Money‚ Markets & Macroeconomics

ECB is battling an imaginary wage spiral

24 Jan 2024

European Central Bank President Christine Lagarde is set to hold rates this week because she fears rising salaries will boost inflation. Yet euro zone workers are getting raises of just 3.8%, down from a year ago. Frankfurt may not want to cheer bigger pay, but it can ignore it.

Fixed income investors have reasons to be fearful

23 Jan 2024

Uncertainty over the direction of inflation and monetary policy is buffeting markets. In this Exchange podcast Jim Grant, founder of ‘Grant’s Interest Rate Observer’, discusses his gloomy outlook for US bonds and sounds a warning about the risks of shadow banking.

Fractured world is changing investment geography

23 Jan 2024

Washington and Beijing’s quasi-Cold War, and rising protectionism, are already hurting foreign direct investment. Though some states are gaining from China’s falling FDI, overall cross-border flows are down. If Trump becomes US president, they will take another hit.

Strong yuan, not stock market, tops Xi’s wish list

23 Jan 2024

The State Council pledges it will promote a stable capital market. Yet Beijing is showing more urgency in supporting the yuan, weakened by foreign selling. A strong currency is central to President Xi Jinping’s goal to make China a financial power. A strong stock market can wait.

It will take more than Draghi to boost EU growth

22 Jan 2024

Europe can’t decide if it will be more competitive with open markets or heavily protected national champions, and it wants Mario Draghi to pick. Italy’s former PM is more likely to reflect than resolve tensions among members. But the bloc can’t up its game behind closed doors.

Capital Calls: Microsoft’s Russian hacker

22 Jan 2024

Concise views on global finance: The $3 trln tech firm disclosed that a nation-state hack accessed leaders’ email, saying it showed the need for potentially “disruptive” measures. It’s a worrying acknowledgement of the still-vague costs of geopolitical tensions for tech giants.

Davos holds up funhouse mirror to shifting world

22 Jan 2024

Delegates from the Middle East and India made a splash at last week’s World Economic Forum, reflecting their wealth and investment appeal. Europeans and Chinese were subdued. Big Tech looks the winner from AI. This year’s Swiss conflab arguably exaggerated more than it distorted.

Private credit gets the slice-and-dice treatment

19 Jan 2024

Managers like Blackstone and Blue Owl are selling ‘collateralised loan obligations’ backed by privately issued debt. Such alchemy, common in traditional lending, helps lenders raise cheap funds. It also adds complexity, and makes private credit more dependent on flighty markets.

Global risk pile-up penetrates Davos bubble

18 Jan 2024

Nearly 3,000 movers and shakers have converged on the Swiss resort amid crises in the Red Sea, Gaza and Ukraine. In this Viewsroom podcast, Breakingviews columnists discuss how Davos-goers unable to ignore these perils are nervously anticipating another Trump presidency.

China’s war on corruption turns into high wire act

18 Jan 2024

Xi Jinping is declaring victory in his decade-long war on graft. He has made more progress than India and the US over the same period by some global standards. Yet the decision to double down on cleaning up the finance sector when the economy is weak could come at a heavy cost.

BoE can win inflation race but lag on rate cuts

17 Jan 2024

UK price growth could drop in the spring due to lower energy bills, enabling the Bank of England to hit its 2% target before the US and Europe. But wage and services inflation will stop Governor Andrew Bailey from reducing borrowing costs. So will a likely UK fiscal splurge.

China consumers keep Beijing, and world, on edge

17 Jan 2024

The economy expanded 5.2% last quarter, thanks to manufacturing. But local demand remains weak, forcing factories to look abroad. That will stoke global trade tensions and add to fears that China will export deflation. All eyes are on how Beijing stimulates domestic consumption.

Goldman’s new durability message cuts two ways

16 Jan 2024

After failing in consumer finance, the investment bank wants to emphasize the predictability of its existing businesses. Boss David Solomon makes a good case that a chunk of revenue is more reliable than it once was. And yet arch-rival Morgan Stanley generates even more of it.

Economics is pushing US swing voters to pick Trump

16 Jan 2024

The real estate mogul won the Iowa caucus, the first Republican primary in the presidential race. The midwestern state is not a battleground, but hotly contested areas favor him over President Joe Biden. That may be because their residents feel poorer than four years ago.

Poland’s path to euro will be long and arduous

16 Jan 2024

New Prime Minister Donald Tusk wants to bring his country closer to the EU. As the co-author of an old plan to strengthen the monetary union, he might be expected to apply to join the single currency. Politics and economics make this a long-term goal at best.

Capital Calls: Greek airport IPO

16 Jan 2024

Concise views on global finance: State-backed Athens International Airport may be able to fetch a 3 bln euro valuation in a planned February listing.

Reparation bonds could unlock $300 bln for Ukraine

15 Jan 2024

The US and EU are struggling to keep writing mega cheques to Kyiv and reluctant to hand over frozen Russian central bank assets. One alternative is for Ukraine to sell bonds backed by future claims for reparations. It could then use the cash to defend itself against Moscow.

Taiwan navigates new waters with old map

15 Jan 2024

Lai Ching-te has won his independence-leaning party an unprecedented third term. That tees up a deterioration in the island’s relationship with China and will refocus global minds on the costs of a possible confrontation. It puts pressure on Lai to find new ways to minimise risks.

Mega-banks menaced by closing jaws in murky waters

12 Jan 2024

JPMorgan, BofA, Citi and Wells Fargo all unveiled financial results clouded by exceptional items and less predictable outlooks. Bad-debt costs are up and interest rates are probably coming down. Cutting expenses relative to revenue, or “positive jaws,” will be a 2024 fixation.

BoE can counter banks’ unfriendly rate fire

12 Jan 2024

UK lenders like HSBC think lower borrowing costs are coming and have slashed five-year mortgage payments below 4%. That makes it harder for the Bank of England to slay inflation and, in fact, may delay any cuts. Governor Andrew Bailey could ask the City to reward savers as well.