ECB risks credibility with new long-range forecast 10 Feb 2014 The European Central Bank will lengthen its forecast horizon by an extra year. This may help justify its decisions and signal intent at a time when its inaction is under attack. But it is playing with fire, and its credibility, given the risk of being wrong increases with time.
Political assault on Centrica is more than hot air 10 Feb 2014 UK Energy Secretary Ed Davey has waded into a regulatory inquiry, noting high margins in gas supply and mooting potential breakups. Investors in Britain’s top gas supplier are aghast. But Davey is onto something. Margins do indeed look rich, and competition could be stoked up.
Swiss anti-immigration vote hits EU where it hurts 10 Feb 2014 The Swiss economy has far more to lose than its largest trading partner from Sunday’s 50.3 pct vote to exit the treaty on the free movement of people. For the European Union, the rejection of its vision of solidarity comes just when its leaders most need a sense of common purpose.
Hugo Dixon: Euroscepticism may have silver lining 10 Feb 2014 Arguments used by those who want to break up the European Union - such as last week’s report saying the Netherlands would be better off out - are exaggerated and full of holes. But the rise of euroscepticism should embolden those trying to make the EU more competitive.
Age shifts weaken global economy’s shock absorbers 10 Feb 2014 It’s not just the 2008 crisis that has made the world economy more fragile. The ageing global population means older savers are expanding faster than younger consumers. That makes it harder to negotiate deflationary speed bumps. Expect the next two decades to be a rocky ride.
Lenta IPO showcases Russian retail’s mixed bag 7 Feb 2014 The St Petersburg hypermarket operator may raise $1 bln in a London IPO. It boasts high margins and lots of potential as Russian shopping goes Western. Yet equities are wobbly, the economy sluggish and consumers wary. Structural growth is a harder sell with such a weak backdrop.
Ghana spoils good thing with poor policies 7 Feb 2014 When oil arrived, Ghana’s socialist government ramped up spending and subsidies and ran big budget deficits. Now growth has stalled and the government is installing FX controls. It needs to move in exactly the opposite direction, toward an affordable and more modest state.
Review: Robotized world will produce few jobs 7 Feb 2014 Two MIT professors look at the age of robotics, which is finally arriving. And when robots do everything, how will humans find jobs? The authors’ suggested answers are mostly unconvincing and unattractive. They should put more trust in human ingenuity.
FX fines could hit European bank profit hard 7 Feb 2014 The UK’s financial regulator says foreign exchange manipulation could be as bad as the Libor scandal. If the fines are as big, that has serious financial implications. Libor settlements now stand at $5.8 bln – on average 15 pct of the affected banks’ forecast 2014 pretax profit.
German court’s “No, but” may undermine ECB’s OMT 7 Feb 2014 The constitutional court strongly implied that the central bank’s bond-buying programme is outside its remit. OMT defenders will worry, but there are hints that the higher European court can make things right. Still, the decision will reinforce German doubts about the ECB.
Welcome to Sochi, Putin’s Potemkin village 7 Feb 2014 The Russian president made the Winter Olympics his personal project and wanted it to be a symbol of Russia’s power. But the games will mostly throw light on the economy’s deep problems - and the autocratic president’s unwillingness, or inability, to address them.
Morrisons split is the right idea at the wrong time 7 Feb 2014 The UK grocer has property assets worth more than its enterprise value. That’s why hedge funds want to split its operations from its real estate. Sadly, such “opco-propco” structures require a stability that Morrisons currently lacks.
Panama Canal heading towards silly global failure 6 Feb 2014 A dispute over cost overruns could stop the 70 pct complete expansion of the Panama Canal. That’s ludicrous. American ports have already invested to take the bigger ships the wider canal will allow. With arbitration stalled, it’s time for a strong mediator to step in.
Minimum wage can’t supersede need for less greed 6 Feb 2014 George Osborne’s call for a big UK minimum wage rise is irresponsible vote-seeking. The chancellor should let the Low Pay Commission do its work. In any case, corporate morality is more valuable than laws. Bosses should show less generosity to themselves, and more to employees.
Petrobras risks becoming Latin America’s Gazprom 6 Feb 2014 Brazil’s petro-giant increasingly resembles Russia’s gas monopoly as state meddling and rampant spending destroy value and crowd out more productive investment. Petrobras shares have fallen so low it’s like 2007’s “gift from God” never arrived. It’s not too late to change course.
Credit Suisse stuck in a hit-and-miss phase 6 Feb 2014 The Swiss bank has cut leverage and may beat long-term balance-sheet targets. Its legal bills look bearable too. But the operational restructuring is still a work in progress. Until that’s fixed, the wobbly performance of the fourth quarter could be repeated.
Standalone Vodafone starts to look healthier 6 Feb 2014 Quarterly results suggest revenue declines are finally moderating. Competition, regulation, technological change and the slump have all hurt the mobile giant. It now hopes to ride a boom in mobile data. Yet Vodafone’s role in future M&A remains the top question for investors.
For third Greek bailout, EU could try generosity 6 Feb 2014 Brussels and the IMF are mulling how far they could go to ease the Greek debt burden, without agreeing to a straightforward haircut. They should act fast - and be bold. If they fail, calls for more radical measures will grow louder, ahead of crucial European elections.
Revving-up Daimler still not running at full speed 6 Feb 2014 Shiny new models helped the carmaker show record sales and profit in 2013. But Daimler still faces big challenges. While margins are increasing, they’re still below rivals’, and headaches in China are only abating slowly. The shares are already counting on much more good news.
AstraZeneca challenged but no longer cheap 6 Feb 2014 The UK pharma group says patent expiries will hit earnings harder than analysts expected. Management sees growth returning in 2017, but rivals like Sanofi offer a less risky earnings trajectory. After a good run in recent months, AstraZeneca’s shares are taking a lot on trust.