Money‚ Markets & Macroeconomics

An activist nudge is all it takes in Japan Inc

15 Apr 2024

Shares in the country's top property group, $31 bln Mitsui Fudosan, jumped 8% after it pledged to lift returns and halve strategic shareholdings. It partly answers Elliott's call for change, but peer pressure is at work, too. Pushy foreign investors can only claim some credit.

Middle East is complicating West’s grand strategy

15 Apr 2024

The U.S. and its allies wanted to focus on Russia and China. But the Gaza war - and now a conflict between Iran and Israel - is distracting them. It has also undermined support from poorer nations and boosted Donald Trump’s chances of returning to the White House.

JPMorgan wrestles with the tyranny of expectations

12 Apr 2024

The biggest US bank is avoiding being pinned down on where the economy will go next. Problem is, that’s now the overwhelming focus for investors gauging the banking business. Boss Jamie Dimon only stands to lose from staking a position. The best he can do is plan for the worst.

Bernanke partly mends cracks in BoE’s crystal ball

12 Apr 2024

The former Fed chair’s review of the Bank of England’s economic forecasts contains some sensible ideas. He correctly urges the central bank to stop relying on market predictions of future interest rates. But he could have pushed harder for UK policymakers to climb off the fence.

European bond traders are chasing the wrong lead

11 Apr 2024

The European Central Bank flagged a rate cut in June, before the Federal Reserve. Yet yields on Germany’s two-year bonds are near the five-month high hit after Wednesday’s strong US inflation data. If the ECB is true to its word, obsessing about the United States won’t work.

Big banks turn inflationary lemons into lemonade

11 Apr 2024

Stubbornly high consumer prices may delay US monetary easing, a boost to lenders like JPMorgan or Citi that thrive amid high rates. Further relief could come from the dilution of tough new capital rules. For smaller banks, exposed to stressed borrowers, life tastes more sour.

Powell’s rate cuts may go from steady to steep

10 Apr 2024

Inflation hit 3.5% in March, making a June cut to borrowing costs unlikely. But Fed Chair Jay Powell is running out of time. A decrease in September would be seen to favor President Biden. The November decision is one day post-election. The only other option: take bigger whacks.

Hong Kong’s latest problem is a 99% nosedive

10 Apr 2024

That’s how much shares in cement maker China Tianrui fell in 15 minutes, erasing some $1.9 bln of value. It’s not the first such plunge on the city’s bourse, and at present outsiders can only guess at its cause. It’s a reminder that governance and transparency still need work.

India can grow fast with or without Narendra Modi

10 Apr 2024

The prime minister is hot favourite to secure a third term, and to lead the country into another decade of economic expansion. Yet projections of 6%-plus annual GDP growth are below the country’s own track record. And hitting the mark does not depend on one man.

ECB’s rate cuts can help bond traders – and itself

8 Apr 2024

Holders of euro zone government debt have lost 14% in three years. Frankfurt policymakers can change that by cutting rates in June, before major peers. Lower borrowing costs would have another winner: the European Central Bank, which could save $7 bln a year in interest expenses.

Blackstone dodges worst of Asia’s exit angst

8 Apr 2024

It plans to float more businesses in India this year, including a diamond certification firm at up to 6 times the value it paid last year. Apart from being one of the region’s biggest private equity investors, it is one of the least exposed to China. That strategy is paying off nicely.

Next Chinese trade war could benefit the planet

8 Apr 2024

As Beijing floods the world with cheap green goods, the West will put up trade barriers. That will delay the energy transition in the United States and EU. But the glut of EVs, solar panels and the like will speed it up in China and much of the Global South.

Germany sovereign pension fund is sound but small

3 Apr 2024

Berlin will borrow to invest up to 200 bln euros in global equities to help pay for the retirement of the country’s fast-ageing population. The vehicle’s modest size will limit its long-term impact, but Europe can learn from this blend of public and private schemes.

Profitability is next sacrifice at inflation altar

2 Apr 2024

Central bankers want LVMH, Pepsi and others to pay higher wages without raising prices. Bottom lines in the euro zone already have dipped to 40% of output, the lowest rate since 2020, and Big Tech accounts for most US margin growth. CEOs and investors can expect leaner times.

LNG angst seeps from consumers to producers

27 Mar 2024

A few years ago, supplies of liquefied natural gas were scarce and prices sky-high. Extra capacity arriving this decade means there could soon be a price-sapping glut. Big suppliers like Qatar and Shell have long-term contracts that can ease the pain, but only up to a point.

Lower taxes would cripple Europe’s growth

26 Mar 2024

The bloc needs new public investment of about 3% of GDP for the green transition, defence, infrastructure, education and health. High debt loads limit borrowing and spending cuts hurt the economy. Instead of pledging lower levies, governments have to raise them.

Ukraine loan is matter of politics and accounting

25 Mar 2024

Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.

Macron’s fiscal chickens come home to roost

21 Mar 2024

The French president is scrambling to deal with an official report likely to show dismal public finances and a deficit near 6% of GDP. He ignored warnings as debt topped 110% of economic output. Bond investors are relaxed but spending cuts will be the price of his insouciance.

‘Twin peaks’ can keep EU capital market push alive

21 Mar 2024

A two-pronged approach can aid Europe’s drive for a single financial market. By splitting oversight of the system’s safety from the policing of daily operations, Brussels can avoid a David Lynch-style mystery on who killed its plan to boost investments and savings across borders.

Japanese investors becoming the life of the party

21 Mar 2024

ValueAct, Elliott and Berkshire Hathaway have deployed some $16 bln to uncover value in Tokyo-listed stocks. They’re receiving warmer welcomes than raider T. Boone Pickens did in 1989. Even better, the US trio’s success is helping inspire local funds to sustain the momentum.