Best of Breakingviews 2016: Our readers’ top picks 30 Dec 2016 You demonstrated a varied, voracious appetite for insight in 2016. The most-clicked columns, podcasts and graphics encompassed the rise of Trump and Brexit Britain to Singapore, Saudi Arabia, negative rates, tech titans and an ethical dilemma for Harvard's business school dean.
Dominican Republic economy faces tricky crosswinds 30 Dec 2016 The Caribbean nation of 10 mln has notched the strongest GDP growth in the Western Hemisphere for the third year running - over 6 pct for 2016. Low oil prices, pro-business reforms, U.S. growth and an influx of cash from Venezuela all helped. The perfect storm won't keep blowing.
Viewsroom Predictions 2017: Part 1 30 Dec 2016 Breakingviews columnists from Europe, Asia and the United States discuss what’s ahead, including Donald Trump and inequality, how smaller M&A deals will shine over big acquisitions, and why Disney may ponder buying Netflix. Plus, what we got right – and wrong – about 2016.
Disney buying Netflix could be practical magic 30 Dec 2016 The $160 bln media firm is on the hunt for technology that will connect consumers directly with its movies and TV shows. It's also searching for a successor to boss Bob Iger. Buying the $50 bln Netflix, plus CEO Reed Hastings, would be a financial stretch but just might pay off.
Pharma’s middlemen will feel the squeeze in 2017 30 Dec 2016 The U.S. healthcare system's opacity and complexity have stoked drug prices, fueling the flow of dollars to insurers, wholesalers and pharmacy benefit managers. The growth of high-deductible insurance will bring much-needed transparency - and unaccustomed pressure on these firms.
Investment banks’ next trade will be EU education 30 Dec 2016 No European city has as many international school places as London. That’s a problem for firms thinking of asking staff to move their families out of the UK capital following the Brexit referendum. The solution will be for banks to get into the education business themselves.
Hadas: Russian Revolution won’t be the last 30 Dec 2016 Soviet communism initially looked like the future, but rapidly became a cruel failure. Its disappearance left big-government democratic capitalism as the sole surviving system. A century later, that hybrid model is now under global threat. It might not last another century.
India is gearing up to recapitalise its big banks 30 Dec 2016 The country's lenders already need $27 bln or more of capital. Now Premier Narendra Modi's scrapping of high-value banknotes could lead to a spike in bad loans at small businesses. That might rally support for a move and help Modi as he repositions himself as a champion of the poor.
Drones will take off for big business 30 Dec 2016 Today's market mainly targets hobbyists. That will change in 2017, as countries clear up legal uncertainty and big corporations turn to commercial drones for everything from crop-dusting to parcel delivery. Tech groups from Intel to Chinese unicorn DJI should benefit.
Trump’s job spin pales beside Obama’s recovery 29 Dec 2016 Some 8,000 new roles at Sprint and OneWeb touted by the U.S. president-elect already were planned, part of a bigger pledge by investor SoftBank. Economic activity is creating 180,000 positions monthly. To keep that going much longer will require more than Trump's double-talk.
Hadas: Four resolutions for a more humane economy 3 Jan 2017 Brexit and Donald Trump’s election are part of a rebellion against the social and economic establishment. Changes are needed to prevent a dangerous disintegration. Here are some suggestions: forget GDP, fight alienation, support communities and promote local decision-making.
American inequality will widen under Trump in 2017 29 Dec 2016 A populist wave sent the real-estate developer to the White House. But his economic policies will help working-class folks the least. His tax cuts, repatriation of corporate cash and infrastructure push will line the pockets of the rich before trickling down to the less well-off.
GE’s succession path lit by dueling deals 29 Dec 2016 The $275 bln industrial giant has a long list of executives capable of taking over when Jeff Immelt retires. In addition to engines and turbines, GE manufactures CEOs. The progress of two major M&A transactions will give the board a clearer view in 2017 on who should get the job.
Psychedelic drugs enlighten $2.5 trillion problem 29 Dec 2016 That was the cost of mental illness in 2010, an expense set to double by 2030, says the World Economic Forum. Psilocybin, magic mushrooms' active ingredient, has alleviated suffering in clinical trials. Illicit stigma aside, high returns on investment could make it worth a trip.
Banking whales have had their day 29 Dec 2016 A year ago, Bank of England boss Mark Carney suggested regulators had cracked the "too big to fail" bank problem. Yet new rules keep coming, and international cohesion is fading. The biggest cross-border lenders like HSBC will find it ever harder to make their cost of capital.
China’s slow salt reform leaves sour aftertaste 29 Dec 2016 China is finally dissolving the world's oldest monopoly. The government's difficulty loosening its grip on the salt trade, which accounts for a tiny fraction of government revenue, suggests dim prospects for reform in more lucrative sectors such as tobacco or telecoms.
Korea scandal shows risk of pension giant 29 Dec 2016 Prosecutors detained the head of South Korea's $450 bln pension fund over suspicion that it voted for a Samsung merger under government pressure. The case highlights how the country's largest investor could be manipulated at shareholders' expense. Korea could use a safeguard.
Tencent heads for high score in gaming M&A 29 Dec 2016 China's biggest tech company will look abroad for growth in 2017. It will probably follow its $9 bln purchase of mobile hit-maker Supercell with similar-sized deals. But these will barely move the needle. A bolder move would be to bid for U.S. heavyweight Activision Blizzard.
Diverging central banks will power dollar in 2017 28 Dec 2016 Donald Trump’s promise of increased U.S. government spending and the likelihood of tighter Fed policy contrast with continued weak growth and loose monetary conditions in the euro zone and Japan. That means the greenback is set to get stronger against most other currencies.
Guest view: China’s currency faces big 2017 test 28 Dec 2016 With rising U.S. interest rates and trade tensions, stop-gap measures from Chinese authorities won't keep the renminbi from depreciating, argues former Citibank executive William Rhodes. The longer reforms are postponed, the greater will be the eventual cost to economic growth.
U.S. company cash deluge will lift only some boats 28 Dec 2016 Slashing corporate tax rates may break the dam on $2.5 trln booked overseas. The actual amount repatriated could be less than half that, however. And while CEOs and politicians talk about more jobs and factories, it's best to brace for a flood of buybacks, dividends and deals.
Dow 20,000 is the market’s version of fake news 28 Dec 2016 The post-election rally has pushed the storied average to the verge of a new milestone. Though not artificial, it's virtually meaningless. Other things – PE ratios, growth rates, fiscal spending and tax rates – will determine whether the aging bull market can flex new muscles.
Maduro will survive, just, on Venezuelan tightrope 28 Dec 2016 The economy is a wreck, but the country's inept leader has probably done enough to avoid being forced from office in 2017, unless by fellow Chavistas. A bond swap and army-led food programs helped. His gutting of institutions, though, risks violence that may yet be his undoing.
ECB’s tough love is good for banks, bad for Italy 28 Dec 2016 The European Central Bank says Monte dei Paschi needs 9 bln euros of extra capital - up from 5 bln euros - after seeking state aid. Raising the bar is a prudent response to prolonged uncertainty. But it adds to Rome’s debt, and may push up the bailout bill for other banks.
Saudi’s IPO gusher will lay dormant 28 Dec 2016 A $2 trillion flotation of oil producer Aramco, once planned for 2018, is likely to slip further down Riyadh's agenda. Politics makes the IPO complicated, and recovering oil prices make it unnecessary. While Saudi's bankers may wish it otherwise, postponing is the logical choice.
Europe’s best antidote to populism is unpopularism 28 Dec 2016 Parties that promised to take on the elite had a roaring 2016. Even so, the withering of the moderate centre isn’t inevitable. In Greece the pendulum is swinging away from radical government. Liberals with sound economic policies can win – if they’re willing to make enemies.
Qualcomm’s big Korea fine is small part of problem 28 Dec 2016 The U.S. giant says it will fight a record $854 mln fine from the country's antitrust watchdog. But the bigger threat will be if South Korea forces the company to license patents to rivals. If other governments follow suit, the financial damage to Qualcomm could be high.
Facebook and Google will swallow the ad world 27 Dec 2016 The two Silicon Valley titans are expected to account for nearly half the $270 bln budget for digital advertising in 2018. Even China's behemoth, Alibaba, is a distant third. Such dominance makes it harder and harder for starry-eyed startups to build sustainable businesses.
China’s central bank will lose its longtime leader 28 Dec 2016 Zhou Xiaochuan will step down in 2017, part of a wider leadership reshuffle as President Xi further consolidates power. Investors will miss the affable technocrat, who helped steer the world's second-largest economy for 15 years. Any successor will lack Zhou's market credibility.
New Toshiba hit is more fallout from poor controls 27 Dec 2016 The $14 bln conglomerate may take another multibillion-dollar writedown at its nuclear-power business, on a unit purchased for nothing up front. That will further weaken the indebted Japanese group's balance sheet - and reignites fears about management's grip on the company.