Money‚ Markets & Macroeconomics

Jay Powell gives next US president an early boost

19 Sep 2024

The Federal Reserve chair and his colleagues brushed off political pressure and slashed rates to protect the labor market. Policy lags mean most benefits will be felt after November’s election. Though unemployment could still get worse, markets will welcome a soft landing.

Defeating tax taboo is scary task for French PM

19 Sep 2024

France’s new Prime Minister Michel Barnier wants to slash the deficit from 6% of GDP and reduce the debt burden. A fiscal squeeze would work but parliament is clamouring for the opposite and President Emmanuel Macron is also against it. The premier’s tenure may be short-lived.

Autos take driver’s seat in China’s new economy

19 Sep 2024

Beijing wants carmakers to reserve overseas factories for final assembly of vehicles. It will slow tech transfers like those that helped the People's Republic get ahead in the industry. Slowing GDP growth is making China protective of companies as they expand overseas.

Data decline blurs Fed’s soft-landing vision

18 Sep 2024

US government surveys provide essential statistics, but quality is at risk as response rates drop and agencies face a funding crunch. The central bank requires reliable information about economic conditions as it prepares to cut rates. Its only option is to cast a wider net.

BoE bond tinkering offers Labour a fiscal lifeline

18 Sep 2024

Governor Andrew Bailey will this week say by how much he wants to reduce the Bank of England’s balance sheet in 2025. If he sticks to 100 bln pounds, higher gilt redemptions and fewer sales will cut the BoE’s losses. That would give the government a much-needed fiscal boost.

Europe headed to muscular industrial policy

17 Sep 2024

The new European Commission marks a power grab by President Ursula von der Leyen, who enjoys more control of key departments. France, meanwhile, gets a tighter grip on industry and markets. The body may be tougher on trade, looser on competition matters and more interventionist.

For global firms, India IPOs are a honey trap

17 Sep 2024

Hyundai and LG Electronics are each keen to float their local subsidiary on Mumbai bourses. Rich valuations are on offer. Companies have been burnt, though, by chasing additional listings around the world. The risk of getting hurt looks particularly bad in India.

India’s mortgage IPO builds on many riches

16 Sep 2024

Shares of Bajaj Housing surged 125% on their debut. That reflects faith in its $56 bln investor darling parent and robust demand for expensive homes. It also hints at deep scepticism among sellers about the sustainability of rich valuations in the country's equities market.

The European Union risks a sad, bad future

16 Sep 2024

The EU economy is stagnating, while Russia, China and even the United States may bully the bloc. There are potential fixes, as former European Central Bank boss Mario Draghi set out last week. But the EU and its members are currently in no position to implement them.

The UK’s finance-business chasm is as wide as ever

13 Sep 2024

British investors and regulators are fretting that capital markets do not adequately serve local companies. The long-running issue is rooted in the country’s outsized financial sector, which brings in 12% of GDP. Recent reforms will struggle to address the underlying problem.

Thrifty Europeans demand more aggressive rate cuts

12 Sep 2024

The European Central Bank lowered rates again on Thursday. President Christine Lagarde hopes to spark a consumer-led recovery. But households are saving 15% of their income, wage increases are slowing and mortgage costs rising. Only more rapid easing can cause a spending surge.

Diaspora gives wings to India luxury housing boom

12 Sep 2024

New launches of pricey properties jumped 48% in financial year 2024. Real estate is hotting up as an investment choice, especially for non-resident Indians. Their purchases prop up growth in the world's fifth-largest economy. It's a new spin on the power of its global citizenry.

UK bank tax would fall on shrinking shoulders

11 Sep 2024

Lenders fear that finance minister Rachel Reeves will tap them to help plug a fiscal ‘black hole’. Reversing a tax cut from the last government would be the simplest option. The high returns of NatWest, HSBC and Lloyds suggest they can afford it, but rate cuts may change that.

China’s banks have a nasty case of indigestion

11 Sep 2024

For decades, Beijing leaned on lenders to fuel growth in the $17 trln economy. But it will take years for them to digest problem IOUs from firms and local governments. Officials will have to find new ways to boost GDP, or the financial dyspepsia could turn into something worse.

Draghi’s Europe plan collides with national crises

9 Sep 2024

The former Italian PM reckons the bloc must invest an extra $883 bln a year to catch up with the US and China. His report sensibly calls for telecom mergers and a common defence strategy. But the big lift will have to come from governments beset by their own issues.

Trump’s super-tariff is dangerously simple

9 Sep 2024

Slapping up to 20% on all imports, and triple that on Chinese goods, is easy to understand, and to implement. The consequences, though, are complex and likely to be mostly harmful. The best hope is that this bad idea, intended to boost US prosperity, leads to some better ones.

Central banks lay liquidity trap for stock markets

6 Sep 2024

The US Federal Reserve and its major peers took $200 bln out of the financial system in early August, likely deepening a global equity slump. Ratesetters control the money supply for good reasons. But their huge presence and investors’ herdlike behaviour add new layers of risk.

China’s global battery ram will be hard to stop

6 Sep 2024

The US and EU have erected tariffs to limit imports of electric vehicles. The People’s Republic has an even bigger lead in batteries. New tech gives rivals a chance to muscle in, but Chinese cellmakers’ head start means resisting giants like $115 bln CATL will come at a cost.

Michel Barnier joins Macron’s last chance saloon

5 Sep 2024

French President Emmanuel Macron picked the former Brexit negotiator to form a government after inconclusive elections. The choice will antagonise the Left and divide the Right. It may buy Paris some time with Brussels on its budget. But the weak executive will have a short life.

Clouds gather over China’s needed solar mergers

4 Sep 2024

Earnings from $12 bln cell giant Tongwei underscore the industry's harmful overcapacity. Its deal to acquire a smaller rival may not provide relief, however. The target's local government investors may complicate any right-sizing. Offshore assets look like the real draw.