British retailers have leverage over Unilever 13 Oct 2016 The maker of Dove soap wants supermarkets like Tesco to pay more for its goods as the pound weakens. They can’t easily pass that cost on to shoppers. Grocers have two reasons to play tough: Unilever's 15 pct operating margin, and their access to the consumer.
BoE’s credit bazooka is misfiring – again 13 Oct 2016 Bank of England Governor Mark Carney’s corporate bond-buying programme is failing to lower company borrowing costs. As in 2009, the bank can be accused of not being aggressive enough. Then again, Prime Minister Theresa May’s lukewarm support doesn’t help.
Trump candidacy makes for bad return on business 12 Oct 2016 The U.S. presidential hopeful has removed his "shackles" and gone after critics in his party. Along with boastful bigotry and sexism, the run may be damaging the real-estate mogul's brand. Parlaying political stardom into a news network is becoming Trump's best financial option.
South Africa is making the worst of a bad job 11 Oct 2016 State prosecutors have told Finance Minister Pravin Gordhan to appear in court on fraud charges, just days after he is supposed to deliver a budget to ease fears about a credit-junking. Such antics needlessly exacerbate Pretoria’s economic problems – including a sliding rand.
VTB snub only hurts UK if American banks follow 11 Oct 2016 Russia's second largest lender may pull investment bankers from London because of Brexit. But VTB's existing base in Vienna is unlikely to suit other big banks. And the Wall Street giants London would actually miss are unlikely to make big logistical decisions in a hurry.
UK gilts face growing array of threats 11 Oct 2016 Ten-year government bond yields have doubled from record lows within two months. Rising inflation expectations partly explain the waning influence of Bank of England asset purchases. A bigger risk is that pension funds and life insurers could become less captive buyers of gilts.
Britain faces uphill battle taming gig economy 11 Oct 2016 About 14 million UK workers do a new type of casual, no-strings job. Business likes the looser arrangements, but so too do most giggers. With workers’ rights a priority, Theresa May will struggle to address the downsides of the new age without hitting some of its benefits.
Greedy CEOs and lazy investors get Nobel treatment 10 Oct 2016 Economists Oliver Hart and Bengt Holmstrom shared the prize for their work on contracts. It helps explain why companies find it easier to borrow than raise equity, and why executive pay is so tricky. Those unfamiliar with abstract models will nonetheless recognise their ideas.
Infidelities and Buffett dominate U.S. debate 9 Oct 2016 Donald Trump sought to deflect criticisms of his comments about women by citing the Oracle of Omaha as a rich sycophant of his rival, Hillary Clinton. The IMF called on nations to do more to spur growth. The candidates focused more on past transgressions than the future of the economy.
Review: Greenspan as saint, sinner, political hack 7 Oct 2016 An era of cheap money makes it easy to oversimplify the former Fed chairman's record. Sebastian Mallaby's new book, however, revels in the complexities of Greenspan's intellect, instinct and ego. His runs in Washington circles and spirited personal life are the real surprises.
Sterling mayhem gives glimpse into future 7 Oct 2016 A flash crash saw the pound briefly plunge below $1.20 in Asia. Ultra-thin liquidity, computer-driven selling, and maybe even an erroneous "fat finger" trade might explain the speed of the slide. But there is nothing unbelievable about the levels to which sterling fell.
British bosses threatened with velvet handcuffs 6 Oct 2016 Theresa May will soon make it easier to hold firms liable for staff wrongdoing. Jittery board members will have kittens. Yet an analogous development - the scope for UK firms to agree U.S.-style deferred prosecution agreements rather than enduring guilt - could soften the blow.
British PM’s attack on QE sends wrong signal 6 Oct 2016 Theresa May has criticised the effects of ultra-low interest rates and promised changes. She's right that monetary policy alone cannot revive growth. If the government wants to boost the economy, the solution isn’t to undermine the Bank of England - but to lift spending.
UK migrant clampdown will be self-defeating 5 Oct 2016 Companies may soon face name-and-shame policies that make it less appealing to hire skilled foreign workers. It's part of Theresa May's plan to cut migrant numbers. This is a harmful option for a country with poor productivity and a deficit of domestic expertise.
Sliding sterling is a long way from a crisis 4 Oct 2016 The pound has fallen to 31-year lows below $1.28. That’s hardly a disaster. Buoyant UK bonds and stocks suggest there are few concerns about Britain’s hefty budget and current account deficits. It would take a much steeper drop to worry Bank of England Governor Mark Carney.
Rajan’s successor signals new pace at RBI 4 Oct 2016 The Indian central bank’s monetary policy committee, led by new Governor Urjit Patel, has cut rates. There are decent reasons for the unanimous decision. Nonetheless, it will do little to calm those who fear the departure of Raghuram Rajan has made the RBI less independent.
Deutsche’s pain a sign bank regulation is working 4 Oct 2016 Jitters about the German lender have revived memories of the 2008 crisis. But eight years of reform have left Deutsche - and the rest of the banking system - better equipped to absorb a shock. The relative calm in financial markets suggests that regulators got some things right.
Heta shows why bailouts are easier than bail-ins 4 Oct 2016 Austria has a deal to hit creditors of failed former lender Hypo Alpe Adria after two years of wrangling. Theoretically, a bail-in could, if needed, raise capital at much-bigger Deutsche Bank. But Heta’s tortuous saga is one reason Berlin might favour a taxpayer bailout.
Idle Congress augurs little help for U.S. economy 3 Oct 2016 Legislators departed Washington after yet another unproductive session. With only 221 laws enacted, they could end 2016 with the fewest in over four decades. For all the campaign talk of immigration and tax reform, deepening partisan obstinacy is what awaits the next president.
Colombia’s “no” to peace will backfire on economy 2 Oct 2016 Voters on Sunday narrowly rejected a deal with FARC rebels that aimed to end five decades of civil war. The result shreds the credibility of the president and pollsters. The desire to be tougher on the rebels proved stronger – just – than the appeal of a needed peace dividend.