Breakingviews on Twitter
Search League Tables

Sunday, 01 February 2015

BREAKINGVIEWS

The Delta IV Heavy rocket with the Orion spacecraft lifts off from the Cape Canaveral Air Force Station in Cape Canaveral, Florida.

Stolid Q4 U.S. growth provides platform for 2015

30 January 2015

A 2.6 pct rate of expansion in the quarter and 2.4 pct growth for 2014 hardly represent a boom. But it’s still a stronger story than most developed economies. With pay rising, confidence strong and inflation, interest rates and gasoline prices low, the upside remains promising.

Stacks of shopping carts are lined up waiting for customers outside a Costco store in Carlsbad, California.

Costco treats shareholders like staff: equitably

30 January 2015

The U.S. mega-retailer known for paying workers above the minimum wage is similarly treating its owners with greater deference than rivals do. Rather than buying back stock, Costco is paying a $2.2 bln special dividend. It’s a fresh sign of how all stakeholders can be rewarded.

A sign displaying the logotype of VTB Bank, covered with icicles, is seen above the bank office in central Moscow.

Russian central bank chooses banks over rouble

30 January 2015

A surprise interest rate cut suggests the central bank is more concerned about the economy than the value of the currency. Worries about the banking sector’s solvency could explain the move. The downside: Russia could end up with both high inflation and a deep recession.

Athens

Greek deposits fly between a rock and a hard place

30 January 2015

One remedy to capital flight would be to give so-called emergency liquidity assistance to Greek banks. But heavy use of ELA could mean big losses if Greece left the euro. The alternative is to copy Cypriot capital controls. That, though, would be politically toxic in Greece.

Labourers rest as a boy playfully shovels coal at a yard in the western Indian city of Ahmedabad November 20, 2014

Modi market mania faces test in $3.7 bln coal sale

30 January 2015

The government is selling a 10 percent stake in the lumbering monopoly to meet its deficit target. A pledge to ramp up domestic production makes it easier to lure buyers. Still, investor enthusiasm for Coal India shares will set the tone for a big pipeline of chunky deals.

U.S. Supreme Court Justice Antonin Scalia.

U.S. insider trading cops risk pasting from bench

29 January 2015

Prosecutors’ aggressive view of the law has already irked appeals judges, and the Supreme Court may be next. A case on the definition of an illegal tip could give Justice Scalia his long-sought chance to rein in Wall Street watchdogs. Their loss would be a win for clearer rules.

Alibaba

Say "ni hao" to Jack Ma's Amazon-style volatility

29 January 2015

Alibaba’s boss, like the U.S. group’s Jeff Bezos, has built online retail dominance. But there are downsides. Unpredictable earnings are Exhibit A. The Chinese group also has fickle regulators. It may not be the last time investors suffer nearly $40 bln of losses in two days.

Dollars

Why the sky-scraping deal fees over Canary Wharf?

30 January 2015

Qatar’s $4 bln swoop on Wharf-owner Songbird didn’t take long. Once big shareholders folded, the defence against the lacklustre offer collapsed. Yet the target’s support team could pocket up to $45 mln. M&A due process certainly doesn’t come cheap.

An aircraft is silhouetted by the sun.

Qatar stake is vote of confidence in BA-owner IAG

30 January 2015

Taking a 10 pct stake worth $1.7 bln makes Qatar Airways the biggest investor in British Airways’ parent company. The immediate strategic benefit is limited: the groups already cooperate and IAG gets no new capital. But a deep-pocketed, long-term backer can be helpful.

A neon Google logo is seen as employees work at the new Google office in Toronto.

Google and Amazon glimpse big-spending futures

30 January 2015

The search giant reported mediocre Q4 results due to high outlays. The online shopping firm did better but also shelled out hefty sums. Neither can count any longer on economies of scale to boost margins sky-high. They need to make pricey investments just to stay in the game.

A ConocoPhillips gas station in Boulder, Colorado.

ConocoPhillips dividend squeeze tests 2012 split

29 January 2015

The $77 bln oil driller is more exposed than larger rivals to lower crude prices after ditching its refinery arm three years ago. That translates into a Q4 loss of $39 mln and big cuts in planned 2015 spending. Dividends will stay high for now, but growth may suffer as a result.

Market volatility

ECB-induced distortions sprout in debt markets

29 January 2015

Mario Draghi’s asset-purchase plans are warping bond markets. The most obvious and benign consequence is a drop in yields. But there are also insidious effects. Investors shun anything the ECB won’t buy. And market liquidity will become patchier as the programme progresses. 

Ford logos are seen at the assembly line of a Ford car factory

Ford slowdown is more pit stop than problem

29 January 2015

The carmaker’s pre-tax margin slipped to just 4.3 pct in 2014 – and that excludes one-off hits. Revenue declined, too. Such dips are typical, though, when launching new models. Dealing with currency headwinds and autonomous vehicles will present a more enduring challenge.

BREAKINGVIEWS TV ON INSIDER

E-book

Predictions 2015: Animal Spirits and Crisis Ghosts

Breakingviews’ annual compendium of financial and economic predictions for the year ahead is out. From the UK election to IBM via the global economy and geopolitics, our columnists offer insightful, entertaining, provocative and – we hope – profitable ideas for the year ahead.

Features

Peter Thal Larsen

StanChart's woes stretch far beyond corner office

30 January 2015

Worries about bad debts and a sliding share price have raised doubts about Chief Executive Peter Sands’ future. The main challenge for the emerging market lender is to boost returns and retain capital as growth slows. If Sands leaves, his successor will face the same issues.

Pierre Briancon

ECB, Syriza have broken euro zone's German spell

27 January 2015

The European Central Bank’s easing and the Greek anti-austerity party’s electoral victory show the euro zone is breaking free of German dominance. With loose monetary policy and banking union, it seems ready for growth-friendly policies that don’t ignore economic reality. 

Hall of Mirrors

Review: What the Great Depression taught the Fed

30 January 2015

Ben Bernanke is an expert on the famous crash. But Barry Eichengreen argues in his new book that the Fed boss during the 2008 crunch hadn’t learnt the lessons of the boom preceding the bust. Bernanke’s knowledge helped with crisis management, but it is too early to say how much. 

Columns

Rob Cox

Rob Cox: Podemos can improve Spanish capitalism

29 January 2015

After Syriza’s victory in Greece, investors are fretting that Spain’s “We Can” party could derail reform plans and fiscal discipline. They needn’t worry. The Podemos target is the demon of corruption. Even if the movement has already peaked, it has done the country a service.

Andy Mukherjee

India in depth: Relaxing the budget squeeze

28 January 2015

The states of India need a break. They have lived with spending curbs that New Delhi has never accepted for itself. But this has bred angst. The upcoming budget is a chance to boost regional spending even as the federal government cuts back. The rebalancing will spur GDP growth.

Edward Hadas

Edward Hadas: Markets can prosper with new left

27 January 2015

Fringe movements may fuel dangerous populism. But new political parties sometimes offer a healthy response to the intellectual bankruptcy of the established order. Greece’s Syriza government could yet demonstrate how a reworked left can reinvigorate finance and the job market.