or revoke banking licenses on September 12th.
  • Germany’s central bank chairman, Jens Weidmann, has reportedly threatened to resign as a result of the ECB’s future purchases of Italian and Spanish bonds.
  • China reiterated that they are willing to keep investing in euro-area debt provided that “comprehensive measures” are taken to prevent a worsening of the European debt crisis.

TIDBITS

  • Canadian oil and natural gas merger and acquisition activity was approximately $18.5 billion in the first half of 2012, more than the total for all of 2011.
  • China’s bridges are falling down. Since 2007, at least 18 major bridges connecting key corridors have collapsed.
  • For the first time ever, Nissan is building cars abroad to ship to Japan.
  • Australia’s LNG development may be jeopardized by the low cost of developing the larger discovery along Africa’s east coast.
  • The Arctic Ocean’s ice cover is shrinking at a record pace this year; in August it shrank about 17% in 11 days.