Politics

French bond rot has capacity to spread

7 Dec 2016

Gallic bonds are trailing euro zone peers. This suggests investors are worrying that the far-right's Marine Le Pen might do better in the 2017 presidential elections than polls show. Were her chances to improve materially, market damage would quickly spread across the region.

SoftBank’s $50 bln U.S. pledge is the easy bit

7 Dec 2016

The Japanese group is raising a tech fund twice that size, so boss Masa Son's promise to Donald Trump looks doable. It can also curry favour for his longed-for merger of SoftBank's Sprint and T-Mobile. But creating 50,000 jobs in the thinly staffed tech industry won't come easy.

City of London should woo not threaten on Brexit

6 Dec 2016

A bad-case Brexit might demolish some of the financial sector's record 71 bln pounds in tax contributions, outlined in a new report. Other bits of the economy could also suffer from the fallout. But bankers might gain more from an upbeat case for their salvation.

E.ON brinkmanship gets rewarded in court

6 Dec 2016

Germany’s constitutional court has ruled in the troubled utility’s favour over an 8 bln euro compensation claim following the government’s U-turn on nuclear power. A payout should ease E.ON’s balance sheet headache and vindicate its decision to delay a much-needed capital hike.

UK regulator makes brokers feel like their clients

6 Dec 2016

The FCA is set to cap leverage punters can take when spread-betting. It shouldn’t have been a shock given EU peers had questioned a product in which 80 pct of clients lose money. Brokers’ 30 pct share falls imply they suffer from the same mindless optimism as their customers.

Greece turns from Sisyphus into Hercules

6 Dec 2016

Euro zone lenders agreed to rejig some of its debt, which adds to the likelihood that future financial support isn’t just good money thrown after bad. Greece is no longer pushing a rock up a hill, but some pretty hefty tasks still stand between it and economic recovery.

Brexit Supreme Court case is a sideshow

5 Dec 2016

The UK's top court may force the government to give parliament a say on triggering Brexit. Yet this wouldn't necessarily change Prime Minister Theresa May's plans much. Two related legal matters - including whether the exit process is reversible - might provide firmer resistance.

Bank clean-up opportunity is Italy’s to waste

5 Dec 2016

The failed referendum need not cause a crisis if UniCredit completes its rights issue and fellow lender MPS can be quickly stabilised. Political turmoil and weak growth, though, could push up bad loan levels. A new "bad bank" would help, but political will may be lacking.

Trump to U.S. businesses in China: drop dead

5 Dec 2016

U.S. President-elect Donald Trump's precedent-breaking call with Taiwan's president, followed by ominous tweets about Chinese policy and American firms' overseas production, has diplomats scrambling. One thing is clear: Trump doesn't care about U.S. investments in China.

Italy’s vote is for uncertainty but not for crisis

4 Dec 2016

Matteo Renzi resigned as prime minister after losing his constitutional reform referendum. The immediate challenge facing his successor is to make sure banks in need of capital still get it. Longer term, Italy will hobble on without the change-minded strong government it needs.

Austria’s “nein” to far-right buys time for reform

4 Dec 2016

The presidential election ended in a clear defeat for Norbert Hofer's Freedom Party. Chancellor Christian Kern has just under two years to deliver a "new deal" including lower tax and more infrastructure spending. His right-wing opponents have taken a knock, but remain strong.

Richmond sharpens up Britain’s Brexit divide

2 Dec 2016

The victory of a pro-EU liberal in a UK local election hints at a potential swing back to the centre. Stronger opposition could keep the government honest as it negotiates Brexit. Yet Richmond is wealthy, and voted strongly to stay in Europe. More clarity doesn't mean more unity.

Hollande’s problem was bigger than Hollande

2 Dec 2016

France's president saved his ruling Socialist Party from electoral annihilation by saying he won't seek a second term. His flaws had become obvious. But whoever seeks the country’s highest office faces the same challenge of reconciling modernisers with those opposed to reforms.

Review: China’s doomed anti-corruption campaign

2 Dec 2016

Tales of Chinese officials enriching themselves are so prevalent they no longer astonish. President Xi Jinping's anti-corruption campaign has penalised bad behaviour. But in "China's Crony Capitalism", Minxin Pei argues that state ownership makes any sustained crackdown futile.

Trump’s AC activism more hot air than cold jobs

1 Dec 2016

The president-elect is touting a deal to keep over 1,000 jobs at heating and aircon maker Carrier in Indiana, after blasting a planned move to Mexico during his campaign. It's a partial win that cost a state subsidy. Trump will milk the PR, but as policy it won't easily scale.

Europe’s long weekend presents a triple threat

1 Dec 2016

In the space of just 48 hours Italy's premier will face a make-or-break referendum, Austria could elect a far-right president, and Greek debt talks will reach a head. All three have the potential to revive the centrifugal forces that could send Europe spinning out of control.

Mnuchin’s first job: get own finances in order

30 Nov 2016

Trump's choice for Treasury has made millions on Wall Street. Unlike his boss, Steven Mnuchin will have to produce his tax returns to win congressional approval, a step that has tripped up past nominees. Mnuchin's wealth and potential use of tax loopholes could be problematic.

Trump puts GOP’s competing loyalties in play

30 Nov 2016

The president-elect's inconsistent comments about his business conflicts have spurred Democratic lawmakers to propose ways to rein them in. But Republicans will control Washington. Failure to tackle any issues could stymie policy goals like tax reform and spook markets.

Trump Treasury chief an illogically logical pick

30 Nov 2016

Steven Mnuchin's Wall Street past will rankle Democrats. But unlike many on the president-elect's team, he's neither an ideologue nor a populist – and well qualified for the job. He's also bipartisan and relatively reserved. His nomination bodes well for fiscal policy.

Dollar strength spells more U.S. bond weakness

30 Nov 2016

As emerging market currencies wilt against a resurgent greenback, countries like India are dipping into their war chests to sell dollars. More may have to follow suit. Sooner or later, this will involve selling Treasuries. It’s more bad news for the battered U.S. bond market.