Central banks’ waiting game plays with fire 21 Feb 2024 Western policymakers fret that if they cut rates too soon inflation may rebound. But keeping monetary policy tight has costs. Staying put as price growth abates means rate-setters squeeze consumers and companies, raising the odds of blowups in areas like commercial real estate.
Capital One will struggle to cash in M&A rewards 20 Feb 2024 An $80 bln deal with Discover would create a credit-card giant with a Visa-like payment network and huge cost savings. These perks can only be redeemed by overcoming political foes, regulators and the target’s conduct issues. On balance, it’s wise to buy now, and maybe pay later.
Capital Calls: S&P/Visible Alpha 20 Feb 2024 Concise views on global finance: The financial analytics firm’s $500 mln bid for alternative data provider underscores the importance of bringing proprietary data to funds that trade on momentum. But as Lyft’s rally after a typo showed, automation has its limits.
US real estate is a micro-drama set to turn macro 15 Feb 2024 So far, loans on isolated buildings by individual banks and funds have gone bad. As mortgages worth $1.5 trln come due in the next two years, strains will also spread from offices to apartment blocks. A correction is inevitable, but its impact can still be contained.
BoE can counter banks’ unfriendly rate fire 12 Jan 2024 UK lenders like HSBC think lower borrowing costs are coming and have slashed five-year mortgage payments below 4%. That makes it harder for the Bank of England to slay inflation and, in fact, may delay any cuts. Governor Andrew Bailey could ask the City to reward savers as well.
ICE cuts tortuous path through frosty trustbusters 7 Aug 2023 It took 15 months, two divestitures and an 11% discount, but Black Knight’s $12 bln sale to the NYSE operator is set to close after deal enforcers dropped a lawsuit. It’s a small sign that even FTC chief Lina Khan can see clear to settle, if merger participants concede enough.
Andrew Bailey’s silence is hurting UK homeowners 12 Jul 2023 Traders’ confusion over the Bank of England’s decisions is sending market interest rates wild. That has pushed the cost of a popular mortgage to a 15-year high. To limit household pain, the governor needs to ditch his usual reticence and tell markets that they are wrong.
Capital Calls: US job market’s shifting balance 7 Jul 2023 Concise views on global finance: American job-hoppers’ pay bumps are shrinking, promising lower inflation as labor costs ease. Workers have avoided widespread layoffs, but they’ve traded some bargaining power along the way.
UK could borrow a leaf from Canada’s mortgage book 7 Jul 2023 High levels of housing debt have left British borrowers exposed to rising interest rates. One way to avoid this problem is to fix payments as a proportion of the loan. Some Canadian lenders offer such adjustable-term mortgages, Edward Chancellor writes. The UK could follow suit.
UK has little wiggle room on mortgage aid 21 Jun 2023 Prime Minister Rishi Sunak is under pressure to cushion the 1.7 trln pound home loans market from high interest rates. Taxpayer support would spook markets and add to the Bank of England’s inflation headache. Targeted relief from banks would do less damage – but have less impact.
Credibility crisis requires BoE to write new plot 20 Jun 2023 The Bank of England’s inflation outlook is faulty because it relies on traders’ expectations. That leads markets to overreact to data, causing pain for homebuyers and firms. Adopting the US system, where policymakers make predictions, would curb policy mistakes and volatility.
Australia is shuffling towards mortgage crisis 15 Feb 2023 Commonwealth Bank is trading at a heady 2.4 times book as higher rates boosted its interest income by 20%. Peers are up too. But households have yet to fully feel the pain of higher payments and home prices are plunging. Risk buffers aren’t nearly as sturdy as investors think.
Capital Calls: NatWest nerves 28 Oct 2022 Concise views on global finance: Shares in the government-backed UK lender fell 8% after it revealed an impairment charge 43% above what analysts had expected.
Credit Suisse legal tab is wildcard for investors 17 Oct 2022 The bank settled an old mortgage case without having to set more money aside. But the bill for future litigation, up to $1.6 bln on its own estimates, will erode earnings. The risk for investors in a looming rights issue is that further nasties bog down the bank’s restructuring.
Bank mortgage tweaks presage bigger political hit 14 Oct 2022 Spain’s CaixaBank proposed a rate freeze, while UK lenders favour ad hoc relief for struggling borrowers. As interest costs soar, these won’t be enough to avoid a mess. Since cash-strapped governments can’t help, they may hammer banks with Polish-style blanket payment holidays.
Capital Calls: Buffett’s Berkshire successor 4 Oct 2022 Concise views on global finance: The Omaha oracle owns $100 bln of stock in his conglomerate. His potential successor Greg Abel’s purchase of $68 mln of stock last week – after selling shares in a subsidiary for $870 mln in June – is too small a move toward Buffett’s standard.
“Help to Refi” could be UK’s next financial wheeze 30 Sep 2022 Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.
UK swaps one cost-of-living crisis for another 27 Sep 2022 The Bank of England may raise rates past 5% to stem the inflationary effect of Chancellor Kwasi Kwarteng’s tax cuts. Homeowners, saved by the government’s energy price cap, now face a surge in mortgage costs. That will sap growth and add to pressure for banks to help customers.
China’s multi-layered property crisis explained 21 Jul 2022 Homeowners in the world’s second-largest economy are refusing to pay mortgages on unbuilt homes. In this Viewsroom podcast, Breakingviews columnists describe how government deleveraging policy destabilised the sector – and President Xi Jinping’s unpalatable options for fixing it.
China property crisis enters dangerous next phase 14 Jul 2022 Homebuyers in 22 cities are refusing to make mortgage payments on unfinished homes. It extends the risk of defaults from offshore developer bonds to banks with $6 trln of mortgages. The fat tail risk of deleveraging the sector is emerging, and puts Beijing in a very tight spot.