Beijing-Trump relations enter dangerous phase 4 Jul 2017 Chinese and U.S. leaders misread each other. Beijing overinvested in a few relationships, while it ran up the trade surplus and failed to rein in North Korea. Trump's team is now pushing back with sanctions, tariff threats and military moves. The risks of a trade war are rising.
Illinois blowup flags dangers of budget fireworks 3 Jul 2017 As America celebrates July 4, at least six states missed their financial-planning deadlines. New Jersey and Maine even shut down services. A third straight year of political impasse has Illinois racing to avoid a junk credit rating. The spectacle should scare others into action.
Theresa May’s dilemma is Mark Carney’s opportunity 3 Jul 2017 The British Prime Minister is under growing pressure to loosen fiscal policy. Higher wages for public sector workers would worsen the deficit. But boosting growth would give the Bank of England chief more freedom to fight inflation. Necessity may force May to do the right thing.
Qatar standoff spells end of Gulf cooperation 3 Jul 2017 Saudi Arabia has granted the sheikhdom two more days to comply with its demands. Failure to reach a deal could escalate the dispute, hitting regional economies and investors in equal measure. But even if both sides back down, plans for greater economic collaboration are on hold.
Next stop for Chinese bonds is credible ratings 3 Jul 2017 A new Bond Connect lets foreign fund managers buy into the mainland’s $9 trln market from Hong Kong. The easier access is welcome and should speed up China’s inclusion in key indexes. But big inflows, especially into corporate bonds, will require more plausible credit ratings.
U.S. water doesn’t let Trump dampen the mood 30 Jun 2017 Industry bigwigs in New Orleans extolled an all-in approach to managing H2O, with one exception. They ignored White House plans to curtail clean-water rules to focus on fixing aging systems. Securing the needed $5 trln is urgent, but limiting federal control could be costly too.
U.S. steel war invites needless collateral damage 30 Jun 2017 With overcapacity on the upcoming G20 agenda, the White House is mulling a 20 pct tariff on imports. That'd be risky for the auto and construction industries. A similar 2002 levy under President Bush led to 200,000 job losses. There are smarter ways to address market distortions.
Review: What really creates the value of money 30 Jun 2017 Christine Desan’s “Making Money” is not only a fine monetary history of England. The 2014 book is relevant today. It shows cash and governments go together, the gold standard was a misnomer and central banking is political. And we should stop outsourcing money-creation to banks.
Colombia faces peace paradox as FARC rebels disarm 30 Jun 2017 Ending five decades of civil war will lift the Andean nation's economy in the long run, but place additional burdens on tight government finances in the meantime if peace is to prosper. Encouragingly, murders are down and tourism up, but it could all still go wrong.
Spectre of old normal gives investors a fright 30 Jun 2017 Financial markets have grown used to sluggish growth, low inflation and rock-bottom interest rates. Now the hint of tighter global monetary policy has pushed up yields and knocked stocks. Though better economic prospects are welcome, a shift will be painful for investors.
Hong Kong’s Enigma crash reinforces small-cap fear 30 Jun 2017 The city’s junior board has tumbled, led by a cluster of firms that an influential activist has dubbed "The Enigma Network". Investors were already souring on the low end of the market. Authorities ought to clean house before pushing to attract yet more small-cap listings.
Green bonds could help build new Silk Road 30 Jun 2017 Investors have yet to warm to the Belt and Road, China’s huge infrastructure plan. Beijing’s new development bank, the AIIB, could help by issuing green bonds to fund railways and ports. But if the projects’ environmental credentials are weak, the lender’s reputation will suffer.
FDA moves signal storm warning for pharma 29 Jun 2017 New commissioner Scott Gottlieb is wasting no time combating high prices. The U.S. agency will expedite reviews of generic-drug applications to promote competition. The changes will batter the likes of Valeant and Cardinal Health, and cast a cloud over branded drug makers.
Draghi’s taper tizzy is sign of dangers to come 29 Jun 2017 Comments by ECB chief Mario Draghi drove up bond yields and the euro, despite later protestations that markets had misread him. The ado owes more to investor complacency than fuzzy talk. It highlights traders’ twitchiness and the challenges in withdrawing ultra-loose policy.
Lessons from Europe’s tricky trio of bank rescues 29 Jun 2017 Creditors saved Britain’s Co-operative Bank, Spain’s Popular was sold, and two Italian lenders received a bailout. Though circumstances differ, the common theme is that regulators remain wary of winding down troubled banks. New capital rules will eventually make the task easier.
Foreign banks get U.S. stress-test cheat sheet 28 Jun 2017 America's top banks passed the Fed’s annual checkup, including the so-called qualitative portion that has tripped them up before. International players like Barclays and Deutsche Bank will have to take the exam next year. Their U.S. rivals have given them a road map to follow.
Ransomware reveals tech challenges past and future 28 Jun 2017 The Petya cyber attack spread from Ukraine to 65 countries, infecting software that could have been patched. Human error enables hacking of today's IT setups, making prank emails that deceived bank bosses alarming, too. The cloud reduces that danger – but introduces others.
Hadas: Time for a big rethink on interest rates 28 Jun 2017 Central banks are told to worry first about prices. The long-term global trend of low inflation makes that a distraction. The right focus now is on weaning investors off the false highs of easy credit and rising asset prices. Part of the withdrawal is making money more expensive.
Britain’s fund manager probe takes horse to water 28 Jun 2017 The Financial Conduct Authority wants clearer fees, more care for investors and better value for money. Its conclusion, that asset management is uncompetitive and too profitable, hit harder than its prescriptions. The question is whether clients will become more demanding too.
Draghi’s hints have more clout than Yellen’s deeds 28 Jun 2017 ECB chief Mario Draghi had more market impact by alluding to higher rates than Fed Chair Janet Yellen did by hiking them two weeks ago. That fits a recent pattern: central bankers who have yet to tighten policy are more apt to upset expectations – and that’s what moves prices.