Hadas: Four resolutions for a more humane economy 3 Jan 2017 Brexit and Donald Trump’s election are part of a rebellion against the social and economic establishment. Changes are needed to prevent a dangerous disintegration. Here are some suggestions: forget GDP, fight alienation, support communities and promote local decision-making.
American inequality will widen under Trump in 2017 29 Dec 2016 A populist wave sent the real-estate developer to the White House. But his economic policies will help working-class folks the least. His tax cuts, repatriation of corporate cash and infrastructure push will line the pockets of the rich before trickling down to the less well-off.
China’s slow salt reform leaves sour aftertaste 29 Dec 2016 China is finally dissolving the world's oldest monopoly. The government's difficulty loosening its grip on the salt trade, which accounts for a tiny fraction of government revenue, suggests dim prospects for reform in more lucrative sectors such as tobacco or telecoms.
Diverging central banks will power dollar in 2017 28 Dec 2016 Donald Trump’s promise of increased U.S. government spending and the likelihood of tighter Fed policy contrast with continued weak growth and loose monetary conditions in the euro zone and Japan. That means the greenback is set to get stronger against most other currencies.
Guest view: China’s currency faces big 2017 test 28 Dec 2016 With rising U.S. interest rates and trade tensions, stop-gap measures from Chinese authorities won't keep the renminbi from depreciating, argues former Citibank executive William Rhodes. The longer reforms are postponed, the greater will be the eventual cost to economic growth.
Europe’s best antidote to populism is unpopularism 28 Dec 2016 Parties that promised to take on the elite had a roaring 2016. Even so, the withering of the moderate centre isn’t inevitable. In Greece the pendulum is swinging away from radical government. Liberals with sound economic policies can win – if they’re willing to make enemies.
China’s central bank will lose its longtime leader 28 Dec 2016 Zhou Xiaochuan will step down in 2017, part of a wider leadership reshuffle as President Xi further consolidates power. Investors will miss the affable technocrat, who helped steer the world's second-largest economy for 15 years. Any successor will lack Zhou's market credibility.
Italy’s Monte dei Paschi bail-in is a bailout 23 Dec 2016 EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.
JPMorgan’s Monte Paschi flop is in eye of beholder 23 Dec 2016 The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.
Russian sanctions will shrivel to soccer boycotts 23 Dec 2016 Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.
Race to build will add impetus to old-world stocks 23 Dec 2016 Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.
Monte dei Paschi endgame can still be made fair 22 Dec 2016 Italy's third-biggest bank unsurprisingly failed to raise 5 billion euros. A forcible debt-for-equity swap would limit state money. If compensation was only paid to mis-sold retail creditors, MPS could be rescued within European rules and without unfairly hitting taxpayers.
Fund manager pay will be next to feel the squeeze 22 Dec 2016 Low returns, lacklustre performance and the growth of cheaper index-tracking funds are squeezing fees. That in turn means lower revenue and margins. To placate shareholders, asset managers will have to follow the example set by investment banks – and pay their people less.
South African debt will be downgraded before Zuma 21 Dec 2016 After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.
Turkey-Russia pact can survive Ankara flashpoint 20 Dec 2016 Moscow’s ambassador in the Turkish capital has been shot dead by a policeman seeking revenge for Aleppo. In 2015, Recep Tayyip Erdogan and Vladimir Putin were at loggerheads. Now mutual self-interest over Syria and a perceived common enemy mean the shock can be smoothed over.
Mega-merger market set for last gasp 20 Dec 2016 Cheap debt and falling hurdle rates will keep bosses on the hunt. Border-spanning acquisitions are harder to square with trustbusters, however, and big targets less affordable as an M&A cycle ends. That makes space for smaller deals, which in any case tend to create more value.
U.S.-China currency war will be symbolic at best 20 Dec 2016 Donald Trump has promised to declare the People’s Republic a currency manipulator. The label means little, though, and the yuan is probably overvalued. The best case is that the U.S. president-elect declares victory and moves on. The risk is that hardliners in Beijing react.
Ukrainian bank clean-up comes at a cost 19 Dec 2016 The war-torn country will rescue the largest private lender PrivatBank. It suggests Ukraine’s banks are emerging from the shadow of oligarch owners and bad lending. Yet the deal hurts Ukraine’s shaky finances, and may inflame political opposition to the IMF-dictated austerity.
Italy will find itself in market crosshairs again 19 Dec 2016 With rates rising, countries with high debt and fragile growth are vulnerable. Italy's political weakness makes tough choices on reform or spending cuts even harder. Even though the European Central Bank will keep buying government bonds in 2017, investors' nerves will be tested.
Russia lacks cash and motive to rebuild Syria 16 Dec 2016 After the last Iraq war, U.S. reconstruction cash poured in. Were Aleppo's collapse to prompt the end of the war in Syria, Moscow's economic fragility would make it unlikely to follow suit. An EU populist backlash against a fresh influx of fleeing Syrians helps Russia anyway.