Boris Johnson exit makes UK pound more binary bet 9 Jul 2018 Sterling fell after the foreign secretary resigned. Prime Minister Theresa May may have a freer hand to negotiate a less economically damaging Brexit. Or she, the negotiations, and the economy could fall victim to political infighting. There’s little middle ground for the pound.
UK counts cost of finance jobs which never come 9 Jul 2018 BlackRock’s choice of Paris over London as the base for its new alternative asset management business underscores the shift in investment away from the British capital. Though the focus has been on bankers relocating, the bigger cost is those new jobs which pass the City by.
Hadas: The euro is not doomed 4 Jul 2018 The single currency is a “EuroTragedy”, Ashoka Mody writes. The Princeton professor sees fatal historical, political and economic flaws. But this drama is not over yet. The euro may still be part of Europe’s historic destiny, if destructive nationalism can be restrained.
EU finally does right thing on taxing bank capital 4 Jul 2018 Under pressure from the European Commission, the Dutch government removed a benefit for banks that issue hybrid bonds. Other countries will follow. Tax breaks helped lenders rebuild capital after the crisis. The sector’s relative health means it no longer needs special treatment.
EU immigration deal papers over two big problems 29 Jun 2018 A fudge on migration whipped up by leaders satisfies Italy’s new government and gives German Chancellor Angela Merkel something that may placate her Bavarian allies. But the former’s confrontational stance and the domestic weakness of the latter remain worrying fault lines.
Viewsroom: Trump goes hog wild on trade 28 Jun 2018 The U.S. president rejected hard-liners’ calls to ban China investing in sensitive U.S. tech. Yet he’s pushing for tariffs that could cost carmakers $45 bln and is livid Harley-Davidson will no longer make EU-bound bikes in the States. Plus: tapping China’s shale reserves.
Derivatives spat is bad omen for UK-EU regulation 27 Jun 2018 The Bank of England wants European authorities to provide assurance that contracts worth 100 trillion pounds will be valid after Brexit. The EU’s watchdog says banks must prepare for the worst. Playing politics with financial stability bodes ill for future regulatory cooperation.
Airbus’ Brexit certainty drive is wishful thinking 22 Jun 2018 The nature of the planemaker’s business means that earmarked transition periods after a UK exit could be too short. But its call for clarity on future arrangements will fall on deaf ears. Even if UK politicians weren’t bungling the process and wanted to help, they can’t.
Greece swaps bailout hell for eternal purgatory 22 Jun 2018 Eight years after seeking financial help Athens can at last support itself, helped by extra euro zone funds and debt relief. But borrowings of over 300 bln euros mean it must maintain a tight budget, and submit to regular scrutiny. Doubts over its debt sustainability will linger.
Trade war tariffs eat Daimler’s homework 21 Jun 2018 The carmaker’s tariff-induced profit warning is odd, since Chinese duties would hit U.S. cars but not imports from elsewhere. Daimler’s statement could cover for poor performance, or make a political point about a trade war’s costs. Expect other companies to try the same.
EU’s best bet is to indulge Trump on car tariffs 20 Jun 2018 Europe’s tit-for-tat response to U.S. metal duties risks a trade war that hits EU carmakers. Better to offer President Donald Trump the carrot of lower auto tariffs, which have little effect anyway. That could humour his trade antics, but cause less economic damage.
Italian bad loan sale defies political risks 20 Jun 2018 Banco BPM sold 5 billion euros of dud loans for 34 percent of face value, amongst the highest prices to date. Rosy valuations and the ECB’s more lenient stance on disposals are a boon for lenders. But buyers risk downplaying the threat posed by Italy’s radical government.
ECB staggered retreat from QE makes sense 14 Jun 2018 Europe’s central bank said it would stop adding to its bond portfolio, but hinted rates would stay low. The move averts fears quantitative easing will help Italy’s spendthrift government. But trade wars and a weak euro zone mean it has little choice but to keep its options open.
Hadas: This should be an anti-dollar moment 13 Jun 2018 Discontent with the world’s dominant currency is not new, but the Trump effect is something new. A trade circuit free from the U.S. president’s idiosyncratic America-first policies is urgently needed. The euro and renminbi can provide a base, but the politics are unpromising.
Trump trade spleen makes foreign firms great again 11 Jun 2018 A fragile G7 detente imploded over his steel tariffs and an adviser's dig that there’s a “special place in hell” for Canada’s Trudeau. Because retaliation pushes up costs, the levies hurt U.S. firms more than they help. It’s rivals like Chinese ag firm COFCO that will profit.
G7 risks becoming G-zero without consensus 7 Jun 2018 President Donald Trump is the sore thumb among leaders meeting in Canada on Friday. Last year’s G7 pledges were already watered down, and he hadn’t then left the global climate accord or started erecting trade barriers. The forum loses relevance if it lacks U.S. economic backing.
UK’s Brexit backstop only a partial step forward 7 Jun 2018 Britain has proposed a backup plan for avoiding a hard border in Ireland when it leaves the EU. Characteristically, it fudges how long the plan will last, and it still needs Europe to agree. Investors wondering whether Brexit will be mild or ruinous still have little to go on.
Amazon’s softly-softly UK soccer move is smart 7 Jun 2018 The e-commerce group made its first foray into UK football rights. But it won’t screen as many games as Sky and BT. The restraint means the group run by Jeff Bezos should easily break even, and suggests it’s more interested in scoring tactical goals than tackling rivals head-on.
Hadas: Financial freedom is not what Italy needs 6 Jun 2018 Leaving the euro would give the country two poisoned gifts: a sinking currency to reduce pressure for durable reforms and fiscal deficits generating inflation and waste. Extra government spending can help create jobs, but only under certain conditions. These don’t apply to Italy.
Telco rules expose EU’s fake digital single market 6 Jun 2018 Europe agreed to cap cross-border call charges and push member states to award longer spectrum licences. That won’t stop the bloc falling behind China and America’s 5G networks. In the ongoing absence of EU-wide spectrum auctions the telco market will stay fragmented.