China’s slow salt reform leaves sour aftertaste 29 Dec 2016 China is finally dissolving the world's oldest monopoly. The government's difficulty loosening its grip on the salt trade, which accounts for a tiny fraction of government revenue, suggests dim prospects for reform in more lucrative sectors such as tobacco or telecoms.
Diverging central banks will power dollar in 2017 28 Dec 2016 Donald Trump’s promise of increased U.S. government spending and the likelihood of tighter Fed policy contrast with continued weak growth and loose monetary conditions in the euro zone and Japan. That means the greenback is set to get stronger against most other currencies.
Guest view: China’s currency faces big 2017 test 28 Dec 2016 With rising U.S. interest rates and trade tensions, stop-gap measures from Chinese authorities won't keep the renminbi from depreciating, argues former Citibank executive William Rhodes. The longer reforms are postponed, the greater will be the eventual cost to economic growth.
Dow 20,000 is the market’s version of fake news 28 Dec 2016 The post-election rally has pushed the storied average to the verge of a new milestone. Though not artificial, it's virtually meaningless. Other things – PE ratios, growth rates, fiscal spending and tax rates – will determine whether the aging bull market can flex new muscles.
Saudi’s IPO gusher will lay dormant 28 Dec 2016 A $2 trillion flotation of oil producer Aramco, once planned for 2018, is likely to slip further down Riyadh's agenda. Politics makes the IPO complicated, and recovering oil prices make it unnecessary. While Saudi's bankers may wish it otherwise, postponing is the logical choice.
Europe’s best antidote to populism is unpopularism 28 Dec 2016 Parties that promised to take on the elite had a roaring 2016. Even so, the withering of the moderate centre isn’t inevitable. In Greece the pendulum is swinging away from radical government. Liberals with sound economic policies can win – if they’re willing to make enemies.
Macri sacrifice of finance chief buys limited time 27 Dec 2016 The Argentine president has scapegoated Alfonso Prat-Gay for the economy's failure to take off. His exit won't reduce 40 pct inflation and a bloated deficit. Macri's policies are sensible but not popular. The margin for error before October's midterm elections just narrowed.
Harry Potter can add magic to predictive power 23 Dec 2016 As J.K. Rowling's boy wizard turns 20, it's a good time to recall how many agents and publishers rejected him. Similarly closed minds help explain why recent political upheavals have surprised many and economic forecasts are often wrong. A little more imagination goes a long way.
Russian sanctions will shrivel to soccer boycotts 23 Dec 2016 Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.
Race to build will add impetus to old-world stocks 23 Dec 2016 Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.
Carl Icahn tops Trump’s conflicted shadow council 22 Dec 2016 The activist will be an off-the-books adviser on regulatory reform. Like the execs on the president-elect's policy forum, Icahn won't have to disclose when his recommendations and his financial interests coincide. Unfettered business oligarchy is no way to run a government.
New White House council muddies Trump trade policy 22 Dec 2016 The U.S. president-elect chose China critic Peter Navarro to head a trade advisory group. Yet Commerce nominee Wilbur Ross is set to lead on such issues. There's also the U.S. trade office. The regime risks speaking in multiple voices and confusing nations negotiating with them.
Latin America’s rightward turn faces serious tests 22 Dec 2016 Several countries in the region have shunned leftist populism of late. But the pain from economic reforms in Argentina and Brazil could make voters reconsider, if it's not accompanied by growth. And Chile's consensus on fiscal prudence may unravel.
Fund manager pay will be next to feel the squeeze 22 Dec 2016 Low returns, lacklustre performance and the growth of cheaper index-tracking funds are squeezing fees. That in turn means lower revenue and margins. To placate shareholders, asset managers will have to follow the example set by investment banks – and pay their people less.
Biggest financial merger of 2017: SEC and CFTC 21 Dec 2016 Donald Trump has vowed to cut the red tape in Washington. America's labyrinth of financial regulators makes a fecund target. But crunching the two main market watchdogs, due to their heavy entrenchment in Congress, will take all of the president-elect's negotiating skills.
Spanish banks get their mortgage comeuppance 21 Dec 2016 Domestic lenders must refund excess interest charged on housing loans with floor clauses, after the European Court of Justice unexpectedly overturned a Spanish ruling. Fair enough: the original verdict was too kind on banks. The hit to earnings looks painful, but manageable.
South African debt will be downgraded before Zuma 21 Dec 2016 After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.
Breakdown: Fintech steps towards maturity 21 Dec 2016 Blockchain, robo advice and other technologies once hyped as the most disruptive to finance will take a back seat in 2017. The payments battle will step up a gear. Alternative lenders will hunt for deposits. And resurgent earnings may give U.S. banks a timely war chest.
CEOs joining Trump: prepare for board of hundreds 20 Dec 2016 Former P&G boss Bob McDonald was used to dealing with thousands of employees. But his corporate years didn't teach him to work with partisan lawmakers. As the U.S. president-elect loads his cabinet with executives, they can learn from McDonald's time as head of Veterans Affairs.
CEOs’ Washington success rests on ceding control 20 Dec 2016 Donald Trump and his cabinet of billionaire bosses want to shake up government. It's harder in practice, as ex-P&G chief Bob McDonald found as Obama's head of Veterans Affairs. He helped restore trust, but progress required adjusting to wielding less power than CEOs are used to.