Money‚ Markets & Macroeconomics

South Korea gets short end of U.S. trade stick

3 Oct 2022

Seoul wants to sell more chips and other goods overseas, but Washington is luring Samsung and compatriots to make in America. A trade deficit and crashing won offer a glimpse at what a U.S. revival in high-tech manufacturing means for the $1.8 trln trade-dependent Asian economy.

“Help to Refi” could be UK’s next financial wheeze

30 Sep 2022

Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.

Currency crash forces Beijing back into bad habits

30 Sep 2022

The yuan touched 7.2 per dollar, a level not seen since 2008. Verbal warnings to the market achieved little, so the central bank has relapsed to using blunt force to restrain prices and is prepping banks to dump dollars. That’s bad for liquidity, and damages credibility.

BoE remedy can only be partial cure for UK ills

29 Sep 2022

The UK central bank launched $70 bln of bond-buying after PM Liz Truss’s budget triggered market chaos. That has stemmed a financial crisis among indebted pension funds. Stopping the market exerting economic pain requires a fiscal rethink from politicians, not more BoE action.

Capital Calls: Chevron, Pickleball

29 Sep 2022

Concise views on global finance: The oil driller has sold its California headquarters building and is moving employees to Texas, while one of the fastest-growing U.S. games is beefing up its professional ambitions with an investment from basketball superstar LeBron James.

Behind Britain’s self-inflicted financial crisis

28 Sep 2022

Sterling fell to a record low and gilt yields soared after finance minister Kwasi Kwarteng unveiled a raft of unfunded tax cuts. In this Viewsroom podcast, Breakingviews columnists explain the long-term damage to the UK’s credibility and what will rebuild investors’ confidence.

Capital Calls: Apple tests discretionary spending

28 Sep 2022

Concise views on global finance: The company’s reversal on iPhone 14 production is a sign that inflation-battered consumers are thinking differently about discretionary items.

BoE’s bond-buying U-turn is worth the risk

28 Sep 2022

The Bank of England will buy UK sovereign debt and delayed sales of its $915 bln bond portfolio due to market “dysfunction”. The danger is Governor Andrew Bailey looks too close to the government whose tax cuts caused the turmoil. Yet calmer markets make it easier to hike rates.

China tea IPO bubbles up on skinny consumers

28 Sep 2022

A $900 mln float by Mixue Bingcheng would be one of the mainland’s biggest this year. It implies a Starbucks-like valuation for a franchise serving less affluent customers and boasting four times the outlets. As the economy stalls, spending habits are shifting in its direction.

Guest view: Russia sanctions lack decisive punch

27 Sep 2022

Restrictions imposed by the United States and its allies following President Vladimir Putin’s invasion of Ukraine have done economic damage, write William Rhodes and Stuart Mackintosh. But Cuba and Iran show American sanctions are not decisive in changing geopolitical outcomes.

Gold will keep losing its irrational luster

27 Sep 2022

A pandemic, war and high inflation should be pushing the yellow metal’s price higher. Instead, at about $1,635 an ounce, it’s worth less than it was a decade ago. Miners also are extracting it at a faster rate than population growth. Farmland, for one, has become a better hedge.

Silicon Valley’s post-Covid brain drain

27 Sep 2022

Before the pandemic, 75% of venture capital was invested in California, New York and Massachusetts. In this Exchange podcast, AOL co-founder Steve Case explains that a hybrid working revolution is reversing that trend and encouraging permanent investment away from the coasts.

UK swaps one cost-of-living crisis for another

27 Sep 2022

The Bank of England may raise rates past 5% to stem the inflationary effect of Chancellor Kwasi Kwarteng’s tax cuts. Homeowners, saved by the government’s energy price cap, now face a surge in mortgage costs. That will sap growth and add to pressure for banks to help customers.

Investors strangle UK’s pro-growth budget at birth

26 Sep 2022

Government bond yields soared and the pound slumped following Chancellor Kwasi Kwarteng’s 45 bln pound tax cut package. Higher interest rates will depress demand while costlier energy imports will further weaken the public finances. That risks cancelling out any boost to growth.

Italy’s right-wing winners inherit poison chalice

26 Sep 2022

Nationalist Giorgia Meloni, EU-sceptic Matteo Salvini and convicted former PM Silvio Berlusconi scored an election victory. Despite campaign unity, they disagree on sanctions and spending. The rivalries risk undermining the high-debt nation’s ability to tackle its energy crisis.

India’s bond inclusion will be overdue and timely

26 Sep 2022

The sovereign debt of the world’s fifth-largest economy may be added to JPMorgan’s emerging market index, offsetting Russia’s exclusion. It’s a step towards prising open a $1 trln market, and a feather in India’s cap. But there are reasons it took so long.

UK growth requires an even less popular Liz Truss

23 Sep 2022

The new prime minister wants the economy to motor, and says she’s ready to take tough calls. Yet her 45 bln pounds of tax cuts have already alarmed debt markets, and may not deliver growth. If Truss wants the UK to grow without a fiscal mess, she will have to upset her base.

Tokyo blinks in game of forex chicken

22 Sep 2022

Japan has responded to the Federal Reserve’s rate hikes by moving to prop up the staggering yen, the first intervention since 1998. The country’s economy and Bank of Japan Governor Haruhiko Kuroda’s loose policy make it unlikely the plan will work. The attempt may even backfire.

Capital Calls: Novartis

22 Sep 2022

Concise views on global finance: The Swiss drugmaker hopes to fix its growth problem by listing its generic drug business and focusing on the U.S. market.

Fed makes inflation fight Joe Biden’s problem

21 Sep 2022

The central bank raised rates by 75-basis-points and suggested they could go higher than expected without a hard landing. That seems overly rosy. But inflation could do more harm than a recession – and if the Fed overshoots, it’s the man in the White House that carries the can.