U.S. debt ceiling’s only value is as a warning light 23 Jun 2017 The Treasury wants lawmakers to raise the $20 trln cap on federal borrowing or risk a default. The 100-year-old idea of the limit is no longer practical, especially when Congress won't link it with budgeted outlays. Still, the ceiling is a symbol of America's growing debt burden.
Review: We’re all behaviorists now – so what? 23 Jun 2017 A decade after the financial crisis started, the lessons are still being debated. Two new books by leading financial practitioners say human irrationality and unpredictability hold the key to understanding. Their reasoning is compelling, but the practical takeaways are slim.
Brexit one year on: an alternative history 23 Jun 2017 It has been a year since Britain voted narrowly to remain in the EU, a (fake) bank CEO writes in a memo to staff. Few expected uncertainty would linger so long after the referendum. Austerity and populism point to challenges in the UK. Thankfully, the euro zone looks attractive.
Oil markets too calm over Qatar ultimatum 23 Jun 2017 Doha’s Gulf neighbours have imposed a 10-day deadline to comply with demands including reparations, closing Al Jazeera and regular inspections. Markets have assumed the standoff won’t turn violent and impact oil supply from the region. That assumption is looking less secure.
Reasons to fret about Hong Kong’s post-2047 future 23 Jun 2017 China’s promise to uphold “one country, two systems” does not expire for three decades. Yet property owners and citizens have little idea of what comes next. Drastic changes to the legal system are unlikely. Still, there is ample room for a crisis of confidence long before 2047.
Next test for big U.S. banks is self-restraint 22 Jun 2017 All 34 lenders and Wall Street firms cleared the Fed’s annual health hurdle. Next year’s checkup may be less strict on operational risk and other areas. If banks want to make aggressive payouts to investors, future stress tests may give the central bank less power to stop them.
Argentina grinds toward economic credibility 22 Jun 2017 Within just a couple of days Latin America’s third-largest economy sold a rare 100-year bond and was then surprisingly snubbed for inclusion in a major stock index by MSCI. Amid all the noise, President Mauricio Macri is slowly asserting the dullness of competence.
U.S. Senate’s “better” healthcare is still worse 22 Jun 2017 Upper-chamber Republicans unveiled their hitherto secret Obamacare alternative. Unlike the House bill it keeps income-based subsidies, but there are big cuts to Medicaid. Millions would probably lose insurance coverage. With costs ballooning, that's what Trump might call "mean."
Cox: Milan is dark horse in post-Brexit bank race 22 Jun 2017 The city that taught London about lending lags Paris and Frankfurt in pitching its appeal as a financial center. Fashionable lateness is a Lombard charm. So are fine universities, clever financiers, tax incentives, a strong work ethic – and easy access to beaches and mountains.
Saudi Aramco IPO is exercise in reverse valuation 22 Jun 2017 The oil producer is worth $2 trillion, say its owners. The question might not be whether that valuation is right, but what Aramco’s owners and bankers will have to do to get it. A Breakingviews calculator suggests this will be a stretch of reason.
China underscores new hard line on outbound M&A 22 Jun 2017 The banking regulator is probing loans made to serial acquirers Anbang, Fosun, HNA and Wanda, reports say. Following the detention of Anbang's chairman, the message is clear: bold foreign M&A is out of bounds. The puzzle is why the authorities let the splurge last for so long.
Theresa May’s plan still has hard Brexit core 21 Jun 2017 The quest for a parliamentary majority has forced Britain’s prime minister to curb her ambition. Planned reforms to pensions, schools and company pay have been shoved aside. Support for her Brexit-heavy agenda is uncertain, though. The government’s future remains in the balance.
Hadas: The constant challenge of deep-set problems 21 Jun 2017 The deadly fire in London’s Grenfell Tower has exposed the UK’s deeply flawed approach to housing. But serious policy flaws aren’t exclusively British. Americans fail in healthcare and Greeks won’t pay taxes. The only cure is a values revolution.
Guest view: U.S. economy needs robust immigration 21 Jun 2017 Labor shortages and weak consumption reflect an aging population, argue Daniel Vajdich of risk consultancy Yorktown Solutions and investor Michael Trachtenberg of Union Place Partners. Japan's experience, they say, is precisely why U.S. lawmakers should embrace foreigners.
As Saudi’s new crown prince rises, so could oil 21 Jun 2017 Mohammed bin Salman has replaced his cousin as heir. That gives him a firmer hand to push through economic reform, but maybe less incentive to do so. Where he is likely to make a bigger mark is in squabbles with Gulf neighbours and taking firmer action over a low oil price.
Economics rather than ethics will harm big tobacco 21 Jun 2017 Aviva is the latest investor to quit cigarette stocks. The sector has yet to suffer any material harm. Nor does it lack capital. Yet there are good reasons to be nervous: growing regulatory risk and competition from electronic alternatives make current valuations unsustainable.
Trump’s CEOs do more listening than influencing 20 Jun 2017 The U.S. president’s hobnobbing with corporate chiefs is largely a one-way street. Executives can claim some impact on China policy but not yet on immigration, and they got stiffed on climate. The White House forums are still useful for their insight into administration thinking.
Exchange Podcast: James Ledbetter 20 Jun 2017 During the 2016 campaign, Donald Trump suggested the United States revisit the gold standard. So did his rivals Ted Cruz, Rand Paul and Ben Carson. Why are Americans so obsessed with the precious metal, both as a store of value and an investment? James Ledbetter swings by Times Square to discuss his new book, "One Nation Under Gold."
Century-bond hope defeats Argentine experience 19 Jun 2017 Less than three years after the last of eight defaults in 200 years, Buenos Aires is tempting desperate investors with a yield of nearly 8 pct. Mauricio Macri's reforms have stoked confidence. But the deal says more about short-term fads than the long-term odds of repayment.
India’s $1.3 trln housing boom has a solid frame 22 Jun 2017 Developers are turning their attention from luxury to cheap housing, as a raft of subsidies and tax incentives boosts demand. A sustained uptick could provide a fillip to the economy. Investors are betting politicians will play their part and keep land in supply.