The Big View

The West could live with a frozen Ukraine conflict

13 Nov 2023

For Kyiv and its allies a stalemate is not as good as a victory. Ukraine would need help shoring up its defences, and there’s a cost to maintaining sanctions against Russia. But triumph is unlikely and a deadlock would still mostly achieve the main goal: denying Moscow victory.

Japan has become a gold mine for value investors

10 Nov 2023

Japanese stocks delivered negative returns for decades. Low debt, a cheap currency and a shift in corporate power to shareholders – egged on by the authorities – are changing the dynamic. The stock market’s recent strong run could last for years.

 

Biden’s economic scorecard touts fragile advantage

9 Nov 2023

Low unemployment and easing inflation should aid the US president’s reelection push. Yet most Americans aren’t impressed, and rising borrowing costs don’t help. A Breakingviews tally gives Biden a narrow economic lead over Republicans. The next 12 months will test that advantage.

Private equity superstores overstock the shelves

8 Nov 2023

Blackstone and Apollo say diversification into credit, real estate and beyond makes them better investors. They have been outraised and often outperformed, however, by more focused buyout shops like CD&R. It will take consistently higher returns to justify the conglomerate model.

Workers are missing cog in US manufacturing gears

7 Nov 2023

Government subsidies have sparked a construction bonanza, with spending on microchip, EV and other factories running at an annualized pace of $200 bln, 60% more than a year ago. Buying the needed equipment comes next. Filling all the new jobs, however, will be the hardest part.

High bond yields challenge “Pax Americana”

6 Nov 2023

The end of free money is adding to US political dysfunction. This may undermine the country’s ability to meet multiple global challenges: witness the struggle in Congress over military aid for Ukraine. The only consolation is that China has even bigger debt problems.

 

Rich countries are stumbling into a debt trap

3 Nov 2023

Large deficits and higher interest rates are pushing up the cost of servicing hefty piles of sovereign borrowing. Elusive growth, stubborn spending and hawkish central banks make it hard for governments to regain control. Little wonder bond investors are heading for the exit.

Morgan Stanley’s new CEO inherits rich pickings

2 Nov 2023

Ted Pick has the money and backing of predecessor James Gorman to make acquisitions that will help the $120 bln Wall Street firm service more of the global elite. While many potential targets look cheap, he can take his time. The most enticing prospects aren’t for sale yet.

Larry Fink’s next M&A may go in surprise direction

1 Nov 2023

BlackRock’s founder built the world’s largest fund group on audacious acquisitions. He wants to do a last deal before leaving. Absorbing an alternative asset manager is tricky, while an index compiler like MSCI could offer synergies. The wild card is a data firm like Bloomberg.

Big government will drive the next market cycle

31 Oct 2023

Politicians are at their most interventionist in decades. Though a return to the stagnant, centralised economies of the 1970s is unlikely, subsidies and inflation will influence asset values. Fund managers need to pick investments that may benefit from the state’s visible hand.

Israel war tests US appeal to global swing states

30 Oct 2023

US power in part hangs on its claim to pursue a principles-based foreign policy. The Gaza conflict has led to accusations of double standards. If these stick, the United States’ attempts to woo developing countries as part of its new Cold War with China could suffer.

The case for a career in bond investing

27 Oct 2023

Rising rates and volatile markets have hammered the conventional case for buying fixed income securities. But higher yields, pockets of value in credit and a possible weakening of the strong US dollar mean there are still opportunities in bonds for budding portfolio managers.

Wall Street’s glum rainmakers deserve more love

26 Oct 2023

Income from dealmaking is moribund; trading revenue is lumpy. No wonder investors in firms like Morgan Stanley and Goldman Sachs promote the relative appeal of less temperamental businesses like wealth management and credit cards. Before long, though, what’s down may be up again.

Russian war economy is overheating on a powder keg

25 Oct 2023

Soaring military spending is Moscow’s main growth engine, leading to tight labour markets and 6% inflation. The government is strengthening its grip on a country gradually closing to the world and financially beholden to China. If peace returns, a collapse is a real risk.

Time is ripe for another push on carbon pricing

24 Oct 2023

Green subsidies can help fight climate change but are fiscally unsustainable. Regulations can be politically unfeasible, while doing nothing is ecologically untenable. Carbon taxes raise cash, some of which can be used to ease the public backlash.