Europe’s two challenges: economy, unity 24 Dec 2012 The euro crisis will become the European crisis as governments realise that among all the things they’ve done in the last two years, austerity is what has failed. And the split will widen inexorably between the 17-member zone and the rest of the EU.
A merger arb writes to Santa 24 Dec 2012 It’s been another thin and bumpy year for betting on M&A. So, having finished the investor letter, one desperate European merger arbitrageur decided to write to Santa with a 2013 wish list. Breakingviews obtained a copy from a source close to the North Pole.
Washington may finally take up mortgage reform 21 Dec 2012 Assuming Congress settles the deficit debate, housing finance should be its next stop. Lawmakers have postponed reforming the government’s role in funding home loans for four years. Some hurdles still remain. But economic, regulatory and political obstacles are dissolving.
Diamond Bob will bounce back in 2013 21 Dec 2012 A toxic brew of Libor, bonus spats and regulatory ire led to the ousting of the Barclays CEO in 2012. Yet investors will soon twig that Diamond’s bank wasn’t the only fiddler of interbank rates. He’s unlikely to land another big CEO gig, but he may resurface.
It’s 20.12.2012; and it’s the end of a magical era 20 Dec 2012 One doesn’t have to be a Mayan to believe that tomorrow represents a numerological end of an era. It may not mark the end of the world - as some users of the Mesoamerican Long Count Calendar suggest - but after a fertile period for adorable dates, we are now entering a desert.
Shadow banks lead China towards a dark place 20 Dec 2012 The secret sauce in the country’s growth is no longer bank lending, but an explosion in off-balance sheet credit. The troubling expansion of funds extended through wealth management products - many of them short-term and dependent on confidence - may force a moment of reckoning.
Growth outlook gives U.S. stocks edge over Europe 19 Dec 2012 On dividend yield and price-to-earnings measures, European shares look attractive - at least compared to the other big, mature market across the Atlantic. But that ignores superior growth potential in the United States. Savvy bargain-hunters will see that better value lies to the west.
Sulzbergers will make headlines in New York Times 18 Dec 2012 Next year will be pivotal for the family that controls the Gray Lady. The Ochs-Sulzbergers have loyally seen the paper through dark days. With the Times on sturdier financial ground, it’s time to find a safe custodian like New York’s billionaire mayor before the moment passes.
Mobile advertising will boom in 2013 18 Dec 2012 Internet firms moaned for years that users were spending lots of hours on the Web, but marketing dollars weren’t following from print and TV. Time and the growth of broadband have closed this gap. The boom in smartphones now provides similar fuel for mobile advertising.
Animal spirits will stir buyout barons before CEOs 18 Dec 2012 Megadeals have been in short supply for both since 2008. But corporate bosses keep getting rewarded for modest acquisitions while Glencore and HP are warnings against going big. For private equity, though, cash stockpiles and cheap money will be catalysts for a bolder 2013.
Merkel set for uncomfortable electoral victory 18 Dec 2012 The German parliamentary election in the fall of 2013 is one of the most important pre-planned political events in Europe next year. It is certain that the incumbent will prevail, but her policies will take on different shades, depending on her coalition partners.
Grains are the commodities to watch in 2013 18 Dec 2012 Iffy global economics make it hard to gauge the outlook for copper and iron ore. Grains are different. Stocks are low and the drought that hit harvests in 2012 has continued. Low rainfall is also hitting river-borne U.S. trade routes. Expect prices to stay high.
Central bank independence at risk in 2013 17 Dec 2012 The Fed celebrates its centennial next year. In recent decades the independence of the U.S. lender of last resort and its peers elsewhere has become an article of faith. But with Western central bank balance sheets swelling toward 30 pct of GDP, that faith is far from rock solid.
Abe era will herald a three-digit yen 17 Dec 2012 Japan’s newly elected prime minister will slay the currency to save the economy. That means it will make the kind of move it made after Lehman collapsed in 2008 – but in reverse. Then, risk aversion saw the yen rise 20 percent. In 2013, a U.S. dollar will buy 100 yen or more.
Whole of sub-Saharan Africa is the real quasi-BRIC 14 Dec 2012 South Africa alone can’t match the others in the emerging club. But add non-Arab continental neighbors, and the combined GDP is over $1 trln and growing fast. Single countries are too small for most investors. But if the region can combine markets and trade, it could take off.
Central bankers may embrace old enemy: inflation 13 Dec 2012 Central banks in developed economies have been trying to juice the economy for years, without much success. As they run out of fresh ideas to battle the doldrums in 2013, they may reluctantly decide that debt-melting price increases are the least bad way forward.
Ethical economy: A tale of two half-centuries 12 Dec 2012 Imagine two 1962 studies of the following five decades. The Blind Guide, written in ignorance, is gloomy, but the Retrospective Guide is pretty cheerful. Communism fell and global poverty retreated. A blind guess for the next 50 years: the demise of finance as we know it.
Corporate carbon bubble may start to deflate 12 Dec 2012 Science points to the potential for climate shocks in burning through just current proven oil, gas and coal reserves. Stock-market valuations of miners and oil groups don’t reflect the risk of a policy response. In 2013, investors may wake up to a carbon-constrained future.
Uncertain SEC leadership heralds 2013 dysfunction 7 Dec 2012 By elevating one of five commissioners to replace departing Chairman Schapiro without naming a replacement the White House has put Wall Street’s watchdog in a bind. Rule-making will be gridlocked along partisan lines and new blood won’t want to work for a boss seen as temporary.
Banking union will revive pan-EU bank M&A 7 Dec 2012 The euro crisis has balkanised the continent’s banks, with national authorities protecting their own turf and forcing domestic mergers. A single regulator and central bailout fund will lift these barriers. And it might also make EU banks more attractive to non-euro competitors.