Firefighters of last crisis see smoldering danger 12 Sep 2018 Former U.S. officials Ben Bernanke, Tim Geithner and Hank Paulson agree it’s hard to predict the next financial calamity. Defenses, such as a robust economy and strong institutions, would help. But inequality and a diminished civil service will make it harder to soften the blow.
Spectre of the late 1930s haunts Ray Dalio 12 Sep 2018 The Bridgewater founder made positive returns in 2008 when few other asset managers did. Today, he tells Breakingviews, he worries about the U.S. deficit and debt pressures that could soon go critical. The risk of populism and conflict sounds eerily like the pre-war years.
New York’s trouble: a total lack of tunnel vision 12 Sep 2018 The city’s commuters already know that its transport system is hanging by a thread. A halted project to build new tunnels underneath the Hudson river shows there are ways to make things better, but maybe not the will. Political squabbling is an obstacle, but not the only one.
Chancellor: The legacy of ultralow interest rates 10 Sep 2018 This first in a series of "Ten Years After" essays argues the bold monetary experiment that followed Lehman’s demise unleashed speculative manias, carry trades, populism born of inequality, capital misallocation and a China bubble that pose grave threats to the financial system.
Elon Musk is even higher on space than cars 12 Sep 2018 Having already captured two-thirds of U.S. rocket launches, the entrepreneur plans a massive boost to SpaceX's capacity. Unlike Tesla, there's no public market pressure. But Musk is gambling the $28 bln firm can slash prices and spur demand for satellite-based internet service.
Latam can exorcise returning decades-old demons 12 Sep 2018 Argentina’s peso crisis and the stabbing of a far-right candidate in Brazil echo the region’s past economic instability and political violence. Mexico’s oil industry, too, may revisit the 1970s; Venezuela is in a totalitarian time warp. But history doesn’t have to repeat.
EU arms media with a pea-shooter for Google fight 12 Sep 2018 Brussels’ proposals would make it easier for publishers to charge tech groups for using their articles. But given Google and Facebook hold all the market power, the plan would make little difference. Digital dominance calls for antitrust remedies rather than ineffective fiddling.
Climate change could offer banks double salvation 11 Sep 2018 The UN’s alarm about global warming also dangles at least $26 trln in economic gains if the world changes course. Wall Street types should salivate over that number. Taking the lead could also provide some cushion against reputational hits of the kind they took a decade ago.
Chancellor: Zombies are Lehman’s dangerous spawn 11 Sep 2018 Over the past decade, a close relationship exists between the rise in the number, and survival rate, of unproductive firms and the decline in interest rates. Easy money has allowed these zombies to roam freely, infecting the world’s economies.
Loeb needs Campbell Soup to taste more like Heinz 11 Sep 2018 The activist is trying to replace the board at the indebted $12 bln food group. He’s backing off demands for a sale, though. That leaves improving lackluster margins. Success could bring an investment win, but it’s a grind more suited to Kraft Heinz backers 3G Capital.
Japan’s Renesas speeds into autonomous M&A wreck 11 Sep 2018 The Tokyo-based chipmaker is buying U.S. peer Integrated Device Technology for $6.7 bln. A promised uplift in revenue from selling self-driving and connected-car technology sounds optimistic. Even if Renesas can achieve such synergies, the return on investment barely stacks up.
Cox: Too-big-to-fail bias just now fading away 11 Sep 2018 For the first time since the financial crisis began, America’s 5,000 smaller banks are paying less to fund their businesses than mega-banks like JPMorgan and Citi. The shift, evident in the most recent quarterly FDIC data, suggests a leveling of the playing field 10 years on.
Didi falls way behind Uber on road to IPO 11 Sep 2018 Both burn heaps of cash, but new figures reveal that the $56 bln Chinese app pockets just two cents of every rider dollar. For $72 bln Uber, the roughly equal sum after subsidies is 23 cents. Differences are getting clearer even if neither looks ready to ride onto public markets.
Chinese Tesla’s $1.3 bln IPO revs up too fast 11 Sep 2018 Electric-car maker Nio has a rich price tag to match its premium branding. Under the bonnet, though, it looks less shiny. The group combines an opaque legal structure favoured by tech giants with dependence on a local auto partner. Sales are still nascent, and rivals abound.
The Exchange: Frank on finance 10 Sep 2018 Barney Frank helped craft the post-crisis rules that put banks back on track. He talks with John Foley about how politics has made the system more fragile, why populism thrived on the right but fizzled on the left, and what it was like to be one of the few openly gay lawmakers.
Wall Street brains mostly stumped by tech dilemmas 10 Sep 2018 Giant opportunities and pay packages lured Imran Khan and other rainmakers to Silicon Valley. Their record is mixed at best at Snap, Alphabet and Twitter. Raising capital is easy, instilling discipline harder, and finding ways to beat dominant rivals nearly impossible.
Chancellor: The mother of all speculative bubbles 11 Sep 2018 Since the interest rate discounts future cash flows, the central banks’ policy of ultralow rates has had an outsized impact on investments whose income lies far out in the future, whether through tech firms or 100-year bonds, and on assets providing no income. Danger awaits.
Apple gets schooled in lose-lose trade strategy 10 Sep 2018 President Trump suggested that the iPhone maker build products in America if it wants to avoid tariffs on Chinese goods. That sends the message that hurting U.S. companies is an acceptable price to pay for insisting trade partners bend to U.S. demands. Escalation is inevitable.
Viacom has chance to pitch its own script 10 Sep 2018 The controlling Redstone family won’t be trying to reunite the media group with sister company CBS any time soon. New leadership, international expansion and an improved movie slate are aiding Viacom’s recovery. At $12 bln it’s cheap, too. It’s a tastier target than CBS.
Musk takes a couple of toes off the pedal 10 Sep 2018 The $45 bln electric-car maker's CEO has promoted an insider to run the autos unit, among other changes, after "in-depth" talks with directors. An experienced outsider would have been better. Musk remains free to overpromise and underdeliver.