LONDON (Reuters Breakingviews) - The archetypal balanced portfolio, 60% equities and 40% fixed income, may not outlast the coronavirus crisis. The traditional mix goes off kilter if bonds are going to offer less and less income and more and more volatility. The solution may be to hold more stocks and cash, and possibly gold, too.
LONDON (Reuters Breakingviews) - Germany is challenging central banker autonomy in order to defend it. Judges at its top court ruled on Tuesday that the Bundesbank would have to stop participating in a long-standing bond buying programme unless the European Central Bank could show it was needed. This won’t stop ECB boss Christine Lagarde forging on with her immediate efforts to lift the euro zone economy out of a virus-induced slump. But it does raise more fundamental questions about the ECB’s cherished independence.
LONDON (Reuters Breakingviews) - A woman’s work is never done, the adage goes. European Central Bank President Christine Lagarde has taken a series of steps to help euro zone economies cope with the coronavirus, including the launch of a 750 billion euro asset-purchase programme less than two months ago. Euro zone politicians’ failure to act as forcefully means she will have to do yet more.
LONDON (Reuters Breakingviews) - There’s an end to everything except, apparently, central bankers’ creativity. Virus-damaged economies will need lots of help to heal, and more downturns are inevitable in the future. The monetary-policy bigwigs will keep coming up with more new ways to stimulate growth.
LONDON (Reuters Breakingviews) - The International Monetary Fund is packed to the gills with highly trained economists. Grim new predictions churned out by their sophisticated models are probably little better than guesses given high uncertainty about what the international lender is calling “The Great Lockdown”. More useful will be the practical help it’s extending to the most vulnerable countries.
LONDON (Reuters Breakingviews) - When it comes to age, 70 is supposed to be the new 50. A similar rethink is on the cards for public debt. Governments are spending freely to combat the economic havoc wrought by the coronavirus. While borrowing will inevitably jump relative to economic output, investors will have higher tolerance thresholds.
LONDON (Reuters Breakingviews) - The Bank of Japan has been an unhappy trailblazer in central banking. What happens to a central bank that has been buying equity exchange-traded funds since 2013 will fascinate peers who are resorting to ever more extreme measures to dig their economies out of a coronavirus-created hole. Among those particularly interested may be Federal Reserve Chairman Jerome Powell, who this week announced plans to buy ETFs that track high-grade U.S. corporate bonds.
LONDON (Reuters Breakingviews) - False dawns are common during financial market slumps. Sterling’s rebound from 35-year lows against the dollar looks like another one.
LONDON (Reuters Breakingviews) - No standing on ceremony for Andrew Bailey. Within a week of taking up his new job, the head of the Bank of England has slashed interest rates to a record low and announced more bond buying. Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde have done similar things in the past week. Their best efforts won’t fix one of the problems that is causing them headaches.
LONDON (Reuters Breakingviews) - Christine Lagarde is building her legacy early and quickly. Less than five months after taking charge, the European Central Bank boss unveiled plans to buy assets worth 750 billion euros. That fixes some of the problems plaguing the euro zone. It also shores up her claim to be Mario Draghi’s worthy heir.