Money‚ Markets & Macroeconomics

The Queen’s question returns with a vengeance

6 Oct 2023

‘Why did no one see it coming?’ the late British monarch asked economists during the 2008 financial crisis. Applying the same query to resurgent inflation is even more awkward for central bankers. There are multiple answers, but no magic solutions, says Felix Martin.

Spying suspicions will stalk Alibaba and Wall St

6 Oct 2023

Belgium is scrutinising the tech giant’s European logistics hub as its courier unit prepares to list. The issues may be old but the risks facing Chinese firms going global are rising. Elections in the US and beyond will only make China deals harder to execute.

Buyout firms catch second-hand shopping fever

5 Oct 2023

Despite a 31% fall in fundraising across the industry since 2021, Goldman amassed $15 bln just to go thrifting for private equity portfolios. Such deals generally produce steadier returns, but a rush of bargain-hunters could boost valuations, making financial upcycling riskier.

China is swing factor in diesel’s global squeeze

5 Oct 2023

Russia’s export ban on the fuel may prove a temporary scare. But low inventories in the US and Europe, spiking crude prices and a colder winter could keep it in short supply. The key variable, though, is whether China helps ease the pressure by raising export quotas.

Japan’s inertia leaves yen at the mercy of the Fed

5 Oct 2023

It’s unclear if officials just intervened to stem currency losses but the debate ignores the bigger issue: The interest rate gap between the two countries will keep boosting the dollar. Unless Tokyo tightens policy, the US central bank will drive foreign exchange moves.

Germany risks letting a good crisis go to waste

3 Oct 2023

Europe’s largest economy is on track to shrink this year. The immediate causes are lower exports to China and higher energy prices. But decades of under-investment will continue to crimp growth unless Berlin ditches its hostility to fiscal stimulus and comprehensive reforms.

Bond blues kick the fun out of racy stocks

2 Oct 2023

Yields are rising for the wrong reason – persistent inflation rather than growth. That’s pushing shares down as well. Some companies will suffer more. Those with higher portions of cash flows coming in the future, like technology firms, are most vulnerable.

Peak China may pose peak danger

2 Oct 2023

A glance through history suggests great powers are a threat whether they are rising or falling. China may be especially dangerous as its economic growth slows. It is riling its neighbours. Investors would be wise to assign a greater weight to this fat tail risk, says Hugo Dixon.

Capital Calls: US government shutdown

29 Sep 2023

Concise views on global finance: Civil servants, who already earn 24% less than the market rate, lose their pay when Washington closes. Legislators, meanwhile, keep collecting their $174,000 salaries. Having skin in the game would help focus congressional minds.

To fix Britain, Labour will need new debt rules

29 Sep 2023

Tight fiscal curbs leave PM Rishi Sunak with no room for tax cuts or investments in the likes of rail link HS2. If Labour wins an election likely in 2024, it could hike spending via a broader metric based on the UK balance sheet. That could spur growth without spooking markets.

Apple may be poisoned by Google antitrust fallout

27 Sep 2023

Founder Steve Jobs once threatened “thermonuclear war” against his rival for copying the iPhone. Now, more than 15% of Apple's operating profit might be coming from fees paid by the search giant. The big risk is that an unfavorable verdict will taint its rich valuation multiple.

Long US shutdown is avoidable but seems inevitable

26 Sep 2023

A group of Republicans are holding up approval of a $1.5 trln budget because they want $60 bln in cuts. Fiscal responsibility is fair enough, but they’re being contradictory and unreasonable. Even if Republicans were to reach an agreement today, other issues will get in the way.

Capital Calls: Net neutrality is back, again

26 Sep 2023

Concise views on global finance: US regulators want to reopen a decade-old fight over the internet’s rules of the road. But just like merger cops who have struggled to gain traction, they are trying to use yesterday’s tools to predict tomorrow’s problems.

Grisly Hulu battle would deepen streaming wars

26 Sep 2023

Comcast and Disney are set to spar over valuing the TV service behind the “The Bear.” Cable boss Brian Roberts figures his company’s 33% stake is worth a bundle; rival Bob Iger will disagree. A long fight makes little sense when they’ll probably wind up around $33 bln anyway.

EU regulators have tech giants in their sights

26 Sep 2023

Brussels is taking on the likes of Amazon and Apple with a slew of new rules aimed at curbing market dominance and taking back control over data. Former EU Commission economist Bertin Martens explains to The Exchange podcast how the industry giants could be forced to open up.

Uncle Sam risks recession by a thousand cuts

22 Sep 2023

A government stoppage would shave a sliver from US economic expansion. Restarting student loan payments will have a similar effect. Add striking autoworkers, high oil prices and costly mortgages, and 0.8% growth forecast for the fourth quarter and 0.5% in early 2024 look shaky.

Ukraine war gives wings to India bond index debut

22 Sep 2023

JPMorgan will add the country’s sovereign debt to its emerging market index, easing concentration issues following Russia’s exclusion. It drags foreigners into a $1 trln market. New Delhi sees new gains from opening but it may have to bend on taxes and more to win wider backing.

Capital Calls: US budget

21 Sep 2023

Concise views on global finance: US House Speaker Kevin McCarthy is siding with hardline conservatives to fund the government. Empowering the further-right flank narrows the already slim odds of new Ukraine aid, cannabis reform and crypto clarity.

Central banks start game of chicken over rate cuts

21 Sep 2023

Officials in Sweden and Norway hiked borrowing costs, while their British peers didn’t. All hinted policy will stay tight, fearing that stoking expectations of an early start of the loosening cycle may fuel inflation. An economic slowdown may prompt rate-setters to be less tough.

Oil spike offers only a brief boon for Fed and MbS

21 Sep 2023

Crude prices are up 25% since July, swelling the Saudi crown prince’s budget. Fed boss Jay Powell wins too: he can use it to justify inflation-busting high rates. Yet long-term, a surfeit of energy demand over supply will complicate life for both central bankers and oil tsars.