The Big View

Larry Fink’s private index dream may be holy grail

19 Sep 2024

The boss of $137 bln BlackRock wants to create benchmarks and passive investment products for alternative assets like buyouts and direct lending. Packaging up illiquid funds will be tricky, and data quality is patchy. A repeat of Fink’s success with public markets seems unlikely.

Joe Biden’s climate law is too valuable to repeal

18 Sep 2024

The outgoing president’s Inflation Reduction Act has spurred $500 bln in green investments in two years. Regardless of who replaces him, politicians, companies and utilities will want to protect lucrative tax credits. A Donald Trump victory might bend the law, but not break it.

Under-fire workers spell trouble for US and Europe

17 Sep 2024

Unemployment remained low in both blocs even as interest rates rose. Staff hoarding and healthy profits averted layoffs. Now, though, US job vacancies are at the lowest since 2021 and euro zone CEOs want to hire less. If labour markets crack, recessions will be harder to avoid.

The European Union risks a sad, bad future

16 Sep 2024

The EU economy is stagnating, while Russia, China and even the United States may bully the bloc. There are potential fixes, as former European Central Bank boss Mario Draghi set out last week. But the EU and its members are currently in no position to implement them.

The UK’s finance-business chasm is as wide as ever

13 Sep 2024

British investors and regulators are fretting that capital markets do not adequately serve local companies. The long-running issue is rooted in the country’s outsized financial sector, which brings in 12% of GDP. Recent reforms will struggle to address the underlying problem.

Buyout barons’ dirty secret shows hard times ahead

12 Sep 2024

Since 2013, 47% of the value created by private-equity dealmakers came from selling companies at higher multiples than they paid. That boon is fading now that valuations seem stretched. KKR, Blackstone and others face lower returns or fights over high-growth targets instead.

China’s banks have a nasty case of indigestion

11 Sep 2024

For decades, Beijing leaned on lenders to fuel growth in the $17 trln economy. But it will take years for them to digest problem IOUs from firms and local governments. Officials will have to find new ways to boost GDP, or the financial dyspepsia could turn into something worse.

Big Pharma lacks motive to prep for new pandemics

10 Sep 2024

The WHO warned the next outbreak may be 20 times more deadly than Covid-19. Moderna’s Corona surge should encourage drugmakers to build up vaccine units for the next virus. But with investors giving little credit for one-off jabs, there’s not much incentive to invest.

Trump’s super-tariff is dangerously simple

9 Sep 2024

Slapping up to 20% on all imports, and triple that on Chinese goods, is easy to understand, and to implement. The consequences, though, are complex and likely to be mostly harmful. The best hope is that this bad idea, intended to boost US prosperity, leads to some better ones.

China’s global battery ram will be hard to stop

6 Sep 2024

The US and EU have erected tariffs to limit imports of electric vehicles. The People’s Republic has an even bigger lead in batteries. New tech gives rivals a chance to muscle in, but Chinese cellmakers’ head start means resisting giants like $115 bln CATL will come at a cost.

Private equity spoils of war bound to spread again

5 Sep 2024

Bigger funds and more fees have boosted buyout-firm valuations. Even at 26 times earnings, Blackstone trails smaller peer Ares. The shop led by Michael Arougheti is benefiting from a focus on credit and deploying its $450 bln, but an M&A revival and investing masses loom large.

Trade War II will be easy to lose for China

4 Sep 2024

The hit to its exports from higher US tariffs threatened by Presidential nominee Donald Trump would be severe. Beijing’s failure to abide by the terms of past truces will make de-escalation hard to achieve, so will its determination to export its way out of a growth slump.

Why Kamala Harris could be good for the planet

3 Sep 2024

The American vice president is being coy about how she will fight climate change if she beats Donald Trump to the White House. But Harris would have scope to step up action both at home and abroad – especially if the Democrats also do well in November’s congressional elections.

Raw economics will trump migration’s sour politics

2 Sep 2024

Nearly 900 mln people would like to live in another country, but most can’t move due to political and social opposition to foreigners. These attitudes are hard to shift. But deepening demographic crises mean a migration-fuelled boost to labour supply is critical for growth.

Donald Trump may dent but not dethrone King Dollar

26 Jul 2024

The US currency’s long-predicted demise has so far failed to materialise. The former president’s possible return to the White House is a reason to reconsider. While the greenback remains unassailable as the de facto global standard, its days of cyclical strength may be numbered.

China’s slump hints at a unique liquidity trap

25 Jul 2024

Record money supply has failed to revive growth. As the impact of monetary loosening fades, Beijing is ready to spend on welfare to encourage savers to consume. Inspiring the private sector to invest in a ‘socialist market economy’ is a trickier part of the problem to solve.

CrowdStrike in cursed grip of corporate klutz club

24 Jul 2024

The cybersecurity company’s 20%, or $17 bln, loss in value after a botched software update echoes those of bumblers from Chipotle to Citigroup. Many factors determine how long the stain lasts. Foremost among them is a CEO’s ability to persuade shareholders the slip was a one-off.

Corporate America revels in Supreme Court windfall

23 Jul 2024

The most influential set of business-related rulings in decades augurs sweeping US deregulation. One case alone may save the medical testing industry some $30 bln, as companies race to challenge many longstanding rules. Receptive judges would help pay dividends for years.

As rates fall, European banks can still rise

22 Jul 2024

Tight monetary policy turbocharged returns for lenders like $68 bln UniCredit. Yet lower interest rates don’t have to do the opposite. Central-bank cuts may boost loan demand and investment-banking fees, while keeping bad debt low, which should push up valuations.

Modern capitalism’s problem is too much prosperity

19 Jul 2024

Growth in productivity worldwide has collapsed since the 1970s. One explanation is that modern life in developed countries has become too comfortable as governments cushion the effects of economic cycles. Reviving capitalist economies may require accepting some level of hardship.