Earnings power gives U.S. market rally new impulse 28 Jul 2017 Notwithstanding Washington's spectacular dysfunction, corporations are beating profit forecasts, growing at a double-digit pace for another quarter. Corporate America's ability to fatten the bottom line without a spurt in the broader economy justifies bull-market convictions.
Stress-test reform risks handing banks easy ‘A’ 27 Jul 2017 Randal Quarles, Trump’s pick to head regulation at the Fed, thinks Wall Street should get details of the annual exam, such as models. He says it’s about providing questions rather than giving answers. That, though, may mean lenders have more clues, which could defeat the purpose.
Cox: Colombia’s peace dividend won’t come easy 27 Jul 2017 The end of a long war against leftist guerrillas should allow Latin America's fourth-biggest economy to attract investment, better allocate capital and grow faster. A trip into rural Colombia reveals how infrastructure neglected for 50 years complicates the challenge ahead.
SEC brings dodgy digital-currency sales to earth 26 Jul 2017 The U.S. watchdog says 2016’s biggest so-called initial coin offering was a securities issue that didn’t comply with the law. That will crimp a market that has boomed to $1.3 bln so far this year. A crackdown will test whether it’s worth the trouble of making ICOs legitimate.
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.
EU play for primary dealers may speed their demise 26 Jul 2017 Banks that buy EU debt directly from governments might have to move jobs out of London after Brexit to retain the privilege, Reuters reports. Such strong-arm tactics may drive some out of a business that has already grown less appealing and force a rethink of how bonds are sold.
Exchange Podcast: Duff McDonald 25 Jul 2017 Harvard Business School has trained world leaders, billionaire entrepreneurs and convicted felons. Duff McDonald, author of “The Golden Passport,” discusses the seamier side of Harvard's teachings with Rob Cox.
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.
Dearth of policy action dulls U.S. economic hopes 24 Jul 2017 Six months in, Donald Trump’s growth promises are getting downgraded. The IMF just cut its forecast for U.S. expansion, though the global outlook is holding up. Stocks stateside have underperformed other markets in 2017 and the dollar has fallen. For now, greatness is elsewhere.
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.
Beijing sours on private-sector independence 24 Jul 2017 Bureaucrats who once encouraged foreign takeovers are now second-guessing private deals by Dalian Wanda, HNA and others. Tech stars like Tencent are being force-fed shares in state dinosaurs. The Communist Party has grown overconfident in its ability to micro-manage.
Abe’s weakness puts Japan reform momentum at risk 24 Jul 2017 A period of unusual political stability helped Prime Minister Shinzo Abe shake up the economy. But his approval ratings have crashed. He is more likely to respond with populist spending than doubling down on reform. If that fails to shore up his support, he may be replaced.
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.
Euro rally will only speed its own reversal 21 Jul 2017 The single currency has hit a two-year high against the U.S. dollar. That will depress import prices when inflation is still too low. Any hint that a stronger exchange rate will prompt the European Central Bank to leave monetary policy loose for longer will push it down again.
China’s new carbon market faces pricing pratfall 21 Jul 2017 China is about to launch the world’s biggest carbon market, after sharply reducing its scope to a few core sectors. The scheme can help foster cleaner, leaner industry. But success is likely to be limited by dodgy data, distorted pricing, and Beijing's distrust of market forces.
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.
GOP may get inside help to defang bank watchdog 20 Jul 2017 U.S. Republicans want to nix a key CFPB rule. Champions like Democratic Senator Elizabeth Warren will defend the consumer regulator created by the Dodd-Frank Act. But if Director Richard Cordray runs for Ohio governor, as seems plausible, the agency may soon wither away.
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.
Crypto-currency deals recall an earlier tech craze 19 Jul 2017 A rash of initial coin offerings has raised $1.3 bln in 2017, much of it in the past month. These crypto-currency versions of an IPO bear the speculative hallmarks of the ‘90s tech boom. With untested managements and few if any investor protections, this wave may end just as badly.