Uniper investors head for bailout they don’t merit 5 Jul 2022 The 4 bln euro German utility’s value has been smashed by its need to expensively replace Russian gas. Given Berlin is mulling a way to spread this cost, Uniper shares may yet rebound. The outcome may wind up being more generous than its main Finnish shareholder deserves.
Inflation finally kills shaky U.S. trade-war logic 5 Jul 2022 President Biden is close to axing some of the levies on $350 bln in Chinese imports, partly driven by a belief they hurt consumers. A better reason would be that they never succeeded in changing China’s ways in the first place. That ought to inform fresh tariff discussions too.
Italy starts countdown to risky life after Draghi 5 Jul 2022 The 5-Star party may bring down Mario Draghi’s coalition government. A crisis would hurt growth and raise the chances of a less EU-friendly executive. Worse, market jitters due to rising political uncertainty may complicate the European Central Bank’s efforts to tame bond yields.
Macron’s travails could turn into fiscal mess 5 Jul 2022 The French president’s electoral platform was bound to stress the state budget. Now a deadlocked parliament may only agree on increased spending and more tax cuts. With borrowing above 110% of GDP, and no credible plan to control public finances, Paris’s debt looks vulnerable.
Capital Calls: EU bank windfalls 4 Jul 2022 Concise views on global finance: The European Central Bank is worried banks will pocket a windfall on special loans when it starts raising rates. But deciding whether the bonanza is too big is a political choice.
Capital Calls: Kohl’s future, Aerojet fight 1 Jul 2022 Concise views on global finance: The U.S. retailer walked away from a deal with Franchise Group, leaving it to weather a potential recession alone. Meanwhile, Aerojet CEO's victory against her executive chairman culminates in a board mess.
Robinhood’s reversal, Russian oil cap 30 Jun 2022 The digital brokerage is worth less than a quarter of its $32 bln IPO value. In this Viewsroom podcast, Breakingviews columnists argue that its $7 bln cash pile and ample user base make it an attractive target. Also, Western leaders’ plan to restrict funds to Moscow may backfire.
It’s time to rediscover the importance of interest 30 Jun 2022 The cost of money is not only key to controlling prices. It also affects the value of financial assets, the allocation of capital, and the appetite for debt. Ultralow interest rates distorted these decisions, Edward Chancellor says. Little wonder financial anxiety is rising.
Uniper woes could force reality check on Berlin 30 Jun 2022 The German utility needs state support after Russia cut gas supplies, forcing it to buy more expensive fuel instead. A better alternative would be for the regulator to allow Uniper to pass the cost on to consumers, dampening demand. The risk of open-ended bailouts helps its case.
Texas becomes Tesla’s new China 29 Jun 2022 The U.S. state has been good to the carmaker, offering tax breaks while the top prosecutor backed Elon Musk’s Twitter bot claims. That’s similar to how his relationship has worked with China. Musk returned favors to Beijing. Soon, he could become a dutiful friend of Texas, too.
Saving energy now is an EU no-brainer 28 Jun 2022 The bloc has hiked LNG imports by 50% to replenish storages and cut its Russian gas dependency. But if Moscow turns off the taps, Germany could sink into recession. All the more reason to kick off energy-saving measures this summer and try to curb gas prices by cutting demand.
G7’s Russia cap could send oil prices up, not down 28 Jun 2022 The developed nations club wants to cut Moscow’s revenue by curbing crude export prices. To work, a cap needs to be global in scope, air-tight to avoid sanctions evasion, and have Russian acceptance of the forced discount. Without these it may mean less supply, and higher prices.
Capital Calls: Chinese fishermen, UK’s Jupiter 28 Jun 2022 Concise views on global finance: Joe Biden goes after the People’s Republic’s commercial fishing fleet; the fund manager’s new chief executive has an even tougher task than his predecessor.
Enforcement is weak link in Russian sanctions push 28 Jun 2022 Western capitals have frozen assets and blacklisted oligarchs. The United States has many well-funded financial crimes regulators, but there’s little formal coordination with poorer European counterparts in policing breaches. Places like Dubai offer hiding places, too.
Capital Calls: Russian default, Inflation and debt 27 Jun 2022 Concise views on global finance: Moscow defaulted on its foreign debt for the first time in over 100 years, leaving bondholders in limbo; the Bank for International Settlements wants rates raised “quickly and decisively”, but is also worried about higher borrowing costs.
Germany’s gas action plan pulls its punches 24 Jun 2022 As Gazprom restricts supplies, Berlin is switching coal power plants back on and squabbling over nuclear energy. But it’s still shielding Germans from high prices. A better ploy would be to use fiscal buffers to protect poorer citizens, thus incentivising everyone to use less.
Capital Calls: Bank stress tests, Japan inflation 24 Jun 2022 Concise views on global finance: U.S. lenders passed the latest Federal Reserve capital exams, but they’re bound to be more stressful next time; the country’s consumer prices rose 2.1% in May, intensifying a standoff between the central bank and bond investors.
Ukraine needs grants more than long-term loans 22 Jun 2022 EU leaders are debating ways to help Kyiv finance its $5 bln monthly budget deficit from the Russian invasion. So far, it has met all its financial obligations. But Ukraine’s allies shouldn’t add to its debt burden. Better that they borrow in order to help Kyiv out with grants.
Capital Calls: SoftBank Arm-twisting 22 Jun 2022 Concise views on global finance: The UK government may be eyeing desperate measures to keep SoftBank-owned chip group Arm's IPO in London.
Hong Kong’s last governor on dealing with China 21 Jun 2022 Chris Patten was Britain’s top representative in the colony before its handover 25 years ago. In this edition of The Exchange podcast he talks about his newly published diaries, businesses sucking up to the People’s Republic, and whether the West will defend international rules.