Alibaba in 2016: an imagined letter to investors 29 Dec 2014 The e-commerce group’s first year as a listed company brought growth and change, departing chairman Jack Ma writes in a hypothetical memo. Profitability is falling, regulators circling, and new projects have uncertain returns. Even a thoroughbred is tested on a long journey.
U.S. housing demand is building 26 Dec 2014 The post-crisis rebound boosted home prices 25 pct even as sales and construction lagged. Increasing household formation, job creation and easing credit look set to give the market another leg up, despite rising interest rates and the headwind of sliding affordability.
Bitcoin’s defects will hasten its demise in 2015 26 Dec 2014 The leading crypto-currency’s economies of scale in mining and its transaction system’s vulnerability to subversion by a dominant miner make it unsound. As seignorage declines it will become cost-uncompetitive for transactions. Flaws may cause its price to lose further altitude.
Mary Barra gets a second first year at GM’s wheel 24 Dec 2014 The carmaker’s ignition-switch fiasco crashed her debut as CEO. The crisis may, though, have speeded up much-needed changes. Barra needs to show these will stick. She also has to prove the Motown firm is prepared for what may be some of the biggest changes the industry has faced.
Uncle Sam stoked to hash out marijuana in 2015 24 Dec 2014 Now that four U.S. states and D.C. have legalized recreational cannabis, commerce and safety warrant better regulation. But federal rules prohibiting the drug create obstacles. For the fledgling industry to mellow, Washington needs to tweak laws to consent to states’ will.
Inflation could make a surprise comeback 24 Dec 2014 Price and wage increases look like endangered economic species. Falling commodity prices make it hard to imagine a comeback. But many policymakers would welcome a return of mild inflation. They might eventually get more than they want.
Euro zone will flit between crisis and catharsis 24 Dec 2014 Elections in Greece or Spain could trigger fresh crises. Populist parties are on the rise, the economy is stalling and governments are paralyzed by their divisions. On the other hand, the euro zone has stronger banks and an activist ECB. There is cause for hope, but it is tiny.
Bank cyberinsurance is overdue to come of age 23 Dec 2014 It’s a confusing market, but growing fast. No wonder with a huge breach at JPMorgan in 2014, never mind monsters at Sony and Home Depot. Add a Washington campaign, and insurance may become standard. As well as financial cover, that could improve security – but only at the margin.
Positive U.S. momentum could grow in 2015 23 Dec 2014 Jitters like recessions abroad seem unlikely to derail America’s economic recovery as late-year growth, jobs and incomes came in unusually strong. Lower gas prices and the possibility that housing ticks up make even inevitable interest rate hikes look easy to shake off.
Meddling will be central banking’s new mantra 23 Dec 2014 Monetary authorities haven’t stopped being responsible for financial stability. But weak output and the threat of deflation mean they can’t raise interest rates to fulfil their mandate. That leaves macroprudential policies – meddling, in plain English – as the preferred tool.
Even a weaker Islamic State will drag on economy 23 Dec 2014 Cheap oil may now be the biggest worry for Middle Eastern economies, but the struggle against the radical group also has the potential to undermine growth. Even if IS has peaked, its ideology remains a problem, especially for Iraq and Turkey. Iran could end up gaining ground.
India’s growth spurt could be for real this time 23 Dec 2014 The country’s decade-long obsession with GDP expansion has proved costly. It stoked inflation and damaged balance sheets due to a lack of effort to boost production. By contrast, Prime Minister Narendra Modi’s reforms promise a slow buildup to a more enduring increase in output.
Acquirers can expect more M&A investor skeptics 22 Dec 2014 There’s no reason to think the $3.2 trln pace of deals will slow in 2015, but the uproarious reception from shareholders is already showing signs of subsiding. As easy pickings of squeezing costs from overlapping operations evaporate, the laws of corporate finance will prevail.
First case against algorithm could reboot U.S. law 22 Dec 2014 A market manipulation prosecution essentially turns on whether one program duped another. That makes proving criminal intent seem futuristic at best. Similar obstacles could trip up other cases where software is the de facto defendant. Judges will tackle the issue in 2015.
More than Slim odds America Movil buys T-Mobile 22 Dec 2014 Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.
China-U.S. shift will end Cold War peace dividend 22 Dec 2014 The PRC’s military outlays may match Uncle Sam’s in 15 years, while U.S. policy paired with Russian aggression could force up EU spending. Western defense firms face more competition, but added demand. Governments may have to choose between just rearming and an all-out arms race.
High-yield boom enters hold-your-nose territory 22 Dec 2014 With defaults and interest rates low, junk bond sales have broken records. Central banks won’t stop the party in 2015. So investors will keep chasing yield, despite a market sell-off, a few blow-ups and rising corporate indebtedness. That will store up trouble.
China will make 2015 year of missed opportunities 22 Dec 2014 Foreign investors hope for a more open, balanced China. Its leaders have other ideas. They favour reforms that minimise financial instability, punish bad eggs, and nurture national champions. President Xi Jinping’s popularity quest will raise tensions with the rest of the world.
Activists may take the Pepsi, and Coke, challenge 19 Dec 2014 Thanks to stagnant sales the world’s top soda makers – with $300 bln of combined market cap – already attracted agitators in 2014. Now Pepsi is risking a proxy fight over billionaire Nelson Peltz’s break-up plan. Coke, too, may face a radical shake-up if it can’t reignite growth.
Deutsche strategy rejig may presage CEO succession 19 Dec 2014 The German bank is set to review its direction in 2015. Its bet on capital markets remains unproven. Likely regulatory settlements in the coming months could raise further doubts. Recent executive moves suggest Deutsche is keeping options open for strategy and leadership change.