Money‚ Markets & Macroeconomics

Greener anti-flood investments will be win-win

26 July 2021

Germany’s worst natural disaster in decades and deluges in China have sparked calls to build more dams and reservoirs. There are better ways to protect people, land and buildings from both too much and too little water. These alternatives will also appeal to investors.

Guest view: Investing when inflation is a mystery

23 July 2021

Trying to outguess asset prices on how fast consumer prices will rise is pointless, Gerard O’Reilly, chief investment officer at Dimensional Fund Advisors, says. Better to focus on ways of outpacing or hedging against what’s anticipated by market gauges of inflation expectations.

ECB’s old problem will defy new strategy

22 July 2021

Boss Christine Lagarde revealed the practical consequences of tweaking her inflation target: interest rates may stay at record lows for even longer. But given ultra-easy policy has failed for years to make prices rise faster, the chances of hitting her new goal are no better.

Mind-blowing earnings are already so last season

21 July 2021

Big companies are set to report stellar second-quarter results. But the best will soon be in the rear-view mirror and many worries, notably about Covid-19 variants, lie ahead. Head-scratching drops in U.S. bond yields will only make stock markets even more prone to stumbles.

Capital Calls: BBQGuys go easy on the hot sauce

20 July 2021

Concise views on global finance: An e-commerce company for grill connoisseurs is going public via a blank-check company with a valuation that befits its side-dish status.

UK virus cost-benefit discounts human psychology

19 July 2021

Britain lifted Covid-19 restrictions, diverging from states like Israel. On the face of it, the financial benefits of reopening outweigh the ongoing costs from living with the virus. But as with previous false dawns, if consumers remain fearful the recovery won’t motor.

Lagarde’s green turn may not need to be that sharp

16 July 2021

The ECB boss’s 293 bln euro corporate bond programme may soon tilt toward environmental saints and away from sinners. Too heavy a hand could distort markets and inflate green bubbles. But it’s a big enough change for it not to matter if, as seems likely, the intervention is mild.

South Africa has no money to throw at its problems

15 July 2021

The Rainbow Nation is suffering its worst civil unrest since the end of apartheid in 1994. The ruling ANC’s usual response to cracks in the social fabric is to fill them with new subsidies. With debt at 80% of GDP and rising fast, that has a limited shelf-life.

China’s uneven recovery threatens Xi’s tidy-up

15 July 2021

The economy expanded at a slower-than-expected 7.9% in the second quarter as small firms struggle. Easing monetary policy is a quick fix but will fuel lending to sectors President Xi Jinping is trying to rein in. Pressure is building for him to kick the can down the road again.

Biden could raise volume on Fed’s quiet message

14 July 2021

Even if Chair Jerome Powell keeps his role at the central bank, the U.S. president may choose as many as three of its seven governors. New picks are likely to exceed Powell’s expansive view of the Fed’s role. But its tools to tackle issues like inequality are limited.

ECB has reason to leapfrog Fed on digital currency

14 July 2021

President Christine Lagarde took the first step towards an electronic euro. China and some others are moving faster. But the innovation may be more useful in the euro zone than in the United States, especially if the ECB can impose negative interest rates directly on households.

Kiwis show world how to deliver sharp policy jolts

14 July 2021

New Zealand’s central bank is suddenly halting bond buying in a sign that it may soon raise interest rates. It’s a contrast to the long advance notice that Fed Chair Jay Powell or ECB boss Christine Lagarde need to give investors. The country’s relatively healthy finances help.

U.S. auto financing has mini subprime problem

12 July 2021

Prices have shot up 45% in some cases in the $800 billion car sales market, due to pent-up demand and a chip shortage. But unlike houses that can go up in value, cars depreciate as soon as they are driven off the lot. Owners will soon be underwater, and so will their lenders.

The Exchange: American-EU relations return to warm

13 July 2021

After four frosty years, Washington and Brussels are back to cooperation on foreign and economic policy, with some big trade wins already on the scoreboard, Ambassador Stavros Lambrinidis tells Rob Cox in an interview hosted by the European-American Chamber of Commerce New York.

EU carbon border levy limbers up for a soft launch

13 July 2021

The European Commission will this week set out plans for making companies that export goods to the bloc incorporate the rising cost of carbon. It’s likely to pull its punches. That’s not ideal, but even a watered-down levy would still set an important precedent.

Bretton Woods could use a green transition reboot

11 July 2021

Larry Fink wants the World Bank and IMF repurposed to tackle the climate crisis. The BlackRock boss has a point. To prevent further harmful warming, shock absorbers for private capital will be needed to help poorer nations decarbonise. These multilateral lenders fit the bill.

Yellen’s art of the tax deal has difficult sequel

9 July 2021

The U.S. Treasury chief was known as an economics wonk instead of a negotiator. Yet she convinced 130 countries to back a minimum corporate levy. Persuading Congress to do the same while preserving the global coalition will present her with tougher and contradictory tasks.

Numerate faithful put stock in an England victory

9 July 2021

Goldman Sachs says the Three Lions will beat Italy in Sunday’s Euro 2020 final. Before that, it reckoned Spain would beat Italy, and Belgium would win the whole thing. One side benefit of an English win is that forecasters might keep being allowed to get it entertainingly wrong.

Mario Draghi can help Italian recovery in two ways

9 July 2021

The end of a layoff ban, the prospect of more loan defaults and high public debt pose a triple economic challenge. Fortunately, ECB asset purchases will buy the prime minister time to focus on growth-enhancing investment and push for more flexible EU budget rules.

Giant leap for ECB is small step for euro zone

8 July 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.