Money‚ Markets & Macroeconomics

Italy’s imperfect budget faces bumpy ride

15 Aug 2011

There’s mounting public anger at Rome’s accelerated austerity programme, in particular its tax on high earners. Debt market jitters are likely as the measures are debated in coming weeks. Still, it’s hard to see the package being rejected - though it may well be modified.

Return to gold standard seems less unthinkable

15 Aug 2011

Fiat money has worked well in the 40 years since Richard Nixon ended the peg, but this latest recession must gnaw at believers. If years of ultra-cheap cash give rise to serious inflation or a dollar collapse, the gold standard, however erratic and deflationary, may appeal again.

Euro bailout fund could survive French downgrade

15 Aug 2011

France’s triple-A rating is the weak link in the soon-to-be-expanded European Financial Stability Facility. A downgrade would almost certainly dent the rescue fund’s top rating, pushing up borrowing costs for bailed-out countries. But this need not be a disaster.

HTML5 buzz weakens the power of mobile apps

12 Aug 2011

Apple and Google-powered smartphones have hundreds of thousands of specialized Web programs, allowing them to lock up the market - and users. A new Web standard is gaining traction, potentially allowing an end-run around walled gardens. But Apple and Google have little to fear.

Fretting frackers restrain economic opportunities

12 Aug 2011

Critics of the controversial drilling process contend its hazards have been downplayed and the benefits exaggerated. A new U.S. report suggests just the opposite. Yet until safety concerns are tackled, as with New York’s proposed cleanup fund, shale’s potential won’t be realized.

Financial lifeboats starting to get crowded

11 Aug 2011

Safety from sinking stocks has been sought in Treasuries, and even bonds backed by U.S. homes. But other places of refuge like the Swiss franc and gold showed on Thursday how quickly they can be rocked when too many investors pile in. Havens aren’t immune to mania either.

Nomura’s Wall Street push will be tough to pull off

11 Aug 2011

The Japanese broker is focusing its investment banking ambitions on the United States while trimming its European headquarters. Nomura reckons it can establish itself by hiring rather than buying. But it’s hard to see it succeeding where so many others have failed.

U.S. debt-cut panel already poisoned by politics

11 Aug 2011

It hardly matters who sits on the new “super committee” seeking $1.5 trln of savings over 10 years. Wall St. will struggle to convince lawmakers of how important it is to reach a compromise when both parties are eyeing 2012 elections. Credit raters, however, may not wait so long.

China’s collectible bubble shows Beijing’s challenge

10 Aug 2011

Investors are bidding up arts and jewellery because they are worried about inflation and a weak dollar. It may not be too damaging if this kind of bubble bursts. But the mania shows how tighter credit rules have only partly worked, and too much money is still sloshing around.

HSBC reassures with $2.4 bln credit card sale

10 Aug 2011

At just twice 2010 earnings, the gain on selling its U.S. cards unit to Capital One isn’t brilliant. The sale will also lower returns and raise the bank’s cost ratio. Still, a clean exit shows CEO Stuart Gulliver is serious about getting back to HSBC’s trade-bank roots.

Groupon IPO can now be judged with half the grief

9 Aug 2011

The daily-deal website is abandoning its nonsensical profit measure, ACSOI, which excludes marketing costs. Chalk one up for the SEC, which was scrutinizing the practice. Regulators can’t prevent all bubbles from inflating, but stopping firms from duping investors pricks one.

Why Apple just might be the first $1 trln company

9 Aug 2011

The iPhone maker’s sales have been surging 80 pct a year, and profit faster. While its $342 bln value overtook Exxon’s briefly, it trades on par with the sluggish market - and at half the multiple it fetched in 2006. Relatively, at least, Apple looks worth far more.

Italy still vulnerable despite ECB covering fire

9 Aug 2011

The European Central Bank’s bond buying has brought down Italian yields, yet Rome is still in markets’ sights. The government plans to accelerate fiscal measures and labour reform, but real change could take time, and growth may disappoint. Italy cannot afford to delay.

London riots strike another blow to confidence

8 Aug 2011

A third day of violent clashes and looting around the city are being put down to anti-police sentiment, social division, summer boredom and BlackBerry-coordinated unrest. Whatever the causes, the images from the financial capital can only hurt already fragile markets.

Global equity sell-off ignores fundamental value

8 Aug 2011

Stocks have been clobbered by the latest leg of the global economic and financial crisis. But falling share prices are a symptom of fears: they are not, as yet, a cause. Long-term investors unburdened by leverage still have good reasons to hold their nerve.

Timing of S&P U.S. downgrade couldn’t be better

6 Aug 2011

Markets may be wobbly, but interest rates are at historic lows and buyers of U.S. debt plentiful as the world braces for another economic slowdown. There may be some initial turbulence, but it would be worse for Uncle Sam if the rating agency waited until markets acted first.

Asia emerges as refuge from global fears

5 Aug 2011

The region’s government bonds have soared amid this week’s panic. Not that investors are buying the theory it has decoupled from the West - Asian stocks are weakening. But with balance sheets that look pristine next to the U.S. and EU, Asian sovereigns are seen as a safe haven.

Panic and crisis need different solutions

5 Aug 2011

Markets are panicking amid fears of world recession. That looks overdone for now, and falling commodity prices support growth. So policymakers should keep cool. The euro zone faces systemic crisis but conventional policy would help: Italy and Spain must tighten fiscally - fast.

RBS’s uncertain road ahead gets even bumpier

5 Aug 2011

Though the UK bank met expectations in the first half, its shares are being savaged in the broader market sell-off. The balance sheet clean up is going well, but euro zone exposure is starting to hurt. The bank’s goal of 15 pct return on equity by 2013 is also looking vulnerable.

EU bank funding headed back to emergency room

5 Aug 2011

The 2008 liquidity squeeze triggered a credit crunch and massive bailouts. Though Europe’s banks are in better shape today, turmoil in the euro zone means some lenders can once more only get overnight funding. That leaves the European Central Bank squarely on the hook - again.