Politics

Harry Potter can add magic to predictive power

23 Dec 2016

As J.K. Rowling's boy wizard turns 20, it's a good time to recall how many agents and publishers rejected him. Similarly closed minds help explain why recent political upheavals have surprised many and economic forecasts are often wrong. A little more imagination goes a long way.

Italy’s Monte dei Paschi bail-in is a bailout

23 Dec 2016

EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.

JPMorgan’s Monte Paschi flop is in eye of beholder

23 Dec 2016

The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.

Russian sanctions will shrivel to soccer boycotts

23 Dec 2016

Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.

Race to build will add impetus to old-world stocks

23 Dec 2016

Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.

Carl Icahn tops Trump’s conflicted shadow council

22 Dec 2016

The activist will be an off-the-books adviser on regulatory reform. Like the execs on the president-elect's policy forum, Icahn won't have to disclose when his recommendations and his financial interests coincide. Unfettered business oligarchy is no way to run a government.

New White House council muddies Trump trade policy

22 Dec 2016

The U.S. president-elect chose China critic Peter Navarro to head a trade advisory group. Yet Commerce nominee Wilbur Ross is set to lead on such issues. There's also the U.S. trade office. The regime risks speaking in multiple voices and confusing nations negotiating with them.

Latin America’s rightward turn faces serious tests

22 Dec 2016

Several countries in the region have shunned leftist populism of late. But the pain from economic reforms in Argentina and Brazil could make voters reconsider, if it's not accompanied by growth. And Chile's consensus on fiscal prudence may unravel.

Monte dei Paschi endgame can still be made fair

22 Dec 2016

Italy's third-biggest bank unsurprisingly failed to raise 5 billion euros. A forcible debt-for-equity swap would limit state money. If compensation was only paid to mis-sold retail creditors, MPS could be rescued within European rules and without unfairly hitting taxpayers.

Spanish banks get their mortgage comeuppance

21 Dec 2016

Domestic lenders must refund excess interest charged on housing loans with floor clauses, after the European Court of Justice unexpectedly overturned a Spanish ruling. Fair enough: the original verdict was too kind on banks. The hit to earnings looks painful, but manageable.

South African debt will be downgraded before Zuma

21 Dec 2016

After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.

Turkey-Russia pact can survive Ankara flashpoint

20 Dec 2016

Moscow’s ambassador in the Turkish capital has been shot dead by a policeman seeking revenge for Aleppo. In 2015, Recep Tayyip Erdogan and Vladimir Putin were at loggerheads. Now mutual self-interest over Syria and a perceived common enemy mean the shock can be smoothed over.

Mega-merger market set for last gasp

20 Dec 2016

Cheap debt and falling hurdle rates will keep bosses on the hunt. Border-spanning acquisitions are harder to square with trustbusters, however, and big targets less affordable as an M&A cycle ends. That makes space for smaller deals, which in any case tend to create more value.

U.S.-China currency war will be symbolic at best

20 Dec 2016

Donald Trump has promised to declare the People’s Republic a currency manipulator. The label means little, though, and the yuan is probably overvalued. The best case is that the U.S. president-elect declares victory and moves on. The risk is that hardliners in Beijing react.

Trump governance carries Chinese characteristics

19 Dec 2016

The U.S. President and his counterpart in Beijing have a surprising amount in common. Like Xi Jinping, the tycoon is eager to pump up growth, disdains free speech and wants to restore his nation to former glory. Here are some other parallels to watch for in Trump's first year.

Ukrainian bank clean-up comes at a cost

19 Dec 2016

The war-torn country will rescue the largest private lender PrivatBank. It suggests Ukraine’s banks are emerging from the shadow of oligarch owners and bad lending. Yet the deal hurts Ukraine’s shaky finances, and may inflame political opposition to the IMF-dictated austerity.

Italy will find itself in market crosshairs again

19 Dec 2016

With rates rising, countries with high debt and fragile growth are vulnerable. Italy's political weakness makes tough choices on reform or spending cuts even harder. Even though the European Central Bank will keep buying government bonds in 2017, investors' nerves will be tested.

Energy Dept choice pits Trump against bureaucracy

16 Dec 2016

Rick Perry ran for the White House promising to dismantle the federal energy agency. Now the president-elect wants him to run it. The DOE is already resisting a Trump request to list staffers working on climate change. Animosity from the "deep state" could slow-roll his agenda.

Breakdown: Dodd-Frank, Trumped

15 Dec 2016

The U.S. president-elect wants to unwind some post-crisis financial rules. Given their slim Senate margin and regulators' support for key reforms, Republicans may have to pick their battles. Tougher capital requirements would be tough to roll back, but the Volcker Rule may go.

Viewsroom: Can Big Oil’s man be diplomat-in-chief?

15 Dec 2016

Exxon CEO Rex Tillerson, Donald Trump's pick for secretary of state, is well versed in international dealmaking. But he's too close to Russia even for some Senate Republicans. Meanwhile, Goldman Sachs shuffles the top ranks and Wells Fargo's regulatory hubris comes back to bite.