Hugo Dixon: Greek ultimatum is a bad idea 1 Jun 2015 Some say the euro zone and IMF should present Greece with a take-it-or-leave-it offer, set a deadline, and threaten to cut off its banks if it doesn’t agree. This could play into the hands of Greek nationalists who would argue that foreigners were again bullying Athens.
Renzi’s reform agenda rattled but still on course 1 Jun 2015 The Italian prime minister’s modest showing in regional elections weakens his hand and shows growing dissent at his domestic programme. But Matteo Renzi still has momentum and the economy is recovering. If the latter persists, he has a limited window to force change.
Banks could get stuck in FIFA penalty area 29 May 2015 Over 20 lenders are mentioned in the U.S. Department of Justice’s 164-page soccer rap sheet. Even if FIFA officials are found guilty, banks may be blameless. But UBS’s recent experience suggests any sniff of wrongdoing could change how U.S. regulators view past misdemeanours.
German job miracle keeps defying gloom-mongers 29 May 2015 Most experts predicted that January’s imposition of a national minimum wage would lead to heavy job losses. But employment in Germany keeps rising and economists are confused. The fears may yet be vindicated, although it could take a recession to show they were right.
Venezuela adds hazy Rosneft $14 bln to leaky pail 28 May 2015 President Nicolas Maduro is touting the misleading investment sum from Russia’s oil giant. Though U.S. sanctions have boosted his popularity, he can’t escape high inflation, low reserves and power shortages. A further run-up in crude prices may be one of the country’s last hopes.
The FIFA big boss guide to executive survival 28 May 2015 Soccer’s supremo Sepp Blatter may win a fifth four-year presidency at the scandal-wracked governing body. Even if he fails, his tenacity is remarkable. It owes much to FIFA’s financial success, but also cumbersome governance and tin ears. Those help all boardroom Machiavellis.
Yen slide will encounter little political friction 28 May 2015 Some Japanese officials sound ambivalent about their currency falling to 12-year lows against the dollar. But the drop isn’t unruly, and the economic pros probably outweigh the cons. Aided and abetted by monetary policy, traders can easily push the yen down further.
To fix FIFA, start with the sponsors 28 May 2015 U.S. prosecutors allege that shadowy marketing agencies diverted cash from the likes of Toyota, Santander and probably Nike to corrupt soccer officials. Big bucks are at stake. FIFA’s revenue from 2011 to 2014 was $5.7 bln. In future, contractual transparency will be paramount.
Russian banks find fragile shelter in macro storms 28 May 2015 Higher funding costs predictably hurt interest margins at the struggling state’s two biggest lenders in the first quarter. The pain at Sberbank and VTB was limited by trading gains, as the rouble and oil price both rose. But bad debts and political tension remain big threats.
RBS would be good fit for Northern Rock leftovers 28 May 2015 The UK state-held bank may bid for a 13 bln stg mortgage portfolio held by its fellow state-run entity. That sounds weird, but Granite could boost RBS’s weak profitability. That in turn could give a helpful shove to the UK’s efforts to sell the bank back to the private sector.
Fiat boss fights for car M&A with hand behind back 27 May 2015 Sergio Marchionne argues mergers would cut duplicative spending and boost shareholder returns. GM has already rebuffed him, probably because such deals are complex and hard to complete. But he also hurts his case by downplaying the benefits of lower costs and fewer employees.
Edward Hadas: Why Lehman Brothers lives on 27 May 2015 Almost seven years after the U.S. investment bank failed, the reputations of financial markets, central banks and economic theorists remain deeply tarnished. Worse, the shock permanently damaged already-weak governments, ever-fragile labour markets and the frayed social fabric.
U.S. well placed to blow whistle on soccer excess 27 May 2015 Americans already act as the globe’s legal enforcer and financial regulator. Now a federal prosecutor is filling soccer’s refereeing void with a direct tackle on its long-running corruption allegations. FIFA, the sport’s governing body, faces a long overdue reformation.
Britain could offer China ultimate FX sacrifice 27 May 2015 The IMF is likely to recognise China’s global clout with a place in its pseudo-currency. The UK, which is courting the rising power, no longer merits a place in the SDR basket. It could offer its place to Beijing. Currency obscurity would be a fair price for enduring gratitude.
BA owner flies in no-frills bid for Aer Lingus 27 May 2015 The Irish government has backed British Airways’ parent in its 1.4 bln euro offer for Aer Lingus. The 40 pct premium is less generous than it looks, given the wider rise in airline shares. Key shareholder Ryanair could push for more, but other investors shouldn’t bank on it.
Generali finds logical response to low-yield pain 27 May 2015 The Italian group’s pledge to hike dividends may look bold: ultra-low bond yields are hurting insurers. But bigger players are relatively better placed, and Generali just hit a set of multi-year targets. Besides, a shift away from guaranteed-return products could help profit.
Greece cries wolf, genuine beast may lurk 26 May 2015 Greek ministers are threatening a default on IMF loans. They might be bluffing, like Aesop’s shepherd boy. That scamp found that lying does not pay. The Syriza government may know more about extreme game theory, but it could end up out of the euro zone, or mauled by the ECB.
Euro pessimists are taking the long view 26 May 2015 The single currency is below $1.09 for the first time in nearly a month. Its short-term fortunes may depend as much, if not more, on when U.S. rates will rise as what happens in Greece. But options prices reveal that euro bearishness is becoming more and more entrenched.
Spain starts confusing political transformation 26 May 2015 Local election results intensify the decline of the ruling People’s Party. In Barcelona and Madrid, coalitions backed by leftist Podemos upstarts could emerge as winners. November’s general election may clarify the political order. Meanwhile, investors will fear paralysis.
Perceptions about inequality beat the reality 26 May 2015 Poor people often feel rich, the rich think they are hard up, and big income gaps elicit little indignation, says a new multinational study. Income levellers should take note. Accurate economic statistics won’t foment revolt. But perceptions of rising inequality just might.