Mario Centeno, former Bank of Portugal governor discusses monetary policy, rates and his candidacy for ECB vice president position. He says that as Europe has entered a phase of structural uncertainty, "EU institutions will increasingly be called upon to act as a stabilizing actor" and that a ''voice of consensus'' is his well-known trademark he will be to the ECB if elected vice president. He speaks with Tom McKenzie and Anna Edwards. ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Asia-Pacific economic outlook for 2026, with specific emphasis on China, Japan, India, Taiwan, and New Zealand. Core Insights and Arguments 1. **China's GDP Growth**: - Expected real GDP growth of 4.8% in 2026, surpassing consensus expectations of 4.5%-4.6% due to strong export growth and easing fiscal policy [6][5][4] 2. **Housing Market in China**: - The housing market is not expected to bottom out across all indicators; housing starts are down approximately 80% from peak levels in 2020, while construction activity has fallen about 60% [7][4] - Home prices have significantly declined, with expectations that they will remain lower by the end of 2026 [7][4] 3. **China's Trade Surplus**: - Anticipated to increase further, with a record trade surplus of nearly $1.2 trillion in 2025 expected to rise in 2026 due to competitive manufacturing and a focus on exports [13][14][4] 4. **US Tariff Relief**: - Modest tariff relief expected for Asia, particularly benefiting India, as negotiations continue to lower trade barriers [19][4] - Taiwan has signed an agreement to reduce US tariffs in exchange for significant investments in semiconductor and AI production [21][4] 5. **Japan's Fiscal Policy and Yields**: - No significant rise in bond yields expected post-election; fiscal policy may loosen but will be constrained by market pressures [25][26][4] - The yen is expected to strengthen slightly, moving away from the current weak levels [31][4] 6. **Growth Surprises in Asia-Pacific**: - Taiwan and New Zealand are projected to outperform consensus growth expectations, driven by tech exports and recovering economic conditions, respectively [33][4] 7. **Inflation Outlook**: - Inflation pressures are not expected to drive significant policy shifts among Asia-Pacific central banks, with CPI inflation returning to pre-COVID levels [41][4] - China and Thailand are expected to see continued easing in monetary policy due to low inflation [42][4] 8. **Central Bank Policy Rate Expectations**: - Anticipated tightening in Japan, Taiwan, and New Zealand, with the Bank of Japan expected to resume rate hikes [47][48][4] 9. **Asian Currencies Performance**: - Majority of Asian currencies expected to appreciate against the USD in 2026, with the CNY anticipated to strengthen due to strong fundamentals [52][4] Other Important Insights - The report highlights that most themes from the previous year were accurate, with notable surprises including the rise in government bond yields in China and the underperformance of the Indian Rupee [56][4] - The analysis includes a review of past predictions and their outcomes, reinforcing the credibility of the current forecasts [56][4]

Core Insights - The potential nomination of Kevin Warsh as the next Fed chair could lead to a less aggressive approach to interest rate cuts compared to his rival Kevin Hassett [2][8] - Betting markets indicate a 60% chance for Warsh's nomination and a 15% chance for Hassett, following Trump's comments favoring Hassett's current position [3][4] - The selection of the new Fed chair is crucial as it will significantly impact monetary policy and the federal funds rate, affecting borrowing costs [5][10] Group 1: Candidates and Their Positions - Kevin Warsh has gained momentum as the front-runner for the Fed chair position, with Trump expressing a desire to keep Hassett in his current role [2][8] - Hassett is viewed as the most aggressive rate-cutter among the candidates, aligning closely with Trump's views on monetary policy [6][14] - Warsh, while advocating for lower rates, is perceived as less dovish than Hassett, indicating a potential moderation in rate-cutting policies [7][8] Group 2: Economic Implications - The new Fed chair will face the challenge of balancing a slowing job market against persistent inflation, which is currently above the Fed's 2% target [10][11] - Fed officials are expected to maintain steady interest rates in the upcoming meeting, with uncertainty surrounding future rate cuts [12][13] - Political pressures from the Trump administration regarding interest rate cuts could undermine the Fed's independence and credibility in managing inflation [13][14]

Group 1: Gold Market Dynamics - Gold prices experienced a significant decline, dropping as much as 1.7%, following President Trump's comments regarding the nomination of Kevin Hassett as Federal Reserve chair, which raised doubts about the Fed's future leadership [1][2] - The uncertainty surrounding the new monetary chief is expected to keep gold prices supported, but concerns about the Fed potentially not lowering borrowing costs as much as anticipated are negatively impacting non-yielding gold [3] - Gold has continued its rally into 2025, driven by renewed attacks on the Fed's independence and expectations of monetary easing [2] Group 2: Federal Reserve Insights - Recent inflation and unemployment data have led several Federal Reserve officials to indicate a willingness to pause rate cuts, citing a stabilizing labor market and ongoing inflation pressures [4] - Five regional Fed bank presidents have suggested that the central bank is well-positioned to wait for more data before making further policy decisions [4] Group 3: Silver Market Developments - Silver prices fell significantly, with spot silver declining as much as 6% after a previous modest decline, influenced by regulatory actions in China that limited trading positions and high-frequency trading [5][6] - The Shanghai Futures Exchange has implemented measures to reduce volatility by removing high-frequency trading servers and lowering the maximum number of intraday opening positions for silver futures [6]

Core Argument - The article argues that Fannie Mae and Freddie Mac should be terminated rather than expanded, suggesting that their existence distorts housing policy and monetary policy [1] Group 1: Housing Policy Implications - The expansion of Fannie Mae and Freddie Mac is viewed as a potential risk to the housing market, as it may lead to increased government involvement in housing finance [1] - The article emphasizes that the current housing policy is overly reliant on these government-sponsored enterprises, which could lead to inefficiencies and market distortions [1] Group 2: Monetary Policy Considerations - The involvement of Fannie Mae and Freddie Mac in the housing market complicates monetary policy, as their actions can influence interest rates and credit availability [1] - The article suggests that a clear separation between housing policy and monetary policy is necessary to ensure effective economic management [1]

Core Insights - The precious metals market remains vibrant as it enters 2026, with various metals exhibiting different growth potentials influenced by interest rate paths and inflation cycles [1] - FXGT notes that while gold, silver, and platinum group metals (PGM) share similar macro support, their unique supply-demand dynamics are significantly altering their relative performance in investment portfolios [1] Group 1: Precious Metals Performance - By early January 2026, gold has surpassed the $4,500 mark, while silver and platinum are approaching or breaking historical highs [1] - From the end of 2024 to early January 2026, silver has led the precious metals sector with a 170% increase, followed by platinum and palladium, while gold's 65% increase appears relatively moderate [1] - The current market dynamics reflect a "catch-up" effect of silver against gold, driven by new demand in battery and solar sectors, as well as silver's role as a high-beta substitute for gold [1] Group 2: Platinum Group Metals Outlook - FXGT observes that platinum remains historically undervalued relative to gold, currently priced at about half of gold's value, indicating potential for price recovery [2] - Despite past challenges due to declining demand from diesel vehicles, platinum's price has room for improvement compared to its peak value of 2.5 times gold's price in 2007 [2] - Palladium faces long-term threats from the rise of electric vehicles, but potential delays in subsidy reductions by major economies may provide temporary relief for palladium prices [2] Group 3: Macroeconomic Considerations - Investors should closely monitor the resonance of global fiscal and monetary policies, as many major economies maintain large budget deficits and are relaxing fiscal constraints for military and infrastructure spending, which is favorable for precious metals in the long term [2] - The upcoming leadership change at the Federal Reserve in May 2026 may increase uncertainty in monetary policy, potentially heightening market volatility [2] - Given that the gold market is significantly larger than that of silver and PGM, even a small outflow of safe-haven funds from gold can have a substantial multiplier effect on the prices of the latter [2]

Group 1: Eurozone Industrial Output Recovery - Eurozone industrial activity showed a phase of improvement in November, with industrial output rising by 0.7% month-on-month, slightly better than market expectations [3] - The rebound is seen as a localized repair rather than a comprehensive recovery, with capital goods being a key driver of industrial output growth [3] - Energy output contracted significantly, and production of consumer goods, both durable and non-durable, declined, indicating persistent weakness in end-demand [3] Group 2: Strong U.S. Retail Sales - U.S. retail sales data for November demonstrated strong performance, confirming the role of consumer spending in supporting the economy [5] - The month-on-month retail sales growth exceeded market expectations, alleviating concerns about a sharp decline in year-end consumption [5] - Core sales data, excluding automobiles and energy, showed a robust upward trend, indicating a solid foundation for consumer improvement [5] Group 3: Moderate Recovery in the UK Economy - The UK economy showed unexpected signs of recovery in November, with monthly GDP achieving moderate growth, providing a buffer for year-end economic prospects [7] - The growth was driven by both the services and manufacturing sectors, reflecting improvements in economic activity across multiple levels [7] - Over the past three months, the economy has seen slight growth, maintaining positive year-on-year growth rates, indicating resilience without falling into recession [7] Group 4: Federal Reserve Beige Book Insights - The latest Federal Reserve Beige Book presents a relatively balanced view of the U.S. economy, with most regions experiencing slight to moderate expansion [9] - The report indicates a stable labor market, with no significant signs of cooling, while businesses emphasize flexibility in hiring practices [9] - Wage growth remains moderate, and many businesses report that cost pressures are normalizing, providing a realistic basis for further inflation cooling [9]

The dramatic escalation of pressure by the White House on the Federal Reserve and Chair Jerome Powell to lower interest rates is ticking off billionaire Michael Bloomberg. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, and the founder of Bloomberg Philanthropies. He’s also the former mayor of New York City whose name has been bandied about frequently as a possible presidential candidate. I’m reminding you of this right up front as a gentle reminder of ...

Core Insights - The financial data for 2025 indicates a robust performance, with new loans totaling 16.27 trillion yuan, reflecting effective monetary policy and strong credit demand from both enterprises and households [1][2]. Group 1: Financial Performance - The total social financing scale for 2025 reached 35.6 trillion yuan, with broad money (M2) exceeding 340 trillion yuan and the RMB loan balance surpassing 270 trillion yuan, showcasing a solid financial system supporting economic stability [1]. - The average interest rate for newly issued corporate loans in December 2025 was around 3.1%, a decrease of 2.5 percentage points since the second half of 2018, indicating lower financing costs for businesses [1]. Group 2: Loan Distribution and Demand - In 2025, new loans to enterprises amounted to 15.47 trillion yuan, indicating that over 90% of new loans were aligned with corporate needs, with more than half of these being medium to long-term loans [2]. - Key sectors attracting loans included technology (11.5% growth), green initiatives (23% growth), inclusive finance (10.3% growth), elderly care (60.2% growth), and digital sectors (14.6% growth), all outpacing the overall loan growth rate [2]. Group 3: Policy and Economic Development - The optimization of structural monetary policy tools has been pivotal, with increased quotas for loans supporting technological innovation and rural development, alongside the introduction of new financial instruments [3]. - The Chinese central bank plans to continue a moderately loose monetary policy in 2026, focusing on counter-cyclical adjustments to enhance domestic demand and supply optimization, thereby fostering stable economic growth [3].

Group 1 - The recent monetary policy adjustment is characterized as a precise structural interest rate cut rather than a traditional comprehensive rate cut, aimed at reducing the cost for commercial banks to borrow from the central bank [2] - The central bank's funding will be directed towards specific sectors, particularly supporting private small and medium-sized enterprises with high R&D investment, indicating a focus on technology companies for future growth [2] - A reduction in the down payment for commercial real estate has been implemented, lowering it from 50% to 30%, which is a strategic move to alleviate inventory pressure in the commercial property sector [3][4] Group 2 - The inventory pressure in commercial real estate is significantly higher than in residential real estate, with the de-stocking cycle for commercial properties being 2-4 times longer than that of residential properties, especially in first-tier cities [3][4] - As of October 2025, the inventory of commercial properties in first-tier cities reached 31.49 million square meters, with an average sales volume of 458,000 square meters per year, resulting in a de-stocking cycle of 68.8 months (approximately 5.7 years) [4] - Shanghai faces the most severe situation with a commercial property inventory of 20.97 million square meters and a de-stocking cycle of 253.5 months (approximately 21 years) [5] Group 3 - The vacancy rate in second and third-tier cities is high, with some office buildings exceeding a 35% vacancy rate, indicating a challenging market environment [6] - The rental rates for commercial properties in key cities are declining, with a drop from 85.37% to 82.54% in occupancy rates and an average rental decrease of 11.9% [7] - The conditions for purchasing commercial real estate are stricter than for residential properties, but there is potential for investment in apartments, especially in major cities where rental yields can be attractive [9] Group 4 - Recent favorable policies in the real estate sector include tax exemptions for individuals who sell their homes and purchase new ones within a year, although this is a continuation of previous measures rather than a new initiative [10][12] - The central bank is expected to maintain a relatively loose monetary policy, with indications that the Loan Prime Rate (LPR) may be adjusted downwards in the near future, signaling a potential increase in liquidity in the market [14]