Credit markets are wrong to call Draghi’s bluff 12 Sep 2014 Prices of risky euro assets have barely moved since the ECB president last week promised to hoover up bank debt. Worries about Scotland and U.S. rates blur the picture. But investors seem to doubt the buying programme will work. Betting against the ECB could be costly.
Give Germany and China a break 12 Sep 2014 The two world leaders in trade surpluses are sometimes accused of importing too little. In fact, both run surpluses for good economic reasons. If trade imbalances are a problem, it’s because the financial system copes badly with the international cashflows they create.
Global glut means more pain for Europe’s refiners 11 Sep 2014 New plants in China and the Middle East will flood the world fuel markets, lifting output at the fastest rate since 1999. U.S. firms like Phillips 66, with access to cheap crude, can weather the storm. Rivals across the Atlantic, where margins are low, won’t be so lucky.
RBS/Lloyds moving plans leave key questions opaque 11 Sep 2014 Relocating Edinburgh’s two big banks to London would eliminate the risk of potential bailouts for an independent Scotland. But it creates crucial uncertainties over credit availability and cost for Scottish consumers. They deserve answers before they vote – and won’t get them.
Calculator: A little ECB QE can go a long way 11 Sep 2014 The European Central Bank will soon begin buying asset-backed bonds. Breakingviews’ build-your-own collateralised debt obligation shows how purchases could help banks free up capital and lower loan rates. The ECB might not need to take much risk to make the exercise worthwhile.
Morrisons shows Tesco that price cuts might help 11 Sep 2014 The smaller grocer joined Britain’s supermarket price war early. Half-year figures show tentative signs of success. That might embolden Tesco’s new CEO to follow suit. But by lifting dividends rather than conserving cash, Wm Morrison leaves itself little room for error.
Rich nations’ import crunch creates durable drag 11 Sep 2014 Six years after the fall of Lehman Brothers, the volume of goods and services bought by OECD countries is running 11 percent below long-term trend. That takes $600 billion a year of potential revenues from emerging markets, enough to curb their growth ambitions for several years.
Five changes for Ana Botin’s Santander 10 Sep 2014 She takes over a successful bank from her father. But the existing strategy needs a rethink. Capital looks low, the dividend policy is overly generous, and Brazil and America need work. None of these should be sacred cows. Botin’s objectivity will be paramount.
Ferrari spat raises expectations on Marchionne 10 Sep 2014 Boss Luca Cordero di Montezemolo is leaving Ferrari after two decades. A tiff with Sergio Marchionne, CEO of parent Fiat, made his position untenable. Fiat’s stock rise puts a lot of faith in Marchionne’s ability to extract greater value from Ferrari – possibly from a sale.
Finance and deficit foxes toothless in EU henhouse 10 Sep 2014 New European Commission head Jean-Claude Juncker has made the UK’s Jonathan Hill head of financial services and France’s Pierre Moscovici head of economic affairs. Both are surprising choices. But their capacity to promote domestic agendas has been deliberately constrained.
Edward Hadas: A holistic economics of healthcare 10 Sep 2014 A UK report suggests merging medical and other welfare programmes for the critically ill. The lessons are global. Recognising that poor health is often just one part of life’s troubles would bring better care. The greatest challenge is to make that care less bureaucratic.
Santander loses a leader and gains an opportunity 10 Sep 2014 The death of Emilio Botin, the Spanish bank’s patriarch, leaves a succession quandary since his daughter Ana may not be ready to take over. But the future of the euro zone’s biggest bank shouldn’t depend on a last name. It can now adopt modern corporate governance.
Botin’s swashbuckling hid a conservative streak 10 Sep 2014 He took many risks transforming a regional Spanish lender into a global giant. But it was his ruthless caution that enabled Santander to survive the ABN Amro wreck and economic catastrophe at home. That is the reason why Emilio Botin led the bank for as long as he did.
ABB’s $4 bln buyback camouflages still-tough future 9 Sep 2014 The Swiss engineer pleased investors by promising to buy back shares equivalent to 7.5 pct of its market cap. But it also cut growth and margin targets. There’s an organisational rejig too. Even after the reset, ABB will have to work hard to meet its goals.
Spanish property outlook gets just a bit sunnier 9 Sep 2014 With prices up for the first time in six years, the Spanish housing market may be near the end of the slump. But real estate remains expensive, transactions are scarce and there is a glut of supply. On the demand side, falling wages and high unemployment will temper the recovery.
Hugo Dixon: Brexit risks have shot up 9 Sep 2014 If the knife-edge referendum on Scottish independence leads to a breakup of the United Kingdom, the rump UK will probably quit the EU. Financial markets are finally waking up to the direct impact of Scoxit. But they are not yet focusing on the knock-on effects.
European defence wakes up to new reality 9 Sep 2014 Conflict in Ukraine is changing national security policies. The post-1989 era of shrinking defence budgets is ending. Countries including Sweden and Poland are increasing spending. Rallying European defence stocks anticipate an enduring shift.
Double-digit oil promises lubrication not seizure 9 Sep 2014 Brent fell below the $100 a barrel threshold on Monday. The decline is mostly an adjustment to less money-printing, a firmer dollar and shale supply, not a sign of impending deflationary doom. Oil could fall further. That will be good for consumer spending and global recovery.
UK breakup: market panic need not entail crisis 8 Sep 2014 British financial assets will face a rough ride if Scotland secedes. But a weaker sterling has economic benefits and the Bank of England can resist higher gilt yields. UK banks aren’t likely to be frozen out of money markets. Investors may panic, but a real crisis is unlikely.
RBS puts lipstick on Citizens for $14 bln IPO 8 Sep 2014 The Scottish bank reckons cost cuts, rising interest rates, capital returns and more business will boost its poorly performing U.S. unit. Granted, all this might create decent enough returns to justify the price. But RBS is painting too pretty a picture of Citizens’ independence.