Macri sacrifice of finance chief buys limited time 27 Dec 2016 The Argentine president has scapegoated Alfonso Prat-Gay for the economy's failure to take off. His exit won't reduce 40 pct inflation and a bloated deficit. Macri's policies are sensible but not popular. The margin for error before October's midterm elections just narrowed.
Wal-Mart’s tortoise-like digital pace may pay off 27 Dec 2016 The plodding $218 bln retailer is slowly making strides in e-commerce. August's $3 bln purchase of Jet.com will accelerate the push to compete with Amazon in 2017. Patchy customer service and a brick-and-mortar image are some of the biggest remaining hurdles to online success.
Rate hikes will help U.S. pensions, but not enough 27 Dec 2016 If bond yields head higher, that will cut cash-strapped public retirement funds' sky-high liabilities. Weak returns and weaker-kneed politicians mean relief could be fleeting, however, especially if the economy falters. Illinois and Dallas are canaries in a $1 trln coal mine.
Trump, conservatives will clash over Ex-Im Bank 23 Dec 2016 The president-elect's "America First" industrial policy should help the agency that finances foreign purchases of U.S. goods. It has been hobbled by Republicans who deride it as corporate welfare. After the Carrier deal, a collision with free-market capitalism looks inevitable.
Harry Potter can add magic to predictive power 23 Dec 2016 As J.K. Rowling's boy wizard turns 20, it's a good time to recall how many agents and publishers rejected him. Similarly closed minds help explain why recent political upheavals have surprised many and economic forecasts are often wrong. A little more imagination goes a long way.
Deutsche wins biggest in U.S. regulatory casino 23 Dec 2016 The German bank can weather a $7.2 bln hit for mortgage bond mis-selling. Credit Suisse's settlement means it and Deutsche now have similar capital ratios, but the latter had more to lose. Barclays' lack of a deal reflects its pluck - but possibly a bigger balance sheet thwack.
Italy’s Monte dei Paschi bail-in is a bailout 23 Dec 2016 EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.
JPMorgan’s Monte Paschi flop is in eye of beholder 23 Dec 2016 The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.
Driverless cars will be steered by insurers 23 Dec 2016 Who's to blame in a crash when no one's at the wheel: owner, manufacturer, software developer or someone else? And what if two collide? The industry needs answers, even as autonomous vehicles threaten to erode $200 bln a year in U.S. premiums. Expect greater clarity in 2017.
Russian sanctions will shrivel to soccer boycotts 23 Dec 2016 Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.
Chinese cinema will have a rosier plot in 2017 23 Dec 2016 Ticket sales will grow at their slowest pace in a decade in 2016, to a bit more than $6 bln. Blame lousy movies, lower subsidies from online sellers, and a fraud crackdown. The picture could brighten in 2017 as a promising slate of films wins back moviegoers and investors.
Race to build will add impetus to old-world stocks 23 Dec 2016 Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.
Carl Icahn tops Trump’s conflicted shadow council 22 Dec 2016 The activist will be an off-the-books adviser on regulatory reform. Like the execs on the president-elect's policy forum, Icahn won't have to disclose when his recommendations and his financial interests coincide. Unfettered business oligarchy is no way to run a government.
Uber’s $70 bln value accrues mainly to customers 22 Dec 2016 Exiting cutthroat China should help, yet the ride-share giant may still lose $2.8 bln in EBITDA this year. Competition is tough even in U.S. cities like New York. Economics suggests Uber is valuable to its passengers. Turning a profit for investors, though, is a different story.
New White House council muddies Trump trade policy 22 Dec 2016 The U.S. president-elect chose China critic Peter Navarro to head a trade advisory group. Yet Commerce nominee Wilbur Ross is set to lead on such issues. There's also the U.S. trade office. The regime risks speaking in multiple voices and confusing nations negotiating with them.
Latin America’s rightward turn faces serious tests 22 Dec 2016 Several countries in the region have shunned leftist populism of late. But the pain from economic reforms in Argentina and Brazil could make voters reconsider, if it's not accompanied by growth. And Chile's consensus on fiscal prudence may unravel.
Nokia’s new patents war dials up disappointment 22 Dec 2016 The Finnish group is countersuing Apple for patent abuse after antitrust accusations. Recent cost cuts have boosted Nokia's margins, but drawn-out lawsuits could hurt a business that is a third of operating profit. With network sales weak ahead of 5G adoption, it's a bad signal.
Monte dei Paschi endgame can still be made fair 22 Dec 2016 Italy's third-biggest bank unsurprisingly failed to raise 5 billion euros. A forcible debt-for-equity swap would limit state money. If compensation was only paid to mis-sold retail creditors, MPS could be rescued within European rules and without unfairly hitting taxpayers.
Banco Popular’s new broom has plenty to tidy 22 Dec 2016 Shares in the Spanish bank are already down more than 60 percent in 2016. Popular's new chairman Emilio Saracho will have cleaning up to do when he takes over next year. He broadly has two options, but the most likely is another capital hike to cover dud assets once and for all.
Grocery sector is ripe for big checkouts 22 Dec 2016 Pressure on traditional food retailers is relentless, and many-pronged. Customers are spending less of their budget on food and suppliers like Unilever are toying with selling direct to shoppers. Then there’s Amazon. The solution isn’t better retailers – it’s fewer of them.
Fund manager pay will be next to feel the squeeze 22 Dec 2016 Low returns, lacklustre performance and the growth of cheaper index-tracking funds are squeezing fees. That in turn means lower revenue and margins. To placate shareholders, asset managers will have to follow the example set by investment banks – and pay their people less.
Evergrande’s M&A misadventure is costly 22 Dec 2016 The Chinese property developer has spent $5.2 bln building a 14 pct stake in larger rival Vanke. With the regulator cracking down on capital market "savages" and Evergrande itself ruling out a takeover, the bet is already 13 pct underwater. It can hardly afford the misstep.
Hong Kong is stage for Tesla’s next power surge 22 Dec 2016 Though it's congested and boasts limited green credentials, the city's residents snap up thousands of Elon Musk's slick electric cars. The tax breaks that make them affordable are up for review. But 2017's cheaper Tesla could show the world how to switch on subsidy-free success.
Libor-style doubts gut U.S. chicken benchmark 21 Dec 2016 The Georgia Dock index, used to set prices paid by grocery stores, has been suspended indefinitely. Based on submissions from producers, the measure had diverged from others and ruffled some feathers. Billions may be at stake for consumers - and companies like Tyson Foods.
Morgan Stanley a victim of its own excess 21 Dec 2016 Shares of major banks have surged on hopes that Trump's agenda will boost income. BofA, Citi and JPMorgan are now fairly valued and stand to gain as revenue grows. Morgan Stanley's surplus capital may temper the firm's rebound, though, unless DC's new masters change the rules.
Biggest financial merger of 2017: SEC and CFTC 21 Dec 2016 Donald Trump has vowed to cut the red tape in Washington. America's labyrinth of financial regulators makes a fecund target. But crunching the two main market watchdogs, due to their heavy entrenchment in Congress, will take all of the president-elect's negotiating skills.
Deals from latest M&A boom will disappoint in 2017 21 Dec 2016 With corporate matchmaking proceeding apace, but slowing from its recent peak, investors are starting to calculate whether one plus one actually made three. More than half of mergers don't live up to promises. Three from the 2014 crop offer a guide to the letdowns of the future.
Spanish banks get their mortgage comeuppance 21 Dec 2016 Domestic lenders must refund excess interest charged on housing loans with floor clauses, after the European Court of Justice unexpectedly overturned a Spanish ruling. Fair enough: the original verdict was too kind on banks. The hit to earnings looks painful, but manageable.
Mediaset shares on the up bit of a rollercoaster 21 Dec 2016 Silvio Berlusconi's group has soared in value on hopes of a takeover by Vivendi, controlled by Vincent Bollore. The French tycoon may still unlock a breakup value higher than the current share price. Yet his objectives aren't clear, and Mediaset may also face a big dip.
South African debt will be downgraded before Zuma 21 Dec 2016 After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.