Predictions 2015: online extras 9 Jan 2015 Some of Breakingviews’ crystal ball-gazing didn’t make it into the chapters in our printed book because space was short. This “bonus round” highlights our columnists’ prognostications on topics including the global economy, Bitcoin, badly-behaved algorithms and inflation.
New tech battlegrounds pitch East against West 9 Jan 2015 Tech titans that have conquered their home markets are targeting new ones, like India and Indonesia, where leaders are yet to be crowned. Tie-ups between Japan’s SoftBank and e-commerce groups in Asia may signal a trend that could put Silicon Valley at a disadvantage.
Animal spirits and crisis ghosts will shape 2015 5 Jan 2015 Breakingviews’ annual compendium of financial and economic predictions for the year ahead is out. From the UK election to IBM via the global economy and geopolitics, our columnists offer insightful, entertaining, provocative and – we hope – profitable ideas for the year ahead.
A double-speak guide to modern markets 5 Jan 2015 As the market perpetually shifts, so do the rhetorical stylings its players use to talk their way out of problems. The past year saw above-average creativity when it came to saying one thing and meaning another. Breakingviews offers up 10 euphemisms we’d like to see disappear.
Water woes could open taps on corporate risk 5 Jan 2015 Two-thirds of the world’s biggest companies are worried about access to water. But few are well prepared for problems. That should change as ways to track and address concerns grow. And if bosses don’t take the initiative, activist investors may force them to.
Centre-left may have UK election edge 5 Jan 2015 Britain’s three main parties are weak. Its two nationalist groups are stronger. The economy might help the in-power Tories – or give voters confidence to swing left. If they also want public spending, a new Breakingviews calculator suggests a Labour-led coalition could win sway.
Crude slump will stoke European oil and gas M&A 2 Jan 2015 The sharp drop in the price of Brent might make it harder to get deals done in the short term. But if the downturn persists, financial distress will put some small players in play. Larger, more defensive mergers, designed to create value by sharing costs, are also possible.
Europe returns to Franco-German axis of neurosis 2 Jan 2015 A prolonged economic slump highlights Europe’s core problem: a crisis in the French-German partnership. Populist parties are rising and the UK could leave the EU. Although many countries still want to join, it’s up to Paris and Berlin to make the case for a rejuvenated Europe.
Current account is key Africa factor in 2015 2 Jan 2015 Rapid African growth is likely to continue. But too much spending and borrowing has led many countries into trade deficits. As lenders become more discriminating, the state of the balance of payments, along with freedom from Ebola, will become keys to continued growth.
Japan’s cash helicopter may be first to take off 2 Jan 2015 Quantitative easing is reaching its limits, but 2 percent inflation remains a distant goal. The Bank of Japan’s next step might be the ultimate stimulus: a cash gift to households. A “helicopter drop” would open a new front in the global fight against deflationary stagnation.
IBM turnaround requires atypical activist fix 31 Dec 2014 Big Blue’s strategy of cost cuts and debt-fueled buybacks is no longer working – but the tech giant keeps trying. A tarnished balance sheet, lean staffing and a history of disposals rule out typical activist wheezes. Prodding the company to invest in its business could pay off.
Banks will make asset managers pay for regulation 31 Dec 2014 Persistently low returns are spurring investment banks to re-price products like repo financing and prime broking. In 2015, expect firms to get serious about passing on the pain of capital and liquidity rules. Higher costs could in turn force some money managers to consolidate.
Wearable tech will go from novelty to necessity 31 Dec 2014 Activity trackers like Jawbone and Fitbit gather vast quantities of deeply personal data. Consumers aren’t always keen to overshare. But healthcare and insurance companies are finding ways to make it worth their while. Geeky gadgets could soon become too useful to ignore.
Accounting fraud is ripe for fresh scrutiny 30 Dec 2014 Dodgy numbers will replace insider trading as U.S. watchdogs’ preferred prey in 2015. New auditing and analytics arms give the SEC a head start, even if SarbOx reforms make cases harder to track down. With the likes of SAC chastened, it makes sense to refocus on the next Enron.
Tesco will have to fight for its independence 30 Dec 2014 At $40 bln, the UK’s No. 1 grocer would be an M&A mouthful. A leveraged buyout looks tricky but strategic buyers have a rare opportunity. Tesco’s long-suffering current shareholders might jump at a chance to cash out. Much depends on the person chosen as the new chair.
UK faces risk of cold-weather blackouts 30 Dec 2014 Britain’s electricity system is ageing and the mix of generating technology is changing. Both factors increase the danger of power cuts at peak times. Contingency plans include paying companies to accept temporary grid outages. New capacity can’t come soon enough.
Where to hide in an emerging market rout 30 Dec 2014 Developing nations tend to get into trouble after seven fat years. By that yardstick, a meltdown is due. If rising U.S. interest rates help trigger a crisis, investors will look for relatively safe economies. Hungary, Mexico and the Philippines are the most attractive shelters.
Bad ideas catching up with Latin America in 2015 29 Dec 2014 For four years, the region has mostly lagged world economic growth. The IMF predicts another year of the same. While Pacific-oriented countries will shine, Brazil, Argentina and Venezuela will suffer. With a couple of exceptions, misguided policies are coming home to roost.
Ukraine crisis forced into suspended animation 29 Dec 2014 Markets worried about Europe’s economy in 2014. They will worry about Europe’s security in 2015. EU sanctions over Ukraine will weigh heavily on Russia’s economy. A lot depends on Vladimir Putin, but Europeans need to define what they want sanctions to achieve.
M&A spin doctors could get swept up in the action 29 Dec 2014 Financial PR specialists have been buoyed by the boom in mergers and activist investing. History suggests independent outfits like Joele Frank or Brunswick may be tempted to find an investor or bigger owner. They should at least have enough deal nous to know when to sell.