The Big View

Americans’ travel bug is too much of a good thing

18 Jul 2024

More US citizens are going to Europe than vice versa, creating a $27 bln tourism-related trade gap, the biggest in over two decades. Sometimes there’s a simple reason: it can be cheaper to see Taylor Swift abroad. But a persistent travel deficit could have ominous symbolism.

European boards have too little skin in the game

17 Jul 2024

Non-executive directors at big US companies get 60% of their pay in equity. That’s rare in Britain, France and Germany, where many board members own a slither of stock. Cash fees warp incentives, discourage engagement, and risk making Europe’s capital markets less competitive.

Inflation teaches five lessons for the next crisis

16 Jul 2024

After taming a 9% rise in prices without breaking economies, US Fed Chair Jay Powell and other central bankers are poised to pat themselves on the back. There’s also an opportunity to improve the playbook. Among the useful takeaways: embrace taciturnity, flexibility and humility.

World polycrisis hangs on US politics

15 Jul 2024

The shocking attempted assassination of Donald Trump doesn’t just unveil the fragility of the US political environment. The globe also has much at stake in the outcome of November’s election. A victory for the former president would carry risks for Ukraine, trade and the planet.

Victorian rail mania has lessons for AI investors

12 Jul 2024

Excitement over artificial intelligence has spurred a wave of investment. In the mid-1840s, British speculators similarly went wild for another capital-intensive technology: railways. The historic boom and subsequent bust provide a salutary warning for today’s hyped-up markets.

Wall Street places reluctant bet on Trump

11 Jul 2024

Financial folk prefer Republicans over Democrats when it comes to political donations. They dislike President Joe Biden’s regulatory drive. But Donald Trump’s return could roil markets, widen divisions and expand deficits. No wonder some would prefer one of their own in the race.

EU’s China trade weak spots hide in plain sight

9 Jul 2024

Beijing may retaliate after Brussels imposed tariffs on Chinese-made electric vehicles. Of the 5,000 product groups the People’s Republic imports from the EU, many are too crucial or too small to bother with. But luxury goods, petrol cars and some foods are plausible targets.

Big Beer’s low-alcohol Plan B has too much froth

9 Jul 2024

Carlsberg, AB InBev and Asahi have set toppy targets for their teetotal products. Health concerns and Gen Z’s aversion to alcohol imply that’s a safe bet. But at $13 bln the market is still puny – and if the likes of Coca-Cola muscle in there will be a smaller barrel to share.

Global economy finds new ways to keep growing

8 Jul 2024

Despite fears of a slowdown, world GDP is expanding at 3.5% a year, faster than in 2023. As the US engine loses thrust, Europe and emerging markets are picking up. A sluggish China and geopolitical confrontations are risks. But for now, investors can enjoy a Goldilocks moment.

Why AI may fail to unlock the productivity puzzle

4 Jul 2024

The world’s richest economies are grappling with slowing growth in output. Many investors believe artificial intelligence can provide a much-needed boost. But four features of the technology suggest the benefits will be limited – and might even achieve the opposite outcome.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

Tougher trustbusting will last beyond US election

3 Jul 2024

In just a few years, competition cops Jonathan Kanter and Lina Khan reversed a lax consensus that existed for decades. The November ballot threatens to derail some of their efforts. Much of the agenda has staying power, however, both in the fine print and the bigger principles.

New UK government can claim competence dividend

2 Jul 2024

Eight years of political upheaval and economic uncertainty raised the risk premium for investors. Now the centrist Keir Starmer is set to take over, while France and the US face electoral turmoil. For the first time since the Brexit vote, the country looks a relative safe haven.

The risk of a euro crisis is rising

1 Jul 2024

While political instability in France adds to the single currency’s fragility, it probably won’t trigger another meltdown. But euro zone members’ high debts, pressing spending needs and low growth at a time of rising nationalism and geopolitical conflict are storing up trouble.

The economics of AI points to value of good data

28 Jun 2024

Investors chasing the artificial intelligence boom have pushed up the value of $3 trln chip supplier Nvidia and big cloud computing firms. Yet AI models have dubious benefits unless they are trained on reliable information. Moreover, high-value data makes them cheaper to develop.

Miner M&A spotlight may shift to Teck and Freeport

27 Jun 2024

BHP’s failed pitch for Anglo American leaves a vacuum for keyed-up mining bankers to fill. Canada’s $25 bln Teck and $70 bln US rival Freeport-McMoRan both offer purer-play copper options. Either could become targets for bigger fish, or even drive consolidation themselves.

Banks grab AI-generated tiger by the tail

26 Jun 2024

Sleeker IT systems, stronger fraud defenses and other algorithmic upgrades could yield nearly $200 bln of profit for lenders by 2028, one study finds. An efficiency revolution isn’t evident in valuations, however. The new tech may pay higher dividends to customers than investors.

UK investment crisis calls for taxes and U-turns

25 Jun 2024

Budget strictures could see public expenditure sink from 2.4% of national income now to 1.8% by 2029. Businesses are unlikely to pick up the tab. The winner of Britain’s July 4 election can redress domestic underinvestment by taxing more – and moving the fiscal goalposts.

How to scale up the G7’s $50 bln Ukraine loan

23 Jun 2024

The club of rich democracies navigated many obstacles to lend to Kyiv. They found ways that could side-step U.S. Congressional approval and avoid increasing EU countries’ debts. They could use similar methods if they are prepared to give Ukraine the $320 billion it really needs.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.