Giant leap for ECB is small step for euro zone 8 Jul 2021 The central bank tweaked its inflation target to stress how much it hates falling short of 2%. And boss Christine Lagarde wants to do her bit to fight climate change. The shifts may be a big deal for a cautious institution, but they won’t produce a revolution in terms of results.
Capital Calls: Infrastructure, Doximity, Deliveroo 24 Jun 2021 Concise views on global finance: President Biden’s $1 trln bipartisan plan for U.S. infrastructure is a feat of political engineering. Meanwhile, medical-themed social network Doximity finds riches in niches, and UK delivery outfit Deliveroo serves up a favorable court ruling.
The Exchange: Roger Ferguson talks monetary policy 22 Jun 2021 The former Fed vice chair and ex-TIAA CEO joins Swaha Pattanaik to discuss how the central bank is navigating economic recovery and price pressures. He also talks about whether corporate America is living up to its diversity pledges and suggests strategies to speed progress.
Fed’s goal is to see forest, not whipsawed trees 16 Jun 2021 The U.S. central bank’s sanguine attitude on inflation avoids getting lost in fickle data. Record lumber costs were a worry until they fell. Used cars may be next. The risk is the Fed misses signs of lasting price pressure. But it's still better to focus on the bigger picture.
Capital Calls: U.S. inflation, Big Tech’s ad gains 10 Jun 2021 Concise views on global finance: A 5% annual jump in U.S. consumer prices reflects warped comparisons; the prospects for U.S. advertising are getting hotter, and the largest Silicon Valley firms will be the beneficiaries.
Capital Calls: GEO meme, United Parcel Service 9 Jun 2021 Concise views on global finance: The meme stock good-vs.-evil fairy tale is wearing thin with the private prison operator; the logistics company is focusing on high-margin deliveries rather than volume, and investors aren't loving it.
Jay Powell’s oil price bet counts on green inertia 3 Jun 2021 The Fed boss and his peers expect rebounding energy costs will only temporarily lift inflation. But if Western oil majors cut capex to please investors, crude could grow more expensive in coming years. Rate-setters are implicitly banking on a more gradual eco-friendly shift.
Inflationary tide rises on glum shipping forecast 26 May 2021 Sea freight costs have more than tripled in the past year. Ports are backed up, containers are in the wrong place, and demand is picking up. Supply-chain disruptions won’t last forever. But, going by what companies like Maersk are seeing, pressures may persist for most of 2021.
Inflation scaremongering is overdone 19 May 2021 Company earnings have revealed rising prices, and U.S. inflation in the year to April was the highest since 2008. Economist Larry Summers has criticized the Fed’s view that the spike is transitory. But bond markets, closer to the central bank’s camp, may well be on the money.
Fed fuzziness stores up problem for global markets 18 May 2021 U.S. rate setters say they’ll act if inflation stays too high for too long. What that means in practice is anyone’s guess, going by economists’ divergent views. Fudged guidance buys time for economic recovery to take hold. Asset prices could be jolted when clarity finally comes.
Three scarcities make Jay Powell’s life harder 12 May 2021 U.S. inflation soared to 4.2% in April due to pricier raw materials and shortages of some goods. The Fed boss plans to ignore what he views as a short-lived phenomenon. It will only be transient if companies can find and retain workers more easily than is currently the case.
Fed’s Jay Powell picks the road less travelled 27 Apr 2021 The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.
Capital Calls: Chubb and Hartford, Swimming pools 22 Apr 2021 Concise views on global finance: The company led by Evan Greenberg twice raised its bid for its Connecticut rival, but so far to no avail; a blowout quarter for private-pool maker Pool Corp points to buoyant wealth and spending trends, but only for some.
Turkey’s monetary meddling offers scant rewards 15 Apr 2021 The country’s central bank kept its interest rate at 19%. Having replaced his chief rate-setter in March, President Tayyip Erdogan hasn’t yet got the lower borrowing costs he wants. Rising inflation, a weak currency and the loss of credibility mean policy will need to stay tight.
Jerome Powell’s tricky tightrope act begins 13 Apr 2021 U.S. consumer prices rose 2.6% in the year to March due to higher energy costs. The upswing may be brief and the Fed boss won’t rush to tighten policy. Still, inflation expectations are rising. If that continues, it will make his focus on jobs rather than prices hard to maintain.
Capital Calls: BlackRock’s Archegos angle, SPACs 30 Mar 2021 Concise views on global finance in the Covid-19 era: The fallout from the collapse of Bill Hwang’s family office gives regulators reasons to focus on funds, not fund managers; and bosses of blank-check companies don’t take investor questions.
Turkey’s soft capital controls are transitory fix 29 Mar 2021 Subtle curbs that make it harder to sell the lira will slow its fall. They won’t be enough if the central bank’s new boss starts cutting rates under political pressure. President Tayyip Erdogan can impose tougher restrictions but will hurt the economy if he is too heavy-handed.
Viewsroom: Turkish trouble and emerging markets 25 Mar 2021 President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.
Turkey’s battered banks face a slow-burn crisis 25 Mar 2021 A plummeting lira creates the risk of a funding squeeze for Garanti BBVA, Akbank, Isbank and others. But they’ve survived past crises without a bank run. The more likely problem for the sector is mounting bad debt, which will drag down returns and capital for years to come.
South Africa offers Erdogan an inflation lesson 23 Mar 2021 A steep plunge in the lira, of the sort seen this week after Turkey’s president fired his central bank boss, usually drags down the rand. Not this time. The South African currency’s resilience shows the value of a credible and independent central bank left free to control prices.