Western economies rediscover meaning of scarcity 27 Oct 2022 For several decades, constraints on supplies of labour, energy and capital appeared to have all but disappeared. Now they are back, humbling leaders like former British Prime Minister Liz Truss. Allocating scarce resources means more state intervention, writes Edward Chancellor.
The urgent search for the perfect inflation hedge 20 Oct 2022 Nearly every major asset class has lost money this year, leaving investors scrambling to protect their wealth from rising prices. Traditional alternatives such as gold and property also have drawbacks, writes Edward Chancellor. The best shield may be the most obvious one.
Europe’s energy crisis nears winter of discontent 18 Oct 2022 Germany, Italy and others have scrambled to replace Russian gas and pipeline attacks have become a concern. The Oxford Institute for Energy Studies’ Jack Sharples tells The Exchange podcast Europe must learn to live with less power. Next year may be even more challenging.
Prada homecoming would set a financial fashion 18 Oct 2022 A decade after its Hong Kong IPO, the $12 bln maker of Galleria bags is seeking to trade also in Milan. That will help it into European indices and create a hedge against Western decoupling from China. It would also make sole listings in the Asian hub less desirable.
Pension fund blowup faces brutal second act 6 Oct 2022 The Bank of England’s $74 bln bond-buying scheme saved retirement plans from losses on government bonds. But the fallout from the crisis means funds with $1.9 trln of assets now need to reduce risk by selling corporate bonds and other esoteric assets. That will spread the pain.
Capital Calls: Peloton races tough economic cycle 6 Oct 2022 Concise views on global finance: The $2.9 bln fitness company is laying off staff for the fourth time this year in a turnaround bid for survival.
Tokyo blinks in game of forex chicken 22 Sep 2022 Japan has responded to the Federal Reserve’s rate hikes by moving to prop up the staggering yen, the first intervention since 1998. The country’s economy and Bank of Japan Governor Haruhiko Kuroda’s loose policy make it unlikely the plan will work. The attempt may even backfire.
Tough love is best fix for energy cash crunch 7 Sep 2022 Utilities and power traders face a $1.5 trln surge in collateral demands due to swings in gas futures. The answer could be bailouts, halts in trading and collateral tweaks. Yet radical changes may increase risk. And government help, if properly priced, needn’t be a freebie.
Chinese audits, Vaccine wars, UK tax cuts 1 Sep 2022 Beijing will let companies submit to U.S. audit requirements. In this Viewsroom podcast, Breakingviews columnists argue only weak firms will comply. Also, Pfizer and Moderna’s legal battle is unlikely to create a winner, and Britain’s prime ministerial hopefuls debate handouts.
Hong Kong’s tiny floats are filled with big risks 19 Aug 2022 A biotech firm sold just 2% of shares in its IPO, highlighting a trend of relatively illiquid stocks coming to market. It’s a way to prop up valuations. Yet issuers will struggle to raise more funds and the added volatility worsens the city’s dismal secondary market performance.
EU crypto rules will cheer banks and deter minnows 6 Jul 2022 Europe’s digital asset legislation set clearer guidelines on cross-border transactions. That’s good for big banks keen to mix it with the likes of Coinbase and Binance. But while those bigger crypto beasts are able to swallow higher compliance costs, smaller fry will struggle.
Robinhood’s reversal, Russian oil cap 30 Jun 2022 The digital brokerage is worth less than a quarter of its $32 bln IPO value. In this Viewsroom podcast, Breakingviews columnists argue that its $7 bln cash pile and ample user base make it an attractive target. Also, Western leaders’ plan to restrict funds to Moscow may backfire.
Capital Calls: Fed faces inflation divergence 30 Jun 2022 Concise views on global finance: The central bank’s preferred measure of rising prices, the U.S. personal consumption index, rose 6.3% in May. That’s more subdued than the surging consumer price index. But the latter offers a better read on household spending.
Sam Bankman-Fried bailouts flag crypto’s fragility 22 Jun 2022 The wunderkind’s businesses coughed up $750 mln to help ailing brokers Voyager Digital and BlockFi. The rescues suggest the sector cannot easily withstand the failure of just a few players. And winners like Bankman-Fried may not save the $900 bln industry if prices tank again.
LME’s best hope is to pay up, then shape up 7 Jun 2022 Elliott Management is suing the London Metal Exchange for voided nickel trades. If it wins its judicial review, the LME could take a flood of further legal blows. Its Hong Kong owner’s best defence may be to pre-emptively compensate angry traders, whilst rebooting governance.
Capital Calls: Microsoft micromanages tech jitters 2 Jun 2022 Concise views on global finance: A 1% revenue shortfall because of a strong dollar normally isn’t that important. Microsoft’s warning reflects how nervous tech investors have become.
Inflation revives spectre of the long bear market 19 May 2022 The S&P 500 Index has fallen almost 20% from its early January peak. Such downturns have become shorter and less frequent due to support from the Federal Reserve, says Edward Chancellor. But rising prices have removed the safety net. The next selloff could inflict more damage.
Wanted: Chillaxed CEO for $21 bln French laggard 18 May 2022 Frédéric Oudéa will depart from SocGen after 15 years at the helm. He leaves a bloated bank with one of the lowest valuations in Europe and an unclear appetite for change. Breakingviews imagines a letter from a headhunter specialising in cushy job placements.
Stablecoin panics may be a feature not a bug 17 May 2022 Crypto tokens like Terra and $80 bln Tether were supposedly pegged to the dollar. Yet the former failed and the latter wobbled. Holding 100% cash reserves would help. But there’s no fun, or money, in that. Users can always flock to the new, sketchy coin offering juicy rewards.
ICE’s Black Knight deal has antitrust snare 13 May 2022 The NYSE owner is paying a big premium to round out its mortgage tech dominance with the servicing-focused Black Knight. But the combination looks to pose antitrust problems, and a loose merger agreement gives ICE room to blow up the deal if it runs into resistance.