Predictions 2019

Global equities offer value trap in 2019

11 Dec 2018

After two sharp corrections in 2018, U.S. earnings multiples are near 10-year averages. Yet aside from the dot-com bubble, U.S. stock valuations have never been higher in cyclically adjusted terms. With leading economic indicators stretched, they may be built on sand.

Cox: Why I’m relocating to Paris in the year ahead

4 Dec 2018

Riots on the Champs-Elysées are not the best advertisement for President Emmanuel Macron’s fight against illiberalism at home and abroad. But homegrown protests like those of the “gilets jaunes” come with the territory in the global centre of the resistance – my new home.

Trump’s Saudi amorality can make Gulf great again

26 Nov 2018

Support for Mohammed bin Salman after the murder of Jamal Khashoggi has skewered U.S. claims to moral leadership. Yet the U.S. president now has huge leverage to force Saudi’s crown prince to reverse course on Qatar, Yemen and other blunders. He would be a fool not to use it.

French telco fight will become ménage à trois

22 Nov 2018

Three tycoons and state-backed Orange are bleeding each other dry in a mobile price war that shareholders despise and consumers love. Something must give in 2019. A deal of some kind between Iliad and Bouygues makes sense, if billionaire owners can set aside their egos.

Mexico’s revolutionaries risk spoiling the party

12 Nov 2018

President-elect López Obrador doesn’t take office until next month, but he and his fellow leftists have already upset markets with moves to nix an airport project and rein in bank fees. Such fumbles could help guide Brazil’s far-right populist Jair Bolsonaro as he nears power too.

Long-term governance risk persists after U.S. vote

7 Nov 2018

Republicans increased their grip on the Senate but still represent less than half the people. Absent parliamentary checks, this means a minority of Americans holds sway over divisive matters like nominations to the Supreme Court. Expect secessionist sentiment to increase in 2019.

U.S.-China mistrust heightens armed-conflict risk

5 Nov 2018

A near-collision between American and Chinese naval vessels in the South China Sea is a dangerous sign. Both militaries are stepping up readiness. With trade tensions high and the usual back channels dysfunctional, a clash – or worse – is a concern investors should not dismiss.

AIG’s lost decade is not yet behind it

13 Sep 2018

The insurer, rescued with a controversial $182 billion bailout in the 2008 crisis, has sold assets like AIA, rejigged operations, repaid the U.S. government, worked through CEOs and even started making acquisitions again. A new direction is emerging, but investors remain wary.

Time breathes life into America’s mortgage zombies

5 Sep 2018

It’s 10 years since Washington took over Fannie Mae and Freddie Mac, injecting $187 bln to render them undead. Reforms have not touched the supposedly temporary fix. A functioning home-loan market, revenue for the Treasury and inertia suggest taxpayers may be stuck with them.