Egypt should let its currency fall 22 Mar 2011 Revolution at home and war in Libya have left the country on the brink of recession. If Cairo continues to fritter away reserves propping up the pound, it will also have a balance of payments crisis the last thing it needs as it tries to complete its transition to democracy.
Arab spring’s violent phase ratchets up risk 21 Mar 2011 Hopes that further dominoes would fall with minimal violence after Tunisia and Egypt have been dashed. Other regimes notably Libya, but also Bahrain, Syria, Yemen and even Saudi are tottering. But the prospect of bloody conflicts will push up alreadyheightened risk premia.
UK tax reform should come, and help justify cuts 21 Mar 2011 Wednesday's Budget may see income tax and national insurance merged. The Chancellor should go for it. The current system is too complex. Reform would show how heavily Britons are taxed and garner support for spending cuts. But relief for the low paid would also be needed.
Egypt should embrace a social market economy 21 Mar 2011 As the country debates what should replace Mubarak's crony capitalism, there is a risk that it will adopt populist policies. But wealth and equality will best be fostered by competitive markets, an end to the militaryindustrial complex and a safety net focused on the poor.
Euro zone debt reduction targets aren’t credible 21 Mar 2011 Proposals that indebted euro zone states cut their borrowing by 5 percent of the excess over 60 pct of GDP may not be a good idea. They would be a challenge for the growthstarved periphery. That may explain why European finance ministers are talking about some helpful getouts.
Belarus’ woes throw it back under Russian spell 18 Mar 2011 The country is facing a run on its currency, underscoring the depth of its economic problems. Lack of reform meant it was headed for a bust anyway. Having alienated the West, autocrat Alexander Lukashenko has little choice but to accept Russia's selfinterested offers of help.
Yen intervention may send wrong message 18 Mar 2011 Though speculators have pushed up Japan's currency, the G7backed response may be an overreaction. Volatility is damaging. But the yen's strength does not necessarily mean it is fundamentally overvalued, or that exporters will be unduly distressed. The yen may be best left alone.
Fed policy disconnecting from looming inflation 17 Mar 2011 This week's FOMC's statement that growth in prices was somewhat low, relative to levels consistent with its dual mandate is shrouded by February's stats. CPI has been increasing at a 3.8 pct annualized rate while producer and import prices also surge. Brace for more inflation.
Reboot of yen carry trade looks tempting but risky 17 Mar 2011 The Japanese currency is at historic highs, despite weak growth and low interest rates that have little chance of rising soon. Possible intervention also would weaken the yen. That makes the borrow yeninvest elsewhere trade look interesting but volatility makes it perilous.
Tokyo will endure as a financial hub 17 Mar 2011 Some foreign bankers may be leaving amid nuclear fears but most will return, barring unimaginable catastrophe. Finance is more mobile than in past but despite language barriers and red tape, Japan's strength is underpinned by liquid markets and colossal domestic savings.
Yen’s spike overstates Japan’s sense of alarm 17 Mar 2011 The currency's recordsetting leap anticipated a Japanese retreat from global markets, but that is unlikely to materialise. The cost of rebuilding Japan won't require massive repatriation. The yen's surge has hurt those betting against it, and is likely to be short lived.
Look for global gems in Japan’s rocky market 16 Mar 2011 Bargain hunters are targeting companies that will benefit from rebuilding earthquake damage. But the economic toll may be less than feared, limiting the windfall for blue chips. With nuclear worries still strong, investors should look for stocks that will ride global growth.
U.S. junk market takes forced but manageable break 16 Mar 2011 Volatility has led subinvestment grade companies like Toys R Us to pull more than $7 bln of issues off the table this week. After a buoyant spell in debt markets, it's no disaster. Gungho investors could use a breather, and risky borrowers are no longer desperate for funds.
Calpers tries to make the reality fit the politics 16 Mar 2011 With interest rates low and stock gains weak over 10 years, the California pension fund's actuary wanted to trim its assumed annual return to 7.5 pct. But that would have cost the cashstrapped state. By holding to a less achievable target, Calpers is sparing political blushes.
Economic shocks no grounds for rate complacency 16 Mar 2011 After the Middle East oil spike, Japan's earthquake and nuclear crisis have given the world economy another big jolt. But to delay tightening in the United States and elsewhere would invite soaring inflation. Barring a more severe disaster, policymakers should hold firm.
Gaddafi survival would test foreign governments 16 Mar 2011 Tough decisions must be made if the Libyan leader regains control of the country. Sanctions will need tightening to stop the flow of oil revenue with harmful consequences on the industry, making a consensus hard to achieve. And Gaddafi's success could embolden other despots.
Asia IPO hopefuls may have to cut prices or delay 16 Mar 2011 Risk aversion following the Japanese disaster is bad for all IPOs. Hong Kong's pipeline looks especially vulnerable. Top issues like Glencore could still find demand. But the likes of Prada, and littleknown Chinese firms, will struggle to launch through a narrowing IPO window.
Portugal inches closer to sobering EU bailout 16 Mar 2011 Investors greeted a Portuguese oneyear bond auction coolly, the day after a Moody's downgrade. And the country's finance minister has admitted it might need outside help to cope with its funding problems. It looks like a euro zone bailout will come in weeks, if not days.
Japan reminds strapped officials they need buffer 15 Mar 2011 When your credit card is nearly maxed out, dealing with emergencies can be tricky. A massive rebuilding effort may stretch Japan to its financial limits. Politicians in Washington and other overspending capitals should take note of the warning.
Global investors vulnerable as Japan fears worsen 15 Mar 2011 World markets are being bashed as Japanese stocks plummet. Equity assets elsewhere are vulnerable. Investors are even shunning gold. The crisis is unlikely to derail a worldwide recovery and may add to it as Japan rebuilds. But nuclear fears and panic must pass first.