Politics

Ireland spins global tax mess into $28 bln of gold

8 Oct 2024

Dublin expects a 2024 budget surplus worth 8% of gross national income, thanks to the presence of US companies lured by low levies. It’s evidence that profit shifting lives on despite a landmark OECD deal. The good news for Ireland is that there’s little chance of that changing.

EV tariffs are only the first step in EU-China war

4 Oct 2024

Despite internal squabbles, member states voted for levies on imported Chinese battery cars. That may help onshore production, but doesn’t tackle China’s clout in hybrid vehicles and batteries. New trade battles are likely: autos and their supply chains are in the firing line.

French PM has a plan but lacks time to fix budget

4 Oct 2024

Michel Barnier is proposing 30 billion euros of spending cuts and tax hikes to shrink the country’s deficit. Even if a divided parliament approves, he will have to repeat the feat in future years to fill the fiscal hole. This government’s weak hold on power makes that unlikely.

China and India reveal emerging market mistakes

3 Oct 2024

Investors often assume stocks in developing countries track economic growth, while valuations are a guide to future returns. The diverging path of Chinese and Indian equities over the past decade shows the flaws in this approach. Better to pay attention to capital efficiency.

Greece is unlikely victor in bank selldown race

3 Oct 2024

Athens sold 10% of National Bank, effectively ending the privatisation of the major lenders it rescued. Germany, the Netherlands, the UK and Ireland still own bank stakes. Greeks can thank continued government support and a strong economy, fuelled by rising investment.

Gulf turmoil will leave ratesetters on edge

2 Oct 2024

Israel’s riposte to Iran’s missile strike may see oil prices spike. The Fed, the ECB and peers struggled to contain inflation in 2022. A new energy crisis, along with a US docker strike, would force central banks to rethink rate cuts just as markets price them in.

New UK government is mired in unreal vibecession

2 Oct 2024

After winning the election, Labour leaders repeatedly warned of financial pain ahead. That helped drag consumer confidence to a six-month low in September. The economy is actually improving but this month’s budget will have to raise both much-needed money and rock-bottom morale.

Dockworkers unpack lasting weak trade links

1 Oct 2024

An extended strike by 45,000 US longshoremen threatens to cost the economy $5 bln daily and snarl supply chains. Government intervention would rattle relations with unions just ahead of the election. The clash illustrates the limits of onshoring, nearshoring and friendshoring.

Saudi oil may keep a lid on Middle East fallout

30 Sep 2024

Israel’s killing of Hezbollah’s leader invites a response from its backer Iran, which could cause crude prices to spike. Yet Riyadh may also soon start pumping a lot more oil. That could prolong the extent to which the economic impact of seismic Middle East events stays regional.

How US foreign policy could produce better results

30 Sep 2024

With conflict raging in Lebanon, Gaza and Ukraine, it is easy to paint pessimistic scenarios for the globe. But there is a more positive outcome where the United States works with other countries to solve common problems. Kamala Harris might just do that if she becomes president.

Thames creditors face messy flush, or deep rinse

30 Sep 2024

The UK water company is running out of cash and racing to raise equity. A new investor would want a big chunk taken out of its 16 bln pound debt load, which may fall heavily on bondholders who can’t put up new money. Even that may be preferable to a government-led overhaul.

Japan’s next PM keeps rate hikes on track

27 Sep 2024

The country’s central bank will welcome news that Shigeru Ishiba is the new prime minister. His rival had blasted tighter monetary policy. Governor Kazuo Ueda is in no rush to raise borrowing costs from 0.25% but the political leadership is unlikely to attack him when he does.

Commerzbank fight is stress test for EU bank union

27 Sep 2024

Regulators spent years trying to level the playing field for euro zone banks. That should clear the way for UniCredit CEO Andrea Orcel’s mooted bid for the $20 bln German lender. If Chancellor Olaf Scholz thwarts the Italian group, new barriers may soon spring up elsewhere.

Arcane signal flags an ill-starred economic shift

26 Sep 2024

Borrowing costs are falling in major economies. But a pointy-headed academic concept which indicates the equilibrium level of interest rates – “R-star” – suggests they are unlikely to revert to pre-pandemic lows. Investors should brace for a future where money is more expensive.

Commerz ills make M&A a question of when not if

25 Sep 2024

The German government backed the $20 bln bank’s quest to stay independent amid UniCredit’s approach. But lower rates and a lack of scale mean new CEO Bettina Orlopp will struggle to earn a good return, and so need a merger partner. Patience may reward would-be buyer Andrea Orcel.

Germany’s fiscal obsession leads to bad deals

24 Sep 2024

Finance Minister Christian Lindner is rushing to plug short-term budget holes with a privatisation spree. But he is leaving money on the table. UniCredit only paid a 4.7% premium to buy a stake in Commerzbank. To feed its debt-reduction addiction, Berlin needs better M&A advice.

EU deforestation ban creates a hazy trade future

23 Sep 2024

The European Union wants to ban agricultural imports from deforested land. The rules have laudable aims but will impact $400 bln worth of goods. Developing nations are already exporting elsewhere. To avoid losing vital supplies, Brussels can compensate farmers or lower standards.

China-EU trade spat’s next swipe may hit LVMH

23 Sep 2024

Beijing is weighing up retaliating against EU tariffs on electric cars. Targeting the French luxury giant and its rivals would cause minimal strategic pain and hit Paris rather than Berlin. Higher consumption taxes, rather than import duties, could also fit with domestic reforms.

Chip halt flags EU’s also-ran status – and Intel’s

20 Sep 2024

The troubled US chipmaker has paused a 30 bln euros semiconductor factory in Germany. Weak demand is hampering Europe’s hopes to close the semiconductor gap between itself and the US. But another leg of the problem is that Intel itself lags rivals like Nvidia and TSMC.

Europe’s CO2 fines undermine carmakers’ progress

19 Sep 2024

An auto lobby group called on governments to ease 2025 carbon penalties. Modest relief would help. With EU electric-vehicle sales down 8% year-on-year, Europe’s plan to end combustion engines looks dicey. That’s more down to government inaction than big-spending carmakers.