South Africa is nearer redemption than it looks 13 Feb 2018 The ruling ANC has decided to remove Jacob Zuma. While the scandal-hit president could still dig his heels in and force parliament to sack him, the party’s united front means his exit is probably imminent. That improves the chances of his successor delivering economic recovery.
Trump budget is mostly fan fiction for Republicans 12 Feb 2018 The administration called for cuts in non-military programs in its $4.4 trln budget for 2019. Last week’s two-year spending deal effectively dooms the plan, though it may offer a blueprint for GOP budget hawks. A new infrastructure push offers one hope of bipartisan dealmaking.
General Dynamics pays paranoia premium for CSRA 12 Feb 2018 The U.S. defense group is spending some $6.8 bln for cyber specialist CSRA. The synergies don’t quite cover the premium, and returns look underwhelming. The deal hangs on a big boost in U.S. government spending, and the idea that these companies benefit from a more fearful world.
State Bank of India picks right time to pivot 12 Feb 2018 India’s biggest bank reported a surprise quarterly dip into the red, hit by losses from its bond holdings and a spike in bad-loan provisions. Yet a plan to raise capital and lend more to individuals is a reminder SBI is in a strong position to grow.
Market turmoil increases the attraction of cash 9 Feb 2018 Despite the global stock market selloff, investors are showing little interest in the safest government bonds. That’s because U.S. fiscal and monetary policies have diminished the safe-haven appeal of Treasuries. When neither debt nor equity is appealing, cash becomes king.
Congress holds its nose over U.S. fiscal restraint 8 Feb 2018 The legislature passed a deal early on Friday to raise spending by several hundred billion dollars, just two months after a $1.5 trln tax cut. The strain on government coffers during a roaring economy will leave politicians with far less ammo when the next downturn arrives.
Hadas: Brexit trial could go worse than expected 9 Feb 2018 Are economists biased against Brexit? If anything, their estimates, which rely on imperfect precedents, are too optimistic. Leaving the EU will impair UK growth by hitting long-term confidence, institutional strength and workforce quality – all hard to capture in a spreadsheet.
Viewsroom: The Fed’s belated Wells Fargo beating 8 Feb 2018 Chair Janet Yellen forbids the $2 trln lender from growing bigger - on her last day in the job, and 17 months after Wells’ fake-accounts scandal hit. Meanwhile, fellow financial watchdog CFPB seems to be giving hacked Equifax a free pass. Plus: how Nintendo made a comeback.
Mark Carney’s next rate rise rests on Theresa May 8 Feb 2018 The Bank of England boss says UK interest rates may rise further and sooner than previously anticipated. But that assumes a smooth exit from the European Union. If the prime minister fails to secure a transition deal in the next few months he will have to backtrack.
UniCredit’s next task is to kick-start growth 8 Feb 2018 The Italian bank is back in the black with an adjusted net profit of 3.7 bln euros. With the balance sheet fixed and much cost-cutting complete, CEO Jean Pierre Mustier can focus on boosting revenue. But ramping up product sales could be harder without its asset management arm.
Commerzbank now merits suitors as well as pity 8 Feb 2018 Normally, potential buyers would look askance at the German bank’s falling profits, rising costs and 1 pct return on tangible equity. But Commerzbank’s commitment to a 2018 dividend is a strong positive. Throw in potential deal synergies, and it should attract interest.
Europe is biggest winner of German coalition deal 7 Feb 2018 Chancellor Angela Merkel has offered the Social Democrats the finance ministry to persuade them to join a government. Even so, the SPD rank and file may not like it. But the accord implies less fiscal rigour, which could help forge better ties across the European Union.
Zuma exit spat exposes South Africa reform hurdles 7 Feb 2018 Thursday’s state of the nation address should have been delivered by President-elect Cyril Ramaphosa. Instead it was postponed because scandal-hit incumbent Jacob Zuma refused to step down. Even after he goes, political divisions could continue to hamper vital reforms.
U.S. watchdogs put crypto-currencies on long leash 6 Feb 2018 Regulators warned Congress that bitcoin and the like test the limit of current law. But for now they seem willing to let the volatile $370 bln market develop rapidly as long as they can keep a handle on fraud. A measured approach makes more sense than Asia’s heavy-handedness.
Chancellor: Beware economic models’ hidden biases 6 Feb 2018 In the age of fake news there’s one comforting thought. It’s easy to expose blatant lies. Harder to identify are possible prejudices buried in the models that inform policy decisions, as recent controversies involving Brexit's impact and the World Bank business rankings suggest.
CFPB scores too low on Equifax transparency 5 Feb 2018 The consumer-finance watchdog is dialing back its probe of the $15 bln U.S. credit-scoring firm’s massive data breach last year. Trump’s CFPB head says the regulator has gone too far in the past. Perhaps – but if protecting vital data isn’t its remit, he needs to explain what is.
Trump’s weak dollar upends Asian growth calculus 2 Feb 2018 Asia is bracing for a softer greenback. That could curb export-led growth from South Korea to Singapore and prompt a reappraisal of stock valuations. A U.S. policy shift could complicate Japan’s deflation fight and China’s ability to keep growing 6.5 percent annually.
Viewsroom: Jamie Dimon risks ruining a good run 1 Feb 2018 JPMorgan’s chairman and CEO intends to lead the bank until around 2023. Dimon has built a strong and successful company over the past 12 years. But the longer he stays, the harder it becomes to leave on an unambiguous high. Plus: Asian governments tackle bitcoin.
China’s IPO cleanup makes encouraging debut 1 Feb 2018 Beijing regulators just rejected six new-listing applications in a single day, including one from Hong Kong-traded psychiatric hospital chain Wenzhou Kangning. Enforcing tougher standards could lead to broader reforms. The risk is empowering entrenched bureaucrats even more.
Trump policy agenda starts to stick to the script 30 Jan 2018 The U.S. president’s first State of the Union address praised fast growth and recent tax cuts. He talked immigration and promised $1.5 trln for infrastructure, but the speech contained few surprises. A consistent platform is starting to emerge from the noise.