Regulation

Italy’s north teaches Catalonia a self-rule lesson

23 October 2017

Areas which bring in 30 pct of Italian GDP demanded more autonomy in a referendum. Lombardy and Veneto want to keep more tax revenue. But unlike the Spanish region they stopped short of demanding independence. Orderly voting and a clear outcome will force Rome to negotiate.

China’s mouldy cheese ban leaves lingering stink

23 October 2017

Authorities have called off a blockage on imports of Brie, Roquefort and the like. Food safety fears threaten China’s growing appetite for dairy and other foreign fare. The risk of such reactions from a maturing market will require investors to have a strong stomach.

Tesla could hit second gear with Shanghai factory

22 October 2017

Elon Musk may soon be able to build his electric cars in China. That's essential for catching up or keeping pace with rivals in the fast-growing market. It'll also take pressure off production trouble in the United States. A troubling tariff problem, however, is apt to remain.

Review: The myth of Federal Reserve independence

20 October 2017

America’s central bank is notionally free from the executive and legislative branches. A new book by Sarah Binder and Mark Spindel argues the Fed’s actions are constrained by politics. The trouble is that politicians don’t exercise their "money power" responsibly.

Tech misjudges how far its D.C. star has fallen

20 October 2017

Firms like Facebook used to have it easy in Washington. Now they face intense scrutiny over the use of Russia-backed online ads in the last election. Yet they are sending lawyers to congressional hearings instead of executives. Their tone deafness could come back to haunt them.

Taylor-led Fed would be dangerous in manifold ways

19 October 2017

In addition to the Stanford economist's dogmatic bent for a programmatic monetary policy, John Taylor backs bigger regulatory changes than others in the running to be the next U.S. central bank chief. His laissez-faire ideas about policing Wall Street are loaded with risk.

U.S. tax outlook opens M&A pricing divide

18 October 2017

Republicans want to cut the corporate rate to 20 pct, but the timing is as uncertain as the outcome. Theoretically, profit – and thereby valuations – could get a 23 pct boost from lower taxes. Sellers want that priced in, but buyers won’t. All-stock deals could be one answer.

Global watchdogs may curb U.S. deregulatory push

18 October 2017

The U.S. Treasury will decide whether to recommend scrapping the post-crisis bank resolution regime, as some Republicans urge. But foreign regulators threaten to impose new limits on American firms if it's ditched. That reduces the chances of a major rollback of financial rules.

Chancellor: 1929 is more apt anniversary than 1987

18 October 2017

Today's high stock prices, dollops of leverage and robust profit margins more closely resemble market conditions preceding the Great Crash than the minor blip that took place 30 years ago. Fold in risk parity, ETFs and other trading strategies, and a repeat could be coming.

Vivendi can live with Italy’s “golden power” move

17 October 2017

Premier Paolo Gentiloni wants Telecom Italia to install state-backed directors and a special appointee to handle security matters. It’s a headache for top shareholder Vivendi. But government sentinels are preferable to being forced to spin off assets or accept state investment.

Allergan’s latest drug wheeze has bad side-effects

16 October 2017

The firm’s stock fell 5 pct after a judge invalidated a key medication’s intellectual property and said using a Native American tribe to protect the patents was a “ploy.” Allergan’s plan was too clever by half. With President Trump on the warpath, it does the industry no favors.

EU banks can tolerate a watered-down capital rule

13 October 2017

Global regulators could soon agree on restricting lenders’ leeway to assess their assets’ riskiness. The so-called output floor may be higher than European lenders wanted at 72.5 pct, but the formula involved may prove easier. Less aggressive U.S. watchdogs will help them, too.

Communist Party assault muddles Chinese capitalism

12 October 2017

The government hopes to regain the private sector's confidence even as it tightens its grip, in particular on the critical tech sector. Alignment with state priorities could ease red tape, but bureaucrats make lousy CEOs, and vicious factional politics will distract executives.

UK energy cap is bad economics and poor politics

12 October 2017

Prime Minister Theresa May wants to limit the most commonly used gas and electricity tariffs until 2020. Other EU countries show government meddling does consumers more harm than good. As a response to the Labour Party’s threat of nationalisation, it’s too little, too late.

Sky investors choose between profit and principles

12 October 2017

Chairman James Murdoch faces a backlash over concerns about his independence as Twenty-First Century Fox, which he runs, tries to buy the UK pay-TV group. Shareholders have legitimate corporate-governance grievances. But financially they’d be better off with Murdoch’s money.

Italy’s new voting law gives illusion of stability

12 October 2017

Parliament is vetting new voting rules ahead of next year’s ballot. The system may encourage a coalition of left and right parties, and hurt the radical 5-Star Movement. Yet ideological strife is likely to weaken any future government, and the chance of meaningful reforms.

UBS no longer lonely in Hong Kong’s IPO sin bin

12 October 2017

The securities watchdog says it is probing shoddy work by 15 firms on Hong Kong listings. That takes some heat off UBS, the only active IPO bank named so far. A lot has changed in recent years, but the regulator’s zeal in cleaning up the market is nonetheless welcome.

EU bank plan exposes mutualisation mirage

11 October 2017

The euro zone is pushing a joint deposit insurance scheme to complete its banking union. But the revised backstop might only kick in if national banking systems pass an invasive health check. It’s a reminder of how far European countries are from underwriting each others’ debts.

Telecom Italia has least to gain in mogul truce

11 October 2017

Vivendi, chaired by Vincent Bolloré, wants to end a dispute with Silvio Berlusconi’s Mediaset. That may involve uniting the broadcaster’s TV unit with Telecom Italia, controlled by the French firm. The telco may end up with an unprofitable asset, with uncertain prospects.

Syngenta puts Beijing’s unspoken promises to test

10 October 2017

The Swiss seed company’s Chinese parent and its state backers disagree over whether they stand behind its legal bills. It’s a dynamic found across China’s financial system: implicit guarantees are common, and rarely tested. The government has good reason to keep things ambiguous.