Showing posts with label .Romania. Show all posts
Showing posts with label .Romania. Show all posts

Tuesday, August 15, 2017

President Donald Trump finally condemned the “evil” of “racist violence” in Charlottesville on Monday, two days after a white supremacist rally in the Virginia town that left three people dead. After mounting criticism at his failure to speak out against white supremacist groups, Mr Trump addressed the nation from the White House and warned those behind Saturday’s riots that they will be held criminally responsible. And, after widespread cross-party anger at his initial response – in which he condemned violence “on many sides” – the president on Monday delivered a more measured response, in which he called out neo-Nazis and the Ku Klux Klan. “To anyone who acted criminally at this weekend’s racist violence, you will be held fully accountable.” He described the rally on Saturday as an “egregious display of hatred and violence” which, he said, “has no place in America.” He continued: “Racism is evil. And those who cause violence in its name are criminals and thugs, including the KKK, neo-Nazis, white supremacists, and other hate groups that are repugnant to everything we hold dear as Americans “We are a nation founded on the premise that all are created equal. We are equal in the eyes of our creator, we are equal under the law, and we are equal under our Constitution. "Those who spread violence in the name of bigotry strike at the very core of America. ” Mr Trump paid tribute to Heather Heyer, the 32-year-old who died when James Fields rammed his car into a group of anti-hate protesters. He also commended the two Virginia state troopers killed when their helicopter crashed on Saturday. “These three fallen Americans embody the goodness and decency of our nation. “In times such as these, America has always shown its true character.”Reading from a teleprompter, the president's remarks were seen as a belated condemnation of the white supremacists who politicians across the mainstream US political spectrum held responsible for the mayhem in Charlottesville.

Sunday, July 2, 2017

Liviu Dragnea "swore", in December 2016, on the electoral program, which then became the governing program and the "Bible of the PSD": he guaranteed, in a TV Show, that he would abide by it or else he would resign. Liviu Dragnea did not abide by the electoral program.
Liviu Dragnea did not resign, instead he changed the government....Along with the government, he also replaced the "Bible of the PSD". The new proposals of the PSD, published on the night prior to the investiture, have overturned the business environment. All the companies in Romania will pay, starting with January 1st, 2018, a turnover tax instead of the profit tax, which will disappear, according to the new governing program of the PSD-ALDE coalition. Also, according to the new proposal, the minimum wage level in Romania in the coming years would be 2,000 lei in 2018, 2,200 lei in 2019 and 2,400 lei in 2020, and for those with higher education it would be 2,300 lei in 2018, 2,640 lei in 2019 and 3,000 lei in 2020. According to the governing program, the solidarity contribution will be introduced starting with January 1st, 2018, as well as an additional tax on consumer products whose consumption has a major negative impact on the health of the population.  Analysts said that the government is blowing up the economy, businesspeople were shocked. The new ministers swore on the Bible to offer all their power for the material and spiritual progress of the Romanian people.  So help them God! 

Friday, June 2, 2017

Today, in Romania, all the significant transactions are calculated in Euros, even though some of them are paid in lei. And "homo economicus" is in every man; all they need is the freedom to make decisions. In the end, the entire economy can be reduced to four words: people respond to incentives! Let's remember the skill of currency dealers on the black market, I the first years of transition, when the currency exchanges were not yet fully liberalized. In order to take their profit, they would keep their dollars in packs, depending on the exchange rate they got them at. I don't think that Romanians will have "cultural shocks" if they were to only operate in Euros, given that the vegetables traders in markets watch the exchange rate to see whether or not they should raise their prices for carrots, radishes, tomatoes, cucumbers, etc. Of course, we are living on the outskirts of the East, where there is no rush. The president of the European Commission, who recently visited our country, when listening to the questions of some politicians, about how Romania didn't want a two-speed Europe, gave us an answer that is worth thinking on: the current treaties of the European Union stipulate the possibility of a 2-speed Europe and it is up to every member state on where it wants to find itself. The trends in the European Union indicate a desire of the member states in the Eurozone to move faster towards integration (there is talk of a common budget of the Eurozone and even of a parliament of the Eurozone...). Member states from outside the Eurozone can not oppose those trends.  Romania will have the presidency of the European Union, in the first half of 2019, but unfortunately, Romania's weight in the decision making process for the decisions that concern the Eurozone will be low, because we are not yet part of it. I wish that this once at least, the intention of drawing up a plan of action for the move to the Euro, as well as the switch of this plan to be taken seriously by every politician and institution of the state that are concerned. Let's not forget that Romania, when it was accepted in the European Union, made the commitment to take all the necessary steps to carry out the conditions needed for the adoption of the Euro!  (Source bursa.ro)

Saturday, May 20, 2017

The European Commission reacted on Tuesday, after the deputies of the Commission for Industries and Services have passed a series of amendments to the Natural Gas Law, according to which the gas producers will be required to fully trade their output on the OPCOM, with the Romanian Commodities Exchange being left out in the cold. Currently, they have licenses for the trading of natural gas on two entities: the Romanian Commodities Exchange, private company, and the OPCOM, a branch of Transelectrica, in which the state owns 58.68%. The amendments made in the Commission for Industries would leave the BRM without a license. On Tuesday, the European Commission wrote to Iulian Iancu, the president of the Commission for Industries, that the proposal for the production of natural gas to be traded completely on the OPCOM is problematic.  The commission thinks that moving trading to the OPCOM is not recommended, as the BRM is currently a more liquid market, and granting exclusive rights to the OPCOM raises competition issues. Also, the Commission considers that the trading of 100% of the natural gas output on an exchange can be excessive. A warning letter concerning the "severe consequences" of the amendments to the Law of natural gas was recently received by the president of the Chamber of Deputies Liviu Dragnea, from the PEGAS European natural gas platform. That letter also arrived, among other places, at the Ministry of Energy, the ANRE and the European Commission. It is debatable whether the amendments are compatible with the competition laws of the European Union, since they limit the ability of offering trading services, amid the obligation of using only one platform, according to PEGAS, which also says that there is a risk that the platform used by the operator would not reflect the requirements of the market.  Furthermore, the measures proposed can raise an obstacle in the implementation of the EU package of energy, which would lead to an isolation of the Romanian gas market, says PEGAS, the trading platform of the German EEX Group, operated by Powernext, in France. PEGAS had 238 members and offers access to the trading of natural gas on contracts from Austria, Belgium, Holland, France, Germany, Italy, Denmark, Czech Republic and Great Britain.

Monday, March 20, 2017

President Trump on Saturday defended the success of his first face-to-face meeting with German Chancellor Angela Merkel, dismissing a barrage of critical news accounts that describe it as “awkward.”  “Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel,” Mr. Trump said Saturday morning via his personal Twitter account.  News reports of the the meeting and a joint press conference Friday at the White House were dominated by descriptions of “awkward” moments between the two leaders, including the president’s quip that he and Ms. Merkel had “something in common” in being wiretapped by U.S. spies.  Mr. Trump was referring to revelation in 2013 that President Obama authorized National Security Agency eavesdropping on her and his claim that Mr. Obama did the same to him during the 2016 presidential campaign.  National Public Radio declared the meeting “The Axis of Awkward.”  U.S. News and World Report dubbed it “Trump’s Awkward Merkel Summit.”

Friday, March 3, 2017

As President Trump struggles to staff his administration with sympathisers who will help transpose tweets into policy, the exodus of Obama appointees from the federal government and other agencies continues. For the financial world, one of the most significant departures was that of Daniel Tarullo, the Federal Reserve governor who has led its work on financial regulation for the last seven years.  It would be a stretch to say that Tarullo has been universally popular in the banking community. He led the charge in arguing for much higher capital ratios, in the US and elsewhere. He was a tough negotiator, with a well-tuned instinct for spotting special pleading by financial firms. But crocodile tears will be shed in Europe to mark his resignation. European banks, and even their regulators, were concerned by his enthusiastic advocacy of even tougher standards in Basel 3.5 (or Basel 4, as bankers like to call it), which would, if implemented in the form favoured by the US, require further substantial capital increases for Europe’s banks in particular. In his absence, these proposals’ fate is uncertain.  But Tarullo has also been an enthusiastic promoter of international regulatory cooperation, with the frequent flyer miles to prove it. For some years, he has chaired the Financial Stability Board’s little-known but important Standing Committee on Supervisory and Regulatory Cooperation. His commitment to working with colleagues in international bodies such as the FSB and the Basel Committee on Banking Supervision, to reach global regulatory agreements enabling banks to compete on a level playing field, has never been in doubt.

Thursday, March 2, 2017

Theresa May has defiantly insisted her timetable for triggering Brexit will not be blown off course despite suffering her first Parliamentary defeat over the Article 50 bill.  The House of Lords voted to amend the Bill to force the Government to guarantee the rights of EU citizens living in the UK. Seven Tory peers - including the former pensions minister Baroness Altmann - backed the amendment.  But the Prime Minister is confident the amendment will be rejected by the Commons later this month, and Downing Street insisted the timetable for Brexit “remains unchanged”... Lords who voted to alter the Bill were accused of “playing with fire” and critics accused them of pointless “posturing” and “doing a disservice to the national interest”.  The scale of the Government’s defeat in the Lords, where the proposal to amend the Bill was passed by 358 votes to 256, prompted speculation that Mrs May could face a fresh Tory rebellion when the Bill returns to the Commons.  Conservative whips are confident, however, that no more than a handful of Tory MPs will support the amendment. Labour's amendment to the EU (Notification of Withdrawal) Bill, tabled with Liberal Democrat and crossbench support, calls for ministers to bring forward proposals ensuring the rights of EU citizens living here to continue post-Brexit, within three months of triggering Article 50.

Monday, February 13, 2017

ECB officials think that they have the obligation to explain to investors the monetary policy decisions, and the effects are beneficial for the functioning of the channel for sending the monetary policy to the real economy. The institution of the EU ombudsman is led by Emily O'Reilly, who got the vote of the European Parliament for that position in 2013. According to its mission, the Ombudsman investigates the complaints concerning the activity of various European institutions and agencies. The complaint addressed to the EU ombudsman focuses particularly on the role of Mario Draghi, who is also a member of the G30. The CEO website shows that "our studies show a severe lack of critical distance between the decision making elements of the ECB and the bankers that are members of the G30", and "as the European Central Bank has also been given the task of regulating the financial sector, any real or perceived conflicts of interests represent a major risk to the integrity of the ECB".  ECB spokesperson said that "we have a large range of regulations and instruments to avoid apparent or potential conflicts of interest".  The CEO representatives think that the current framework is not enough, because "our analyses show that the high ranking personnel of the ECB is way too close to the representatives of the banks it is supposed to oversee".   A similar complaint of the NGO was rejected in 2012, but the current Ombudsman, Emily O'Reilly, made the decision to open the investigation due to the fact that "the ECB has taken on more major responsibilities in the last few years", according to Financial Times.

Tuesday, January 31, 2017

Bucharest Romania -- extremely optimistic estimates of the evolution of the economy in the next four years is not the only weak spot of the budget. Even if we overlook "transparency" easily, what about prudency? Hasn't the CNP learned anything, and more so our authorities, from the lesson of the crisis that began in 2008? Where does this optimism concerning the evolution of the economy over the next four years come from, when the global trade "landscape" is precisely in the process of undergoing a transformation following the victory of the Trump administration, and the problems of the EU are going through a new phase of worsening? The report also states that the "potential GDP will increase at an annual growth rate of 5.1%", whereas "the gap between the GDP and the potential GDP levels expressed as a percentage of the potential GDP will be closed in 2018". But don't we have the opinion of some NBR officials, that the output gap was closed as early as 2013 or Q2 2016? Aside from "faith", we must not forget that the methods for estimating the difference between the potential GDP and the real GDP are more or less mechanical, as they are heavily influenced by the growth of lending. Does the new government believe that we are back to the period of "growth" based on cheap loans and ultra-lax lending norms? It would seem so, because the report concerning the macroeconomic situation in the next years reflects an unrealistic approach of the evolution of borrowing costs. The governmental report also shows that "the yields of government bonds have followed a downward trend in the first three quarters of 2016, and then rise was mostly due to a number of foreign events".

Friday, January 27, 2017

 
Bucharest - the extremely optimistic estimate of the evolution of the economy in the next four years is not the only weak spot of the budget. Even if we overlook "transparency" easily, what about prudency? Hasn't the CNP learned anything, and more so our authorities, from the lesson of the crisis that began in 2008? Where does this optimism concerning the evolution of the economy over the next four years come from, when the global trade "landscape" is precisely in the process of undergoing a transformation following the victory of the Trump administration, and the problems of the EU are going through a new phase of worsening? The report also states that the "potential GDP will increase at an annual growth rate of 5.1%", whereas "the gap between the GDP and the potential GDP levels expressed as a percentage of the potential GDP will be closed in 2018". But don't we have the opinion of some NBR officials, that the output gap was closed as early as 2013 or Q2 2016? Aside from "faith", we must not forget that the methods for estimating the difference between the potential GDP and the real GDP are more or less mechanical, as they are heavily influenced by the growth of lending. Does the new government believe that we are back to the period of "growth" based on cheap loans and ultra-lax lending norms? It would seem so, because the report concerning the macroeconomic situation in the next years reflects an unrealistic approach of the evolution of borrowing costs. The governmental report also shows that "the yields of government bonds have followed a downward trend in the first three quarters of 2016, and then rise was mostly due to a number of foreign events". Unfortunately, we are not given a forecast of borrowing costs until 2020. Even though the president of the PSD has participated in the festivities for the instatement of the new president of the United States, the "expertise" he gained from that has not included the transparency provided by institutions such as the Congressional Budget Office (CBO) or Government Accountability Office (GAO), even though their forecasts are unrealistic as well.

NIS, subsidiară a Gazprom, începe operaţiunile de foraj în perimetrele concesionate în vestul României

Lucrările de forare la prima sondă de explorare a ţiţeiului şi gazelor naturale în perimetrul EX-7 Periam din Bazinul Panonic, din vestul României, au început pe 21 ianuarie 2017. Sonda va fora la o adâncime de 2.500 de metri, iar lucrările de forare şi testare a sondei vor dura între 50 şi 60 de zile, în conformitate cu standardele ecologice, se arată în anunţul companiei.  Firma NIS, subsidiară a gigantului rusesc Gazprom, împreună cu firma canadiană East West Petroleum, are în concesiune patru perimetre petroliere în Bihor şi Timiş (EX-2 Tria, EX-3 Baile Felix, EX-7 Periam şi EX-8 Biled) cu o suprafaţă de peste 4.000 de km pătraţi în Bazinul Panonic. Arealul a fost anterior controlat de Petrom, dar nu a fost activ explorat în ultimii 20 de ani. Perimetrele sunt deţinute în proporţie de 85% de NIS şi 15% de compania canadiană  NIS va finanţa 100% din cheltuieli şi va duce East West prin fazele 1 şi 2 ale explorării, în schimbul a 85% din perimetru, spune East West Petroleum, companie listată pe Bursa de la Toronto.  În octombrie 2011, East West Petroleum a intrat într-un acord cu Naftna Industrija Srbije (NIS), subsidiară a gigantului Gazprom, care va finanţa în totalitate costul primei faze a programului, estimat de canadieni la 60 de milioane de euro. Această primă fază include date seismice 3D şi forarea a 12 sonde, pe o perioadă de doi ani.  Dacă partenerii extind lucrările la oricare dintre cele patru perimetre în cea de-a doua fază, NIS va continua să finanţeze costurile de explorare, estimate tot la 60 de milioane de euro.  Sârbii de la NIS a început 2014 operaţiunile de explorare petrolieră în perimetrele Periam şi Biled şi au realizat lucrări de prospectare seismică.NIS mai deţine în România, pe lângă concesiunea perimetrelor din vestul ţării, şi o reţea de benzinării, operată sub brandul Gazprom.(sursa NIS press)

Saturday, January 14, 2017


Persoanele fizice care vor să-şi izoleze termic locuinţa vor putea cere de la stat o sumă nerambursabilă de până la 40.000 de lei, în cadrul programului „Casa verde Plus”, se arată într-un act normativ al Ministerului Mediului, Apelor şi Pădurilor (MMAP), ce a fost publicat ieri în Monitorul Oficial. Totuşi, pentru a putea beneficia efectiv de bani, cetăţenii trebuie să aştepte stabilirea sesiunii de înscriere.  Regulile pentru participarea în programul denumit, pe scurt, „Casa verde Plus” sunt incluse în Ordinul MMAP nr. 2.425/2016 pentru aprobarea Ghidului de finanţare a Programului privind efectuarea de lucrări destinate eficienţei energetice, beneficiari persoane fizice. Acesta a fost publicat astăzi în Monitorul Oficial, Partea I, nr. 34 şi se aplică deja. Însă înscrierea cetăţenilor va fi posibilă abia după ce autorităţile vor stabili o perioadă anume în acest sens.
 
Prin intermediul programului „Casa verde Plus”, statul vrea să încurajeze folosirea materialelor izolatoare organic-naturale pentru a reduce consumul energetic al clădirilor, cu scopul de a îmbunătăţi calitatea mediului. Banii nerambursabili vor fi acordaţi persoanelor fizice atât pentru casele aflate în construire, cât şi pentru cele deja existente, însă, aşa cum reiese din actul normativ, numai dacă acestea au cel mult parter şi două etaje.  Concret, persoanele fizice vor putea cere o sumă de până la 40.000 de lei (dar nu mai mult de 120 de lei pe metru pătrat izolat şi finisat), care va fi acordată sub forma unei prime de eficienţă energetică. „Finanţarea se acordă sub forma unei prime de eficienţă energetică în valoare de maximum 40.000 de lei, aferentă cheltuielilor eligibile, dar nu mai mult de 120 lei/mp izolat şi finisat, pentru izolarea locuinţelor aflate în faza de construcţie şi pentru izolarea locuinţelor existente”, scrie în ordinul recent publicat, citat de avocatnet.ro.

Tuesday, January 3, 2017

   BMPS stock yesterday reached a new all-time low (see chart 1) and then recovered for no apparent reason, as if the current and potential shareholders were hoping for a miracle that would save them from the imminent bail-in.
The solution of nationalization, regardless of the way it will be promoted and called by the authorities, was somewhat predictable long before the application of the recapitalization program backed by the Italian state. Beyond the precarious lending standards, which are reflected in the quality of the portfolio of corporate loans and mortgages, most banking analysts claim that the beginning of the end for Monte dei Paschi was the fateful decision to the buy the Antonveneta bank, at the end of 2007, for 9 billion Euros. The merger process ended in 2013, precisely when the losses of BMPS, which had been hidden through various derivatives trades, were revealed and the bank "benefited" from an initial bail-out, of almost 4 billion Euros. It will be interesting to see if the nationalization process will also include a complete analysis of the way the bank was managed, as well as the naming of those who bear the blame. Between June 2006 and October 2011, it was Mario Draghi who was the Governor of the Bank of Italy.  What exactly did the Bank of Italy oversee during all this time? As a national oversight authority, the Bank of Italy oversees "the careful management of financial institutions and the stability of the financial system", according to its website.
 

Friday, December 23, 2016


SIF Oltenia has announced that it has brought two lawsuits against Banca Comercială Română: "- a request to bring an action for annulment of the Decision of the Extraordinary General Meeting of BCR of November 23rd, 2016, which is the object of the case no. 45844/3/2016; - a request for intervention which is aimed at rejecting the request for authorization of the merger approved by the Extraordinary General Shareholder Meeting of BCR of November 23rd, 2016, which is the object of case no. 44243/3/2016 which will have the first hearing on January 17th, 2017. Defendants: BCR, BCR Real Estate Management SRL (REM) and Bucharest Financial Plazza SRL (BFP)". The merger between BCR, REM and BFP represents a necessary operational simplification, given the fact that BCR is a majority shareholder in both entities, as its holdings are near 100%, and the two companies conduct their commercial activities through BCR, according to bank officials, who gave us the following statement: "The activities of the two subsidiaries will be internalized, and the merger will have a significant contribution to simplifying the structure of the BCR group and corporate governance". Law no. 31/1990 of companies allows shareholders who did not vote in favor of a spinoff or merger decision to exit the company and to ask the company to buy their shares, in which case their shares will be evaluated by an independent evaluator.  SIF Oltenia is the only one of the SIFs that has remained a shareholder of BCR, with a stake of 6.3%, after the other SIFs made their exit in 2011, following deals with Erste Bank, the majority shareholder of the bank. SIF Oltenia values its stake in BCR at 439.05 million lei, according to the report of September 30, 2016. In its 2016 strategy, SIF Oltenia has announced that it is still willing to negotiate with investors interested in its BCR stake, in order to get an attractive offer. "In the event such a negotiation is completed, we will summon the General Shareholder Meeting in order to put the deal up for approval - according to art. 241 (1) of the law 297/2004 - that stake exceeds 20% of the total assets, less receivables", SIF Oltenia wrote, and added: "We need to remind that BCR has ended 2015 very profitably, meaning that the chances of selling this stake in good circumstances have seen a good evolution".  Bucharest Financial Plazza SRL owns the BCR building of Calea Victoriei (the former Bancorex headquarters). The office building has been inaugurated in 1997, is 83 high, has 18 floors and a surface of approximately 31,000 sqm. 

Wednesday, December 21, 2016

Forecasts made by investment banks such as Goldman Sachs, JP Morgan and Barclays Capital are only marginally better than flipping a coin, and if you hold on to their “hot picks” longer than a few months you will almost certainly lose money, according to new research. Intertrader, a spread betting firm, examined stock predictions from so-called (and highly paid) gurus at 16 investment banks, tracked them over the following 12 months and compared them to the returns on just putting your money into a savings account or a stock market index such as the S&P 500 on Wall Street. “Investment banks’ recommendations are only marginally better than a coin flip,” says Intertrader. “The banks we looked at only managed to predict the correct direction their hot picks would go 55% of the time. And that is actually the kindest we could be – holding their predictions for longer just meant worsening results.” Investors who bought and sold an investment bank recommendation within 30 days on average made a gain of just 0.8%. If they held it for 90 days, it moved to a loss of 1.48%, while over a year the average loss from buying an investment bank recommendation was 4.79%. “We found that if you put the money you would have invested in a 3% high-interest bank account instead, your returns would generally be higher,” says Intertrader, which has created a Gurudex index that analyses investment banks. The firm says the findings serve as a reminder of Warren Buffett’s words of advice on the value of stock market forecasters: “We have long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grownups who behave in the market like children.”

Tuesday, December 20, 2016

The FTSE 100 index of Britain’s biggest stock market-listed companies has enjoyed its strongest year since 2009, jumping from 6,137 at the start of the year to touch nearly 7,000 this week. Wall Street’s S&P 500 has hit record highs, with British investors gaining even more in sterling terms because of the fall in the currency. This has meant that some of the biggest funds popular with small investors – such as M&G’s £6.3bn Global Dividend – have made gains of nearly 40% over the past year. But not everyone has shared in the party. The single biggest fund in the UK, Standard Life’s £26.3bn Global Absolute Return Strategies, has managed to lose money when almost everyone else has been coining it. The fund is down 3.3% over the past 12 months, compared with the 17% gain made by UK index-tracking funds over the same period. Star fund manager Neil Woodford has also had a poor year, making just 2.7% over the past 12 months for investors in his popular £9.2bn equity income fund.  The prize for the best performance of any fund in the UK goes to the little-known JFM Gold, which has given investors a return of 128% over the past year. Unfortunately, it’s only a £20m minnow, so we took a look at the big funds instead. M&G Global Dividend performed best, rising 39.4%, while Fundsmith Equity was up 28.2%. Both are heavily invested in Wall Street-listed stocks, which have rocketed in sterling terms. For example, Microsoft (a big holding in both funds) was trading at $54.80 at the start of the year and was $63.14 this week – a rise of 15%. But in sterling terms that translated into £37.27 at the beginning of the year, and £49 now – a rise of 31%. While the post-Brexit plunge in sterling will make holidays more expensive for everyone in 2017, it has turbo-charged returns for pension and Isa holders with investments in big US companies.

Sunday, December 18, 2016

The US Federal Reserve has raised interest rates for only the second time in a decade.
Janet Yellen, the chairman of the Fed, described the move as “a reflection of the confidence we have in the progress that the economy has made and our judgment that progress will continue”.  But with “considerable uncertainty” surrounding the economic outlook, how is Donald Trump’s election as US president likely to shape the path of interest rates?   After the financial crisis, the Fed slashed rates close to zero in a bid to support economic activity and prevent a bigger rise in unemployment.
It kept them there until December 2015, when it raised its target range to between 0.25pc and 0.5pc.
The Fed's main interest rate remains close to zero - Highcharts CloudTarget Fed Funds Rate (%)Chart context menuThe Fed's main interest rate remains close to zeroSource: New York Federal Reserve20042006200820102012201420160123456HighchartsTuesday, Dec 16, 2008 Target Fed Funds Rate (%): 0.125
Back then, policymakers signalled that four more interest rate rises were on the way if world events turned out as they predicted.  They didn't.  At the start of 2016, stock markets were rocked by fears over the Chinese economy, and policymakers opted to keep rates unchanged, noting that they were "closely monitoring global economic and financial developments".  The Brexit vote in June also caused concern among policymakers.  Even before the vote, policymakers noted that "the upcoming British referendum on membership in the European Union could generate financial market turbulence that could adversely affect domestic economic performance." While the Fed's mandate states that policymakers must "promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates" in the US, global events matter.  The US presidential election also gave policymakers reasons for pause.  At the start of last month, they judged that "the case for an increase in the federal funds rate [ie. interest rates] has continued to strengthen but [we] decided, for the time being, to wait for some further evidence of continued progress toward its objectives."  While the UK voted for Brexit and the US voted for Donald Trump, the market reaction has been relatively calm.Investors are now expecting a mini-economic boom in the US and have pulled cash out of bonds and emerging markets and into US equities. Following last night's announcement, yields on two year Treasury bonds climbed to a seven-year high on expectations of faster rate hikes.
Implied borrowing costs across Europe also ticked higher, with UK benchmark 10-year gilt yields

Saturday, December 17, 2016

In the future, Romania may not receive funding from international organizations such as the IMF or the EU.  "There are no guarantees that the IMF, EU or other supra-national or international organizations will make available to Romania similar financing programs in the future. Both the current account and the budget deficit are rising. If these deficits are going to require the availability of future financing, Romania may pass additional measures that could hinder economic growth". NBR officials declined to comment on the statements included in the MedLife IPO prospectus. Last month, Lucian Croitoru, advisor to NBR governor Mugur Isărescu, warned that Romania was closer than one may think "either to an adjustment towards its potential, or towards recession", if the adjustments aren't made on time.  He wrote, on the NBR blog, that the monetary policy is more relaxes than intended, and the "relaxed fiscal policy has generated a fiscal impulse which stimulated the economy more than would have been implied by the negative amount of the GDP gap". This process whereby the VAT cuts and salary increases stimulate other countries' economies cannot last, and the inflation driven exclusively by demand will increase,  Mr. Croitoru said. He added: "In that context, the measures from 2016, to cut VAT by 4 percentage points together with the significant increase of wage expenditures, are not sustainable. They are putting pressures on the current account deficit and on inflation".  This year, NBR governor Mugur Isărescu has warned on several occasions against the fiscal relaxation measures passed together with salary increases in an electoral year. 

Friday, December 16, 2016

Raiffeisen Bank has snuck a gloomy prediction for the Romanian economy in the prospectus of the MedLife IPO, which it intermediates. "Most analysts claim that Romania needs a new stand-by agreement with the IMF", the MedLife prospectus , published yesterday in order to inform the investors interested in the Romanian stock market and in the MedLife shares in particular. The announcement is mind-boggling, especially as politicians and government members assure us that we are going to have economic growth, higher wages and lower taxes. Furthermore, prime-minister Dacian Cioloş has publicly announced that he would challenge all populist laws with the Constitutional Court. "Raiffeisen Bank" has dropped the aforementioned "bomb" in the Medlife IPO, five days ahead of the parliamentary elections. Except it hasn't taken responsibility for it directly, instead alleging this idea is the result of consensus from "most analysts", without naming them. It is not out of the question that "Raiffeisen Bank" just wanted to make noise and draw attention from investors, as the Romanian stock market has failed to become attractive, despite the projects for expansion conducted by the Bucharest Stock Exchange (the Project to remove the barriers to the entry on the stock market) and by the Financial Oversight Authority (the STEAM project, which has as its goal the move up to the emerging market status) and having brought in Pole Ludwik Sobolewski as CEO. Despite all these efforts, the BSE daily turnover only occasionally passes 7 million Euros a day. "Raiffeisen Bank" has stood out lately, precisely by the fact that it has threatened the Romanian government with a lawsuit in the International Court of Arbitrage, as well as following the ruling of the Supreme Council of Magistrates (CSM), which accused the bank of trying to intervene in the ruling rendering process in relation to the laws concerning the banking sector. The bank later changed its tune and sponsored an event of the Romanian government, which was attended by German finance minister Wolfgang Schauble.