Iraq insurgency adds to stagflation risks 18 Jun 2014 The fighting has pushed oil prices to a nine-month high. The fear is a return to $140 oil last seen in 2008. Even the current rise to around $113 a barrel is bad for the weak global economy, with inflation high in some emerging markets and rising in the United States.
Shire’s independence harder to defend than Astra’s 18 Jun 2014 The UK-listed, Dublin-based pharma group is again in the grip of bid speculation after a frenzy of M&A in the sector. Astra may have repelled Pfizer, but the circumstances are very different. At least Shire has the outside chance of using an auction to get a bidder to pay up.
Can sterling hit $2? Only with a perfect storm 18 Jun 2014 Having touched $1.70, the pound is on the brink of escaping its five-year range. A return to $2 looks like a fantasy right now. But a more hawkish BoE, a dovish Fed, a Scottish “No” to independence, and a narrowing of the UK’s twin deficits would do a lot to close the reality gap.
China may get less than it bargains for from UK 18 Jun 2014 Britain’s $23.5 bln package of Chinese trade and investment comes with unspoken terms: keep quiet on politics, and don’t expect reciprocity. That’s not such a bad deal. Rule of law means Chinese money buys less influence in the UK than it would back home. China may be getting more rambunctious, but openness is still the best response.
Siemens offers Alstom a real alternative 17 Jun 2014 The German group and Mitsubishi Heavy proposed to buy some of the French company’s energy assets. Compared to GE’s friendly 11.4 bln euro bid, there’s less cash, less industrial sense, and more complexity. So this is still a Plan B. But it’s credible and politically astute.
Triple financial mystery remains unsolved 17 Jun 2014 For the last three decades inflation and interest rates have generally fallen in rich countries, while debt has risen. Economists have many explanations, but are continually surprised by the persistence of the trends. The ignorance is dangerous for policymakers and investors.
ECB could unmask incomplete Landesbanken cleanup 16 Jun 2014 The ECB’s stress tests may show that Germany restructured its big regional banks only half-heartedly. Suffering from political interference and short of a viable business model, many are exposed to risky assets, in particular in shipping. Further consolidation is inevitable.
Gazprom/Ukraine dispute is proxy for Putin’s whims 16 Jun 2014 The Russian energy group will deliver only pre-paid gas to Ukraine, after talks on $4 bln of overdue bills collapsed. Combine that with renewed hostilities by Russian separatists in the east of the country, and markets were premature in believing that the Ukraine crisis has ended.
Blunt instrument is needed for global house bubble 16 Jun 2014 The IMF is worried about the risk of a global house price bubble. Housing markets may be regional, but low supply and excess demand are common worldwide. Macroprudential tools and construction are part of the response. But anything other than an end to cheap money is tinkering.
Hugo Dixon: Cameron’s cack-handedness risks Brexit 16 Jun 2014 If Jean-Claude Juncker becomes European Commission president, the chances of Britain quitting the EU will shoot up. That’s why David Cameron is right to try to block the former Luxembourg PM’s candidacy. But the UK premier’s European diplomacy here has, as so often, been inept.
PokerStars goes all-in with $4.9 bln U.S. gamble 13 Jun 2014 The leading poker site is being staked by Canada’s Amaya and Blackstone in an aggressive deal that lifts debt to 6.6 times EBITDA. Cashing out the backers of PokerStars should increase the odds of cracking the United States. If Amaya plays its cards right, the bet could pay off.
Carney uses markets as cover for volte-face 13 Jun 2014 It’s a bit rich for the BoE chief to say rates may rise sooner than markets expect. Until now, he has guided investors the other way. The U-turn shows the danger of pseudo-transparency. Still, there’s welcome honesty that the blunt instrument of a rate hike may be needed.
Austria’s piecemeal bail-in is least-bad outcome 13 Jun 2014 Vienna is to force losses on Hypo Alpe Adria’s junior bondholders, even though the debt is guaranteed by regional government. States shouldn’t make a habit of writing laws to cover past mistakes. The result is fair, but the precedent is bad.
Teaming up with Merkel foes weakens Cameron’s hand 13 Jun 2014 The Tories will join forces in the European Parliament with Germany’s anti-euro party - Angela Merkel’s domestic foe. David Cameron’s hopes that Berlin could be an ally in his drive to reshape the EU to his liking already looked a bit delusional. They now lie in tatters.
Spanish government oddly passive on Catalonia risk 13 Jun 2014 Barcelona and Madrid have reached an impasse over a referendum on Catalan independence. The government says it is open to constitutional reform but won’t take the initiative. It should.
Saudi and Iran hold key to oil market stability 12 Jun 2014 Political turbulence in the Middle East has helped keep crude prices unusually stable for the past three years. That irony couldn’t last forever, and the weakness of the Iraqi military might mark its end. But if Saudi Arabia and Iran can hold firm, everything else is secondary.
Stingy oil nations realize it pays to loosen up 12 Jun 2014 Mexico, Russia and others want to share black gold with the Chevrons of the world after decades of shutting them out. Concerns about lower prices and outdated technology explain the friendlier approach, but it’s also sound economics. The benefits of hospitality can flow both ways.
Forex is weakest link in UK market abuse crackdown 12 Jun 2014 Chancellor George Osborne is attacking manipulation of currencies, interest rates, and other assets. Wrongdoers face jail. The moves are sensible and other EU countries plan something similar. But there’s a big problem: still no global rules to tell FX traders what is acceptable.
Brazil’s companies need soccer team’s global clout 12 Jun 2014 Itaú and 3G could lead the attack with AB InBev in midfield and Petrobras in goal. But the world’s most glamorous soccer nation, and seventh-largest economy, has few global corporate stars. In a World Cup for business, Brazil would struggle to get past the group stage.
BNP’s chief operating officer retires. Next? 12 Jun 2014 The French bank’s long-serving COO is leaving earlier than planned. New York regulators are said to have wanted this as part of a multibillion-dollar settlement for sanctions violations. BNP doesn’t draw a link. The question of who takes responsibility for the mess remains open.