Post-truth data will come back to bite Uncle Sam 21 Feb 2017 Donald Trump's economic team may tweak trade figures to make deficits look bigger, helping his push for tariffs. Though politicians have always cherry-picked numbers, fiddling with actual statistics threatens confidence. It also raises expectations Trump will struggle to meet.
Hadas: Trump’s FX truthiness misses the big points 20 Feb 2017 The U.S. president’s complaint that cheap overseas currencies hurt U.S. jobs contains a little truth, but his proposed cure is far worse than the disease. The main problem in foreign exchange is excess volatility. Fixing that requires better global coordination – a distant dream.
Italy’s decaying left is Europe’s next headache 20 Feb 2017 A leadership battle may split former Prime Minister Matteo Renzi's Democratic Party, in another case of Europe's left-wing woes. Though intrigue and ambition are as much to blame as ideology, a schism would weaken pro-euro forces and make Italian politics even less predictable.
Small-town Laishui is Chinese bubble in a bubble 20 Feb 2017 New apartments in a poor county near Beijing can now cost the average local 15 years' income. There are real reasons places like Laishui might attract development. But amid attempts to cool prices in top cities, smaller towns may be turning into targets for speculators.
UK government wakes up to downside of gig economy 17 Feb 2017 Work created by the likes of Uber flatters Britain's unemployment rate. That was convenient to politicians after the financial crisis. The less palatable implications of a surging gig economy are now dawning on Westminster – a potential 3.5 billion pound gap in tax receipts.
Viewsroom: Trump’s management failures 16 Feb 2017 The president's vacillating over firing national security adviser Michael Flynn is the kind of mistake that gets corporate chiefs fired. Toshiba deals its way to a $6.3 bln loss. California's water woes are a national wake-up call. And Wall Street parties like its 2007.
Cerberus faces White House collateral damage 16 Feb 2017 President Trump may ask co-founder Steve Feinberg to review the intelligence agencies. The ensuing scrutiny would draw in past investments like Chrysler and current ownership of both a gun firm and a Defense Department security contractor. That can't be good for business.
Cox: Swamp is another name for checks and balances 16 Feb 2017 Donald Trump vowed to drain the capital's metaphorical fens. He has also redefined the objective from ridding Washington of its mosquito-like lobbyists to avoiding getting bogged down in a governance morass. The founders intended the separation of powers to be a useful swamp thing.
Italy’s bank fudge takes EU rules to the limit 16 Feb 2017 The government wants to put 5 bln euros into two small banks. That's as much as their common equity. As with Rome's Monte dei Paschi debacle, it's hard to square with European rules that only allow governments to help viable banks.
Hiding China’s ugly data will aggravate correction 16 Feb 2017 A popular independent index of China's red-hot house prices has gone quiet. China has been steadily deactivating private surveys that contradict official data, while ordering economists to stay chirpy. Increasing opacity could turn a healthy correction into a panic.
Hong Kong’s toothless election could still bite 16 Feb 2017 The city's leadership contest lacks a Le Pen or a Trump. Whoever wins the vote in March will be firmly in Beijing's shadow. How the winner manages Hong Kong's various vested interests, however, may determine how successfully the financial centre is run, and how independently.
U.S. consumers offer better prop for stock market 15 Feb 2017 American retail sales jumped in January while consumer prices rose at their fastest rate in four years, reflecting solid growth. Optimism about Donald Trump’s economic plans has lifted markets. Sound economic fundamentals are more reliable than the dysfunctional White House.
French corporate debt immunity to Le Pen will fade 15 Feb 2017 Even the slim possibility that far-right leader Marine Le Pen might lead France out of the euro zone has pushed up government bond yields. By contrast, corporate debt has suffered relatively little damage. Savvy investors will make this anomaly disappear soon.
UK watchdog trolls EU with City Brexit manifesto 14 Feb 2017 European bankers often fear a post-EU Britain will become an offshore casino. The FCA’s consultation on the UK’s listing regime mostly focuses on worthy goals like tech financing. But some proposals – like laxer listing standards for foreign companies – could feed the paranoia.
Italian election delay swaps uncertainty for limbo 14 Feb 2017 Matteo Renzi’s centre-left party is holding a leadership contest, making it hard for the former prime minister to call an early election. Though a messy vote is avoided, a prolonged period of temporary government will only add to Italy’s slow growth and anti-establishment mood.
Yellen throws sand in Trump’s deregulatory gears 14 Feb 2017 In her first Senate testimony since the president took over, the Fed boss defended post-crisis rules and said banks are robust and lending strongly, contradicting Trump adviser Gary Cohn. Fed board seats are open, but rolling back regulation may need to wait for the next chair.
Asia will regret the retreat of global yuan 15 Feb 2017 China has sidelined efforts to take its currency global, and Asia might come to regret it. The region could use more hedges against dollar-denominated shocks in the Trump era.
OPEC’s solidarity points to longer production cuts 14 Feb 2017 The cartel has taken two steps forward and one step back. Compliance with output cuts is narrowing the gap between supply and demand, but it is also encouraging U.S. producers to drill more wells. Sustained higher prices may require even more restraint to keep the market balanced.
Switzerland shoots itself in foot on tax reform 13 Feb 2017 Voters rejected a government plan to balance low corporate rates with global reforms. That might make sense if international cooperation on tax fails. But the Swiss are mainly hoping to avoid higher personal taxes. If multinationals flee, these will happen anyway.
Hadas: How the liberal economy got lost 13 Feb 2017 As President Trump puts his promises on trade and migration into noxious practice, cowed elites are debating how their ideas failed. The big causes are forgotten history, ideological hubris, bad finance and excessive self-interest. Fixing those flaws is essential to any revival.