Protectionism skews emerging market risk compass 9 Mar 2017 Anti-trade rhetoric is a threat to export-dependent countries. But commodity producers such as Saudi Arabia are less vulnerable than nations that play a big role in global manufacturing, like China or Thailand. The latter look more prone to market volatility than in the past.
Britain’s tax raid on gig economy misses the mark 9 Mar 2017 The UK budget means the self-employed will hand over more of their income. That eases one problem – the fact that gig workers pay lower national insurance rates. But it leaves intact a bigger issue, the difficulty of taxing contractors that drive the gig economy.
Do-nothing UK budget belies big risks ahead 8 Mar 2017 Finance Minister Philip Hammond revealed minimal changes to tax and spending. His prudent message makes sense, but contrasts with the large and unpredictable economic consequences of leaving the European Union. It won’t take much for these to knock deficit reduction off course.
Foxtons shines light on London’s squeezed middle 8 Mar 2017 The London-centric estate agent is a good guide to the capital’s property market since the vote to leave the EU. Things look toughest in the affluent middle, and city centre. With its shares below their IPO price, Foxtons is suffering for hitching its wagon to the metropolis.
Britain’s Brexit bill is reassuringly expensive 8 Mar 2017 Lawmakers think the UK can legally dodge an EU exit liability of potentially 60 bln euros. The trouble is, refusing to pay makes it unlikely Britain can get a favourable deal. Moreover, such squabbling undermines Brexit supporters’ case that leaving the EU has a net benefit.
Even flawed UPS trustbusters beat none at all 7 Mar 2017 Brussels has egg on its face after a court overturned its 2013 decision to block the U.S. parcel delivery outfit's merger with TNT. Europe rarely nixes deals, and occasional errors are inevitable. A bigger threat to M&A is protectionism, which requires far less serious analysis.
Markets’ latest distortion: riskless company debt 7 Mar 2017 Some 200 billion euros of corporate bonds are trading below interbank swap rates – usually seen as a floor for credit risk. That renders one measure of companies’ creditworthiness redundant. This distortion comes courtesy of central bank meddling and German parsimony.
Nationality of Vauxhall’s owner is a red herring 6 Mar 2017 The sale of GM’s European operations to French carmaker PSA Group has caused fresh concern over its plants in the UK. Yet irrespective of the owner, the key risk for automotive jobs in Britain is Brexit. A stronger Peugeot may even have more patience with Vauxhall than GM.
Macron pitches novel way to imperil EU banks 6 Mar 2017 The French presidential favourite wants ministers, not regulators, to set capital rules for banks and insurers. Despite the ECB’s best efforts, oversight remains far from harmonised. Handing the reins to politicians would just add financial stability concerns to the mix.
Northern Ireland vote sends Brexit warning shot 4 Mar 2017 Nationalist party Sinn Fein made surprise gains in snap elections, buoyed by discontent with the ruling unionist DUP. That puts the duo, who must govern together, on a more equal but confrontational footing. The result may be a bumpier path for Britain’s EU exit negotiations.
Northern Ireland may bolster case for own spinoff 2 Mar 2017 If Thursday’s elections produce a stalemate, London may have to rule the thorny region directly. The 9 bln pound cost per year of propping up the region is likely to grow after Brexit, but a united Ireland is problematic too. The north is a prize no one wants.
France’s Macron faces peril of becoming mainstream 1 Mar 2017 Former front-runner Francois Fillon is persisting with a presidential bid despite new legal woes. That should help Emmanuel Macron. But the centrist is rapidly losing the useful cachet of being an outsider in what’s becoming a straight contest with far-right leader Marine Le Pen.
What Christine Lagarde might say to Marine Le Pen 28 Feb 2017 The presidential candidate wants France to quit Europe’s single currency. The possibility that she might win is already spooking markets. Breakingviews imagines the advice Le Pen might get from her compatriot, International Monetary Fund head Christine Lagarde.
Trump’s “European Apprentice” is a real-life sequel 28 Feb 2017 The president’s support for Brexit and criticism of the European Union makes its members nervous. Though leaders publicly pledge a united front, they are privately jockeying for influence in his administration. It’s a closed-door version of the TV contest that made Trump famous.
ECB asset purchase rules are self-inflicted wounds 28 Feb 2017 The central bank’s bond-buying scheme has mechanistic rules that are driving German bond yields to record lows well below zero. This makes losses likely. While past gains may offset such hits, loosening the rigid constraints would reduce the risk of losses and market disruption.
LSE and Deutsche Boerse get a gift neither wants 27 Feb 2017 The exchange merger looks sunk after European regulators demanded a sale of an LSE trading platform. That’s not so bad - especially for LSE, which might find suitors elsewhere once Britain’s future is clearer. Besides, investors had only priced in a sliver of the deal’s benefits.
Local election results mark peak for Theresa May 24 Feb 2017 The prime minister’s Conservatives confirmed their lead over rivals Labour with a landmark by-election victory. Acrimonious Brexit negotiations and squeezed incomes will test May’s popularity in the coming year, though. Not calling an early general election could prove a mistake.
Le Pen’s French referendum pledge is tall order 21 Feb 2017 The far-right politician’s promise to hold a plebiscite on EU membership and leave the euro is spooking investors. To call such a vote, however, she would have to find constitutional loopholes. That would be an even bigger challenge than winning France’s presidential race.
Hadas: Trump’s FX truthiness misses the big points 20 Feb 2017 The U.S. president’s complaint that cheap overseas currencies hurt U.S. jobs contains a little truth, but his proposed cure is far worse than the disease. The main problem in foreign exchange is excess volatility. Fixing that requires better global coordination – a distant dream.
French corporate debt immunity to Le Pen will fade 15 Feb 2017 Even the slim possibility that far-right leader Marine Le Pen might lead France out of the euro zone has pushed up government bond yields. By contrast, corporate debt has suffered relatively little damage. Savvy investors will make this anomaly disappear soon.