Money‚ Markets & Macroeconomics

German budget crisis will haunt economy for years

24 Nov 2023

Berlin will suspend its "debt brake" this year, after a court decision cancelling 60 bln euros of spending. Yet the crisis will leave Germans even warier of much-needed public investment. That will hit long-term growth, and worsen the ailing economy’s short-term woes.

Capital Calls: China and iron ore

24 Nov 2023

Concise views on global finance: A warning from Chinese regulators for traders not to hype up prices has done little to dampen the bullish mood. The rally could extend if Beijing unleashes property market reforms.  

The future of interest rates is more surprises

24 Nov 2023

The return of inflation surprised central banks which until recently predicted rates would remain “lower for longer.” Economists and investors struggle to agree on what has changed or what will happen next. Those who assume current interest rates are normal may be in for a shock.

White House needs to talk turkey about inflation

22 Nov 2023

The Biden Administration has encouraged Americans to “be thankful” for falling prices this year. But cherry-picking some items that have edged down from recent peaks won’t counter the fact that US citizens feel glum about the economy. A bit of empathy might go a long way.

UK’s overdue business-friendly budget has a catch

22 Nov 2023

Premier Rishi Sunak slashed taxes for workers and businesses at an annual cost of 20 bln pounds. It’s a partial antidote to the damage of Brexit, inflation and Britain’s dismal growth. Yet his party’s erratic policies, and poor chances at next year’s poll, will dent its impact.

Eli Lilly’s M&A trial prints lose-lose outcome

21 Nov 2023

The pharma giant has offered $1.4 bln for Point Biopharma, but if the target’s latest drug comes good it could be worth much more. No wonder Point investors are sitting on their hands. Had Lilly offered them a share of future profit, it could have saved itself the embarrassment.

UK pay-later fiscal giveaway amounts to self-harm

20 Nov 2023

Faster growth and inflation may gift Rishi Sunak a 13 bln pound war chest ahead of Wednesday’s budget update. But that’s only thanks to optimistic math. If Britain’s prime minister opts for fiscal fireworks, he may torch public spending and singe Britain’s prospects.

Silicon Valley saw OpenAI with eyes wide shut

19 Nov 2023

The Microsoft-backed artificial intelligence darling’s board ousted boss Sam Altman on Friday. He may yet return. Weekend antics aside, unproven technology, governance risks and regulatory uncertainty remain, as does an $86 bln valuation that always seemed hard to justify.

Multipolar world opens up surprising safe havens

17 Nov 2023

Despite geopolitical challenges the United States remains the world’s largest net debtor, owing the rest of the globe $18 trln. Yet increasing dependence on overseas equity investors makes it vulnerable. If the tide turns, fund managers may be better off in emerging markets.

Tata Technologies sets smartly low bar for IPO

17 Nov 2023

The EV-servicing firm is the Indian conglomerate’s first listing in nearly two decades. The $2.4 bln valuation at 28 times earnings is well below peers. But most of its business comes from just five clients and Mumbai stocks are expensive. A cheap price may ensure a smooth start.

American CEOs serve China’s Xi a too-rich dessert

16 Nov 2023

Tim Cook and Steve Schwarzman were among attendees at a dinner where the Chinese president got a standing ovation. For business leaders to curry favor with Xi’s regime is not new. Doing it so performatively, and on home turf, suggests there’s such a thing as too much harmony.

Biden and Xi’s warmer ties look flimsy

16 Nov 2023

The leaders of the largest economies resumed high-level communication following years of tension. In this Viewsroom podcast, Breakingviews columnists explain how Taiwan as well as anti-China rhetoric in the lead-up to next year’s US election could undo any goodwill.

Britain solves half of its wind power problem

16 Nov 2023

After a humiliating failed auction, the UK is hiking green energy subsidies. That will draw bidders, and the resulting power should still be cheaper than gas. But to hit a target of 50 GW of offshore wind by 2030, PM Rishi Sunak will need to allot more cash in new bidding rounds.

Capital Calls: Walmart, HelloFresh

16 Nov 2023

Concise views on global finance: Although the US retailer lost nearly 8% of its market value after it indicated that price increases are starting to ease, it should be able to navigate the challenge; the 2.7 billion euro meal-delivery company has become a tasty buyout target.

Biden-Xi summit clears low bar, reaches no heights

16 Nov 2023

The US and China leaders agreed to resume military communications, work to curb fentanyl production and discuss the risks of AI. It reduces the risk of an accidental war over Taiwan but the otherwise thin pickings highlight a fragile world where managing conflict tops the agenda.

Measuring the US and China’s conscious decoupling

16 Nov 2023

President Joe Biden and his Chinese counterpart Xi Jinping don’t agree on the terminology, but the Sino-American relationship is fracturing. A close look at trade, finance, investment, people and geopolitical noise shows the world’s two largest economies are pulling apart.

Legal blow makes Germany and Europe sicker

15 Nov 2023

Berlin’s top court blocked the government’s use of creative accounting for investments. That may jeopardise Chancellor Olaf Scholz’s $65 bln growth fund and mean less money for the energy transition. Europe’s biggest economy may also want more fiscal rigour from its EU peers.

China’s property boost has to sway wary banks

15 Nov 2023

Beijing wants to inject 1 trln yuan into housing projects. It’s a bigger version of a 2022 scheme lenders shunned because developers are saddled with huge debts. Without a broader plan to convince banks the government can stop the real estate rot, the new effort will also fail.

Bank of Japan’s hesitancy obscures yen’s appeal

15 Nov 2023

The central bank is signalling it will ditch ultra-low interest rates next year. That should boost the yen. Instead, it remains at historic lows against the dollar. Traders’ mistrust of the BOJ’s determination to act may cause them to miss out on the currency’s probable comeback.

Labour is weak link in Israeli economic defences

14 Nov 2023

The Middle Eastern country has withstood the financial pain of a war with Hamas, William Wechsler at the US think tank the Atlantic Council says in this Exchange podcast. But as the conflict continues, an increasing labour shortage will pile pressure on the economy.