Influencer model infects US political fundraising 27 Oct 2023 The US House elected a speaker after four people gave it a try. The chaos partly reflects how politicians now receive support. Social media enables them to reach voters without the backing of their party. The new way to create star power will disrupt politics as it has Hollywood.
Capital Calls: Ford, Amazon 26 Oct 2023 Concise views on global finance: The loss per car at the $45 bln automaker’s electric-vehicle unit has jumped 51% in a year. So-so earnings at the $1.2 trln e-commerce giant’s cloud division beat the even lower bar set by rival Alphabet.
China puts $137 bln Band-Aid on local debt wounds 25 Oct 2023 Beijing will funnel the borrowed cash to regional governments to spend on water and other infrastructure projects. It’s part of a “basket of measures” aimed at alleviating their worsening $13 trln debt crisis. Absent proper restructuring, it’ll only buy local authorities time.
US deficit problem screams for revenue solution 23 Oct 2023 Rising interest costs threaten to widen a $1.7 trln budget gap already stretched beyond 7% of GDP. Lawmakers are haggling about spending, but the math only works with higher taxes. It means closing an inheritance loophole, charging the rich more and resetting the corporate rate.
Green turn will extend China’s Belt and Road trek 20 Oct 2023 Ten years on, Beijing’s $1 trln infrastructure plan has gone global. While the West has largely shunned the scheme fearing debt bondage and political meddling, developing countries have rushed to join. Their lack of cash to fund the clean transition will keep the project alive.
Capital Calls: BlackRock, Dollar General 13 Oct 2023 Concise views on global finance: Boss Larry Fink squares off with Uncle Sam; Dollar General bets on its ex-boss’s old magic.
Europe’s rising bond vigilantes are necessary evil 11 Oct 2023 Debt costs for weaker states like Italy are jumping. Europe’s delay in agreeing new fiscal rules means hostile markets are the only credible check on government spending. Slowing growth and a hamstrung ECB means the backdrop may well get choppier.
IMF’s bond vigilante script is ripe for a rewrite 10 Oct 2023 The International Monetary Fund wants politicians to close the fiscal taps. Yet it’s also warning about a sharp slowdown in global growth. Markets are worried about debt levels but without spending and investment the world will stagnate.
Israel war casts US as flawed-but-familiar haven 9 Oct 2023 Dysfunction in D.C. continues to freeze legislation, including new aid for Israel. Despite that, past conflicts – 9/11, Ukraine’s war with Russia – suggest the dollar will remain the safe haven. Investors’ reckoning with budgets, infighting, and an election will have to wait.
Capital Calls: US government shutdown 29 Sep 2023 Concise views on global finance: Civil servants, who already earn 24% less than the market rate, lose their pay when Washington closes. Legislators, meanwhile, keep collecting their $174,000 salaries. Having skin in the game would help focus congressional minds.
Long US shutdown is avoidable but seems inevitable 26 Sep 2023 A group of Republicans are holding up approval of a $1.5 trln budget because they want $60 bln in cuts. Fiscal responsibility is fair enough, but they’re being contradictory and unreasonable. Even if Republicans were to reach an agreement today, other issues will get in the way.
Western rival to Belt and Road has much to prove 25 Sep 2023 The G7’s $600 bln plan to compete with China’s flagging investment push has launched splashy railway and energy schemes in Africa and Asia. But governments and private investors haven’t put up much cash. It’s also unclear how poor countries will avoid debt traps, says Hugo Dixon.
Uncle Sam risks recession by a thousand cuts 22 Sep 2023 A government stoppage would shave a sliver from US economic expansion. Restarting student loan payments will have a similar effect. Add striking autoworkers, high oil prices and costly mortgages, and 0.8% growth forecast for the fourth quarter and 0.5% in early 2024 look shaky.
Ukraine war gives wings to India bond index debut 22 Sep 2023 JPMorgan will add the country’s sovereign debt to its emerging market index, easing concentration issues following Russia’s exclusion. It drags foreigners into a $1 trln market. New Delhi sees new gains from opening but it may have to bend on taxes and more to win wider backing.
China’s growth is buried under great wall of debt 13 Sep 2023 Local government investment arms owe $11 trln to creditors including state banks. That’s hobbling the world’s second-largest economy. Beijing needs to force asset sales and let some fail. It will be painful but relying on consumers who are unwilling to spend is a dead end.
Flood insurance swamps US government 11 Sep 2023 A federal scheme to back policies for water-logged homes is set to be renewed. Failing to do that would worsen a housing shortage. But the program is already laden with debt. Fixes like flood-prevention infrastructure can lower costs for the government and homebuyers alike.
Bond rout will amplify Powell’s Jackson Hole words 23 Aug 2023 Yields on 10-year US debt are near a 16-year-high. That’s lifting borrowing costs even though the Federal Reserve is likely done with raising rates. More expensive loans may cause a recession. When he speaks on Friday, the Fed chair needs to calm markets without caving into them.
US soft landing means bumpy ride for bonds 8 Aug 2023 Yields on 10-year government debt are near a 5-year high even though inflation is falling without a recession or huge job losses. Fixed-income traders are right to worry. Better growth may fuel more price rises, keeping rates elevated and deepening Washington’s fiscal problems.
Capital Calls: AMC’s meme investor backlash 18 Jul 2023 Concise views on global finance: A new lawsuit looking to force a shareholder meeting adds to growing antagonism between $2 bln movie theater chain AMC and the retail investors who buoyed its business during the pandemic. For boss Adam Aron, meme stock stardom comes at a cost.
China’s world banks are geopolitical victims 15 Jun 2023 Canada suspended activity at the AIIB after a senior employee claimed it has become an instrument of the Chinese Communist Party. The Beijing-based infrastructure lender tried to play by global rules, but multilateral funding models are struggling to evade diplomatic tensions.