Guest view: Market rocket fuel will run out 18 Jan 2018 Investors are pushing up U.S. equities with little regard for an array of warning signals, writes former Citibank executive William Rhodes. The Federal Reserve is running out of time to warn them about their “irrational exuberance” before a probable market correction this year.
Citi investors go through the tax looking glass 16 Jan 2018 U.S. tax cuts pushed the lender into an $18.3 bln loss, but should boost future earnings. That means boss Mike Corbat can be more ambitious about recently set growth targets. Citi’s recovery may be driven largely by forces beyond its control, but that’s not always a bad thing.
Corporate loans can propel Europe’s bank recovery 15 Jan 2018 Lending to companies has seen minimal growth in recent years, official data shows. A raft of positive economic data should provide the catalyst for increased demand. It would be a welcome way for slimmed-down lenders to give revenue a leg-up.
Mnuchin and Dudley exemplify a political dilemma 12 Jan 2018 The U.S. Treasury secretary, contradicting forecasts, expects tax cuts to pay for themselves. The New York Fed chief fears growing deficits and debt. Republicans may nod to the former but enough probably worry about the latter to hamper new outlays on infrastructure and the like.
Markets start doing Mario Draghi’s job for him 12 Jan 2018 The euro hit three-year highs and government bond yields rose after a hint the ECB boss may rethink how long ultra-loose policy will last. The moves amount to tighter monetary conditions. That buys rate-setters time to phase out negative rates even though growth is picking up.
Intesa can afford to speed bad debt cleanup 11 Jan 2018 Italy’s biggest retail bank may sell up to 15 bln euros of sour loans. It looks like a reversal of boss Carlo Messina’s plan to keep bad debts rather than sell them cheaply. But Intesa can take the hit and, with regulators bearing down on dud assets, a quick exit makes sense.
Italy’s pension U-turn would try markets’ patience 10 Jan 2018 Centre-right parties, frontrunners in March elections, have vowed to scrap a key pension reform passed during the 2011 crisis. The law is rigid, but axing it would hurt young Italians and widen Rome’s fiscal deficit. Investors would have a reason to avoid Italian debt.
Chancellor: Bitcoin will never be real money 9 Jan 2018 The leading crypto-currency has monetary characteristics. But without state backing and a means for circulating credit in the capitalist economy it lacks the nature of money and is destined to fail. That’s why some more modest bitcoin alternatives, like ripple, look more promising.
Rising won could help drive change in South Korea 9 Jan 2018 Seoul appears to be reverting to a tired pattern and intervening to cap a surging currency. The authorities should instead welcome the rise as prodding big exporters to raise their game. While growth might take a hit, the long-term gains in competitiveness could be considerable.
Greek banks’ sour loans face reality check in 2018 5 Jan 2018 Lenders plan to shrink their bad debts by 37 pct over two years, including through sales. A recovering economy and falling government bond yields should help. But without a clearer picture of what buyers might pay, shareholders have little clarity over how much pain lies ahead.
Anti-euro debate rears its head in Italy 5 Jan 2018 Northern League leader Matteo Salvini has reiterated his opposition to the single currency. Growing Italian discontent with the EU could make an anti-euro stance a vote-winner in upcoming elections. Despite Europe’s economic revival, monetary union remains a political target.
Breakingviews predicts a frothy, frustrated year 5 Jan 2018 Money is cheap, the global economy is motoring, and tech is reshaping the world. Populism is still driving discord and uncertainty, but markets are ebullient. From elections to electric cars, we offer a series of insights into what 2018 has in store for companies and economies.
Beijing will allow a local government default 5 Jan 2018 Despite a long campaign to rein in rampant off-balance sheet borrowing by cash-strapped regional authorities, the practice remains pervasive. Next year officials will tolerate the once-unthinkable: a bond default. That will rattle fixed-income investors onshore and off.
Germany will follow money in EU top jobs carve-up 4 Jan 2018 Jockeying to replace the region’s most powerful people, including European Central Bank boss Mario Draghi, will begin in earnest in 2018. Proposed new posts like a euro zone finance minister complicate the contest. Berlin will prefer control of purse strings to interest rates.
What we got right – and wrong – in 2017 2 Jan 2018 Breakingviews foresaw a dip in mega-deals; bank bailouts in India; and a “Chinese” turn in U.S. governance. But columnists overestimated the pace of change in America, and some fantasy M&A stayed precisely that. With 20/20 hindsight, silence was not always golden either.
Trump tax cut is sack of coal for foreign banks 29 Dec 2017 The U.S. president says reduced corporate taxes are a Christmas present. But a levy on interest payments to overseas companies could hit lenders with U.S. subsidiaries. The provision, the base erosion and anti-abuse tax, might even cancel out the benefit of a lower headline rate.
The Exchange: Professor Anand Menon 28 Dec 2017 The “Brexit and British Politics” author explains how last year’s vote to leave the EU became the UK’s defining political issue. He says longer-term political undercurrents helped tip the balance towards Leave – and will dictate the type of Brexit the country ends up with.
Bank clients will learn the value of data in 2018 28 Dec 2017 New EU regulations will force lenders to share account information with competitors - subject to savers’ consent. Up to two-fifths of banks’ revenue could be at stake. New entrants will need to overcome privacy concerns. Even so, customers will discover what their data is worth.
Regulators will drive next wave of EU bank mergers 27 Dec 2017 Past disasters, fragmented rules and limited cost savings rightly make European lenders wary of cross-border deals. The European Central Bank, however, is eager to see fewer and bigger banks in the euro zone. Mergers will please regulators more than shareholders.
Fed calls time on monetary and regulatory activism 21 Dec 2017 After nearly a decade of zero rates, asset purchases and tighter rules, the central bank is stepping back. Janet Yellen started the trend as the crisis receded, but her chair apparent promises a real laissez-faire shift. Markets may struggle to adapt to life without a Powell put.