Money‚ Markets & Macroeconomics

Jakarta is in a bind over interest rates

27 April 2018

Indonesian stocks are sliding alongside the rupiah, as higher U.S. yields prompt investors to sell out. But growth is tepid in Southeast Asia’s largest economy and an election looms. So the central bank is unlikely to follow through on talk of a hike, unless conditions worsen.

Mario Draghi struggles to ditch post-crisis policy

26 April 2018

Euro-zone growth is slowing before the European Central Bank boss can end asset purchases or join the Fed’s Jerome Powell in raising rates. One-off factors may be to blame now but a downturn is inevitable. Unusual policy will be the norm rather than the aberration in Europe.

Hadas: Debt overload is an easy problem to solve

25 April 2018

Three financial revolutions would be enough to bring down debt. Tax corporate debts, don’t subsidise them. Let the public share unearned gains on land. And replace government debt with newly printed money. These ideas may sound too radical – until the next mega-crisis arrives.

Water M&A fight puts governance center stage

24 April 2018

Eversource’s bid to upset SJW’s $750 mln deal with CWS is a close call on financial grounds. The interloper feels unfairly shut out, though, because SJW’s CEO ran the target until last year. And Eversource’s last big merger was messy. Watchdogs have to navigate choppy currents.

ECB has big enough stick to repel bad-loan revolt

24 April 2018

A political backlash may force the European Central Bank to ditch plans for stricter provisioning of 760 bln euros of dud loans. The saga has weakened chief supervisor Daniele Nouy, and may delay reform of Europe’s banking union. But the ECB has other tools to cut the loan pile.

U.S. bond yields may be throwing investors a curve

23 April 2018

The difference between short- and long-term Treasury rates is the smallest since before the financial crisis, raising fears of a coming recession. Yet the yield curve is a flawed warning, sometimes flashing years before a downturn hits. There are far better things to worry about.

Wells Fargo bets $200 bln on hopes for new climate

20 April 2018

That’s how much under-fire CEO Tim Sloan is pledging for clean-energy and other green projects. It may distract from a $1 bln mis-selling fine but it’s no mere PR stunt. Boosting financing and outlining credit portfolios’ carbon intensity are smart ways to address climate risk.

Trump’s OPEC smackdown more relevant than it looks

20 April 2018

The president slammed the oil cartel for production cuts that spurred the highest oil prices since 2014. Whatever his intent, members meeting in Jeddah should be wary of leaving the field open for rivals. A U.S. shale-drilling frenzy would hurt prices more than a tweet.

Review: How to deprogram economic xenophobia

20 April 2018

In "Us vs. Them", political scientist Ian Bremmer joins the crowd bewailing the retreat of globalisation. He identifies roots and risks, but finds no easy fixes. Ideas like universal basic income and taxing robots are band-aids. What's needed is a better global school system.

Swiss central bank gets FX wish three years late

20 April 2018

The franc has weakened to 1.20 against the euro for the first time since the Swiss National Bank ditched its cap on the currency in January 2015. Several factors could explain why. Policymakers are unlikely to care much about the reasons given the moves may help revive inflation.

Loans and fancy flats play Hanoi’s consumer boom

19 April 2018

Vietnam's Techcombank and Vinhomes could raise $3 bln through share sales. The lender looks a tad pricey in a frothy market, and doesn’t boast the impressive market lead of the top luxury developer. Still, both can excite investors in Southeast Asia’s fastest-growing economy.

Cuba rings changes while trying to stay the same

18 April 2018

Raul Castro's coming handover of Cuba's presidency is an effort to prolong beyond his own life span the communist revolution he built with late brother Fidel. Trying to modernize could also destroy it, though. And with neighbor Venezuela getting less able to provide cheap oil, economic reform can't wait.

Hadas: Knowledge is better shared than patented

18 April 2018

China is moving towards stronger protection of intellectual property. Trump’s prodding may speed up the pace. But hoarding knowledge is getting harder and less worthwhile, especially in developing countries. A global “Republic of Technology” may eventually replace patent wars.

Electric bikes may show cars some pedal power

16 April 2018

Already big in China, sales of motor-assisted cycles elsewhere may double by 2025 as battery costs fall. The popularity of bike-sharing schemes could spark mass adoption in cities, where e-bikes can be an appealing alternative to autos. No wonder Uber just bought its way in.

Review: Comey is flawed champion of civics revival

17 April 2018

In his blockbuster memoir, the ex-FBI director who prosecuted Martha Stewart and worked at Bridgewater calls Donald Trump an unethical liar and a threat to American institutions. His yarn is riveting, but reveals Comey’s mix of principled leadership and sanctimonious showboating.

China’s surprise reserve cut exposes growth angst

17 April 2018

The central bank cut reserve requirements for banks, freeing $200 bln for lending. That backs up other moves to help over-stretched banks amidst a purge on loose credit. The timing, however, suggests Beijing is looking for a cushion if the economy slows, or a trade war escalates.

IMF does a better job of worrying than forecasting

17 April 2018

The international lender's concerns, including protectionism and a sharp shift in financial conditions, are more useful than its unreliable global growth forecasts. The more policymakers fret about such dangers, the more likely the world is to be prepared and avoid the worst.

China’s two-track money policy hangs over economy

17 April 2018

Even as GDP grew 6.8 pct, industrial activity looks cooler, auguring a softer government line on bad debt. Higher official interest rates are being offset by short-term injections that keep the real cost of cash down. That could weaken the yuan and stir up more trade trouble.

Trump’s Fed is more rerun than reality TV

16 April 2018

Nominating economist and Pimco adviser Richard Clarida as vice chair and regulator Michelle Bowman to the board are predictable moves. With the central bank, the U.S. president has shunned the turmoil sown elsewhere in government. For investors, that's comforting continuity.

Trump spins trade wheel in friendlier direction

13 April 2018

The U.S. president is thinking of rejoining the TPP – an 11-member group set up in part as a bulwark against Trump's trading bugbear, China. Sharing should make that easier, while also appeasing American farmers. The question is whether Trump can compromise for long – or at all.