Spain can benefit from inbound conquistadors 10 Jan 2014 For decades, Spanish business bought up assets in emerging markets. But low valuations and cultural affinity are now attracting Latin American investors to Spain. It’s useful for Spanish assets to have a buyer in the market. And national reciprocity can be helpful in M&A.
Infosys is out of rehab, looking lean and hungry 10 Jan 2014 Founder Narayana Murthy has lost eight top executives since returning to the outsourcing company. The departures have helped end leadership chaos, while a focus on costs has lifted margins. Without a productivity boost, though, the stock’s revival may start to look excessive.
China still means the world to car makers 10 Jan 2014 Chinese car dealers had a bumper year in 2013: 85 percent of the rise in global sales came from the mainland. China’s growth may down-shift to 10 percent this year as large cities impose car-buying caps. But even then, it remains by far the world’s most important car market.
Euro zone “happy loop” carries a warning 9 Jan 2014 European bank shares are rising along with peripheral euro zone bonds. It’s the mirror image of the “doom loop” of shared falls. This connection solves - rather than causes - a policy headache. But it shows the symbiotic link between governments and banks hasn’t been broken.
Britain will be first rich country to raise rates 9 Jan 2014 The UK has a large trade deficit, falling unemployment and a frothy housing market. As the economy picks up, inflation could return. Bank of England Governor Mark Carney wants to keep rates low for a long time. Facts will force him to change his mind.
Indonesian mineral export ban is mistimed idealism 9 Jan 2014 The mining ministry wants to delay a proposed ban on shipping raw commodities by three years. But exports of nickel and bauxite could still be blocked immediately. Nudging miners to invest in domestic processing has merit, but barring sales could widen the trade deficit.
LBJ’s War on Poverty celebrates bittersweet 50th 8 Jan 2014 The U.S. welfare programs launched in 1964 improved the lives of the old and minorities, while tax credits and non-cash transfers helped more than official statistics suggest. On the flip side they also worsened incentives. But economic growth remains the best poverty reducer.
U.S. business lobby needs to stand behind its talk 8 Jan 2014 The Chamber of Commerce wants energy exports, more trade overall, less regulation, simpler taxes and reforms to federal retirement and medical programs. These are sensible goals, but some – like making healthcare work better – require businesses to contribute as well as bloviate.
Euro debt rush marks redemption not resolution 8 Jan 2014 Risky sovereign debt from Portugal to Greece is a star in the new year. Peripheral economies are reforming. Their bonds offer a haven from U.S. tapering. Yet the euro zone has no solution to the problem of high debt and low growth. Bondholders will not always be protected.
Edward Hadas: An early obituary for bitcoin 8 Jan 2014 Bitcoin mania is not over yet. But the pseudo-currency’s recent volatility is probably the start of its collapse. A retrospective would teach a lot about speculative fever, financial ignorance and the ease with which entrepreneurial time and energy can be wasted.
Draghi is playing with fire on deflation risk 8 Jan 2014 Euro zone inflation remains at a worryingly low rate, with some countries at risk of falling into debilitating deflation. The ECB shouldn’t consider only the whole zone. Nor should the central bank let German opposition hold it back. It should act now, before it’s too late.
Abe’s “wage surprise” hopes lack reform push 8 Jan 2014 The Japanese prime minister argues a new national consensus on boosting workers’ pay will help to fire up the economy. He’s being too optimistic. Tough labour reforms are needed to reverse a 15-year slide in Japanese wages. But those don’t seem to be Abe’s priority.
Portugal better choose stability over sovereignty 8 Jan 2014 Lisbon’s bond yields are falling. That raises the possibility it could follow Ireland in exiting its euro zone bailout. Yet markets may not stay gentle, and the challenges are tougher than in Dublin. Forget pride: a credit line from euro zone peers is still the best bet.
Euro zone "deflation" little worse than America’s 7 Jan 2014 A euro zone inflation rate of 0.8 percent will prompt calls for action. But the U.S. has had more stimulus and growth - and has only slightly higher inflation. Besides, wage cuts help weaker euro members and serious deflation isn’t yet a threat. But serious reforms are needed.
Rhetoric on higher U.S. minimum wage misses point 7 Jan 2014 Hiking bottom-end pay would barely increase the jobless rate, despite complaints to the contrary. Equally, it wouldn’t much reduce inequality. What it would do is bump up living standards for millions of low-wage workers. That would help them – and, at the margin, the economy.
Samsung woes strengthen case for cash handout 7 Jan 2014 The South Korean giant’s fourth-quarter operating profit disappointed after it paid a one-off bonus to employees. The strong currency and competition from arch-rival Apple are concerns. But with net cash of $40 billion, Samsung can afford to show investors some generosity too.
Turkey caught in vicious politico-financial circle 7 Jan 2014 The country’s economic stability depends on foreign money while international investors are running scared of political instability. For now, Turkey’s in-fighting elite can ignore high inflation and a falling currency. But uneasy calm could quickly turn to dangerous upheaval.
Europe could live with Italian deficit heresy 7 Jan 2014 Matteo Renzi, Italy’s likely next leader, has suggested Rome could break euro zone fiscal rules. Higher deficits could be good economics and shrewd politics. But to keep markets and euro zone peers from panic, he has to offer lower public spending and faster privatisations.
HTC revival may rest on return to no-brand roots 7 Jan 2014 The Taiwanese handset maker’s full-year loss raises fears it is following rivals into a downward spiral. HTC’s old strength was to focus on design and let others worry about marketing. A possible deal to make China Mobile-branded smartphones may be its best hope of a turnaround.
Even free marketers can get behind U.S. wage hike 6 Jan 2014 The matter of raising minimum hourly pay from a stagnant $7.25 is due a fresh hearing in Congress. One issue often lost in the debate is how retail and fast-food jobs can’t move offshore. Boosting incomes for such low-skilled workers would offset harmful effects of globalization.