Hadas: What Brexit forecasters got wrong 26 Jul 2017 The UK government’s pre-referendum forecasts about what leaving the EU would mean were gloomy, but not dark enough. What they missed: British inflexibility, the damage from unlinking trade, the challenge of migration and the lingering costs of national self-humiliation.
Holding: SEC floats a terrible IPO idea 25 Jul 2017 A top agency official invited firms going public to consider blocking investors from banding together to sue. That would upend decades of policy and leave many frauds unpunished. Iffy claims against Arconic and others, though, mean shareholders may have themselves to blame.
Poland’s new tricks expose EU’s old weakness 25 Jul 2017 Judicial reforms that jeopardized the rule of law were stalled by the president, not European censure. Yet the bloc had little ability to impose sanctions anyway. As when nations flout budget rules, EU membership tests are more strictly enforced before entry than after.
Saudi oil cut would be a hit-and-hope strategy 24 Jul 2017 The kingdom’s pact with OPEC to damp output is crumbling and has failed to drain inventories, or boost prices, fast enough. One suggestion is to reduce its own exports by as much as a seventh to shock markets into submission. If that fails, though, Saudi would look impotent.
Carmakers need more collaboration, not less 24 Jul 2017 Germany’s VW, BMW and Daimler may have illegally colluded on emissions cleaning systems. The scale of potential misconduct is hard to judge. But if consumers don’t suffer, big technological change and bloated R&D budgets suggest more carmaker cooperation is nothing to be feared.
White House creates its very own jobs crisis 21 Jul 2017 Press Secretary Sean Spicer quit after the hiring of financier Anthony Scaramucci. Donald Trump also fired his FBI director, undercut his Treasury secretary and regrets his attorney general pick. Just as U.S. employers wrestle with labor participation, so too does the president.
Viewsroom: Why U.S. tax reform is doomed, too 20 Jul 2017 Republicans’ failure to replace Obamacare throws into doubt Washington’s ability to keep other high-profile election promises, not least cutting corporate levies. Meanwhile, President Trump’s fuzzy agenda for reforming NAFTA could give Canada and Mexico more bargaining power.
Central banks have no choice but to keep the faith 20 Jul 2017 ECB chief Mario Draghi and Bank of Japan boss Haruhiko Kuroda have spent trillions of euros and yen without generating much inflation. Nor is it clear when a pick-up in growth will feed through into prices. Yet they are obliged to insist their policies will work eventually.
Britain gets taster of capital markets disunion 19 Jul 2017 EU lawmakers may ban securitisation of loans where the borrower’s income isn’t proven. It’s a step towards the capital markets union Britain championed before its Brexit vote, yet one that will mostly affect UK borrowers. Britain can try and change the rules – but not for long.
Hadas: No auction often beats a bad auction 19 Jul 2017 Governments and Google are fans of auction theory, which teaches how to extract the highest bids for assets like radio spectrum or online ads. But the branch of economics cannot say if the price is fair. Auctions too often confuse consumers and tarnish the image of capitalism.
BBC stars will gain from radical pay transparency 19 Jul 2017 The UK public broadcaster has named everyone who earns more than 150,000 pounds a year. The main conclusion is that valuing TV presenters is guesswork. As with chief executives of listed companies, disclosing compensation will just enable them to demand even higher wages.
Greek bonds are a bet on euro zone support 18 Jul 2017 Athens wants to issue bonds just after receiving another bailout tranche. If Greece had to finance itself at market rates it would struggle to stay solvent. But debt relief from European governments and ECB bond-buying will reduce the risk. Investors may find the wager appealing. Full view will be published shortly.
Third Senate GOP health attempt is most charmless 18 Jul 2017 Having twice failed to pass alternatives to Obamacare, Republicans may try to repeal it with no replacement. Based on a similar 2015 effort an estimated 32 mln Americans would lose insurance cover, some 10 mln more than under the nixed bills. It’s hard to see senators backing it.
German climate change policy takes Trumpian turn 18 Jul 2017 Angela Merkel has castigated the U.S. President for pulling out of the Paris accord. Yet two German states are putting mining jobs ahead of cutting carbon emissions. If they don’t reconsider, the Chancellor’s green credentials – and the global agreement – will suffer a blow.
Inflation gives Bank of England a summer reprieve 18 Jul 2017 Prices rose just 2.6 pct in June, easing the pressure on the central bank to hike rates. That gives it a bit more time to gauge the extent of any Brexit-induced slowdown. When it comes to normalising monetary policy, Britain is shuffling towards the back of the queue.
Trump fuzziness gives NAFTA mediators wiggle room 17 Jul 2017 The president wants to cut deficits with Mexico and Canada and strengthen rules for products made in North America. But his trade rep is offering few details, while cribbing other ideas from the ditched TPP. Such a vague approach may increase the chance of striking a decent deal.
Central banks oust politicians as market fixation 17 Jul 2017 Investors are worrying about interest rates rather than elections. Statistics are a more reliable guide to the economic outlook than polls to political outcomes. But the path for monetary policy remains uncertain. Expect asset prices to be jumpy and their moves more synchronised.
Wanda’s M&A punishment is too much, too late 17 Jul 2017 Chinese banks have been ordered to halt lending to entertainment and property giant Dalian Wanda, Reuters reported, in what looks like retroactive punishment for big foreign investments. Such blurry lines around what is and isn't allowed do Chinese outbound investment no good.
Citi, JPMorgan and Wells show reliance on D.C. 14 Jul 2017 Higher interest rates helped all three big U.S. lenders beat estimates. But so, to varying degrees, did one-offs, low tax rates and benign credit costs. Performance isn’t yet justifying their healthy trading multiples. That will require more Washington talk to become action.
Review: How justice lost its way on Wall Street 14 Jul 2017 The financial crisis had millions of victims but, unlike previous ones, no apparent perpetrators. Jesse Eisinger's "The Chickenshit Club" blames political timidity, lobbying and D.C.'s revolving door for the failure to prosecute top dogs. Investors may yet regret the change.