ECB steps in where euro governments failed 8 Apr 2011 Its advice to Portuguese banks to stop lending to the government made the ECB the puppet master behind Lisbon's sudden decision to seek a bailout. This assertive, political role isn't that of a central bank. But in the euro zone's current vacuum, the bank didn't have a choice.
Investor AB takes baby step to fixing valuation 7 Apr 2011 The Wallenberg family's listed investment vehicle is restructuring in a bid to close its 30 pct discount to net asset value. Simplification and cost cuts are a move in the right direction. But there's no evidence of a seachange in management's attitude to external shareholders.
Spain cannot afford to be complacent 7 Apr 2011 The country has persuaded investors it is not part of the euro zone's troubled periphery. But Portugal's bailout puts it back in the spotlight. Prime Minister Zapatero should use his final months in power to push through more structural reforms, and sort out the financial system.
When China worries, investors should too 7 Apr 2011 The arrest of outspoken artist Ai Weiwei may be paranoia, but it reflects a real worry that social stability is at risk. Foreign investors in China may be too gungho. Either a tootough government response, or a failure to keep order, would shake the economy.
Portugal’s road to bailout will be rocky 7 Apr 2011 Lisbon has bowed to the inevitable, but who runs Lisbon? Europe and the IMF can't accept to bail out Portugal if it doesn't agree on minimum concessions. That looks tricky given the country's power vacuum. But, with the wheels in motion, Europe can't afford to say no.
China bulls look to hedge their bets 6 Apr 2011 Cheap dollars still pour into the fastgrowing economy, but as inflation accelerates, investors want more protection. With China's capital markets all but closed, that requires some ingenuity. Taiwan, Australian rates and Korean debt are among the popular proxies.
Stopping hot money is dangerous soft option 5 Apr 2011 The IMF wants capital controls in the policy toolkit. It may sound like a good idea with so much money sloshing around. But such barriers impose large and opaque costs on the global economy and encourage fiscal indiscipline. Emerging market officials should resist the temptation.
Fed needs to treat markets like a serious addict 4 Apr 2011 Rate hike talk is in the air. Yet, the central bank is still injecting money directly into the financial system's bloodstream. Current policy would have markets go cold turkey after June, but there's still time to tweak QE2 to minimize disruptive withdrawal symptoms.
Obama’s biggest 2012 obstacle: income, not jobs 4 Apr 2011 As the president kicks off his run for a second term, the issues battlefield is shifting. Although job growth is slowly returning, worker wages are still stagnant. As a result, income growth may emerge as the critical economic factor in the 2012 race for the White House.
U.S. joblessness stubbornly stickier this cycle 1 Apr 2011 While March saw 216,000 new jobs created, the average duration out of work crept back up and remains far above previous cycles. The risk is that as the skills of workers atrophy, wage inflation and shortages may kick in before full employment is reached.
QE2 countdown comes at risky time for Asia 1 Apr 2011 With Fed money printing due to end in June, Asia's markets are bracing for a liquidity withdrawal. Investors may underestimate how much QE2 cushioned the impact of worries over China property, oil and Japan. As June nears, markets will only get more sensitive to these unknowns.
Medvedev takes power struggle to Russia’s boards 31 Mar 2011 The Russian president has ordered government ministers off the boards of stateowned companies in an overt attempt to curb the influence of Vladimir Putin's associates. Medvedev's confidence that he can assert his authority is obviously growing. But he risks a backlash.
Investors should learn to love Europe’s bailout plan 30 Mar 2011 The euro zone's decisions on sovereign restructuring are spooking markets and prompting downgrades. Yet investors shouldn't overreact; the plan makes default a possibility, but it isn't the cause of the crisis. It could discipline markets and make future shocks less acute.
Monetary shift poses new investment threats 30 Mar 2011 Global investors are focused on shocks but inflation is the core concern of policymakers. A rate hike is close in Europe. The U.S. is changing its tune. Tighter money points to a firmer dollar, weaker euro and yen, retreating bonds, stalling commodities and nervous equities.
Consolidation is next step in UK pension reform 29 Mar 2011 Occupational pension schemes manage total assets of 1.5 trillion stg in the UK. But they still look like a fragmented cottage industry. Pension schemes in other countries benefit from more concentration. Mergers in the UK would create value that could be passed on to members.
UK flirts dangerously with wealth taxes 28 Mar 2011 Business secretary Vince Cable is again talking about a kind of mansion tax on highvalue homes, as a quid pro quo for ending the 50 pct top rate of income tax. But wealth taxes like this end up being either punitive or trivial. It would be better to focus on tackling evasion.
Baghdad bourse unlikely oasis amid Arab turmoil 28 Mar 2011 Global markets are unsteady but the Iraqi stock exchange is thriving up 26 pct this year. After decades of war, the oilrich nation is set for doubledigit growth amid tentative signs of stability. From the back foot, Iraq could become an unlikely refuge in the risky region.
Merkel rout has multiple costs for Europe 28 Mar 2011 The trouncing of Angela Merkel's party and allies in BadenWuerttemberg elections could leave her unable to make the tough decisions facing her. On the euro zone crisis, the German banks or the future of nuclear energy, the risk is either paralysis or populism.
Spain could yet rouse docile markets 25 Mar 2011 Madrid has been isolated from the punishment bond investors are inflicting on Portugal. The hope is that Spain is out of the woods. Yet it is vulnerable to a weak banking system and unruly regions. Rising Portuguese yields should be a reminder this is no time for complacency.
M&A league table folly put on full display 25 Mar 2011 Listen for Wall Street's collective gasp at Goldman's slump to an alltime low of 10th place in the quarterly U.S. merger rankings. And oohing and aahing will be heard at the seemingly dramatic rise of the boutiques, led by Evercore. But take note appearances can be deceiving.