The Big View

Change is coming to UK’s macroeconomic policy

31 May 2024

The opposition Labour Party, the strong favourite to win the upcoming election, has promised continuity in its fiscal and monetary approach. An ugly economic inheritance at home and global challenges abroad make that ambition unrealistic. Investors should prepare for a shift.

Capital One scales banking’s Mount Improbable

30 May 2024

The US lender’s $35 bln bid for Discover will make it king of the hill in credit-card debt, but to realise his ambitions, boss Richard Fairbank has a lot of people to win over. That includes not just regulators and merchants but his own investors – and maybe then the world.

CEO pay is hidden factor in US relisting trend

29 May 2024

Plumbing supplier Ferguson almost doubled its boss’s compensation after moving to New York, while $55 bln CRH is reviewing its remuneration after switching too. It’s not something boards like to talk about. But investors might support US-style pay if it attracts the best talent.

Fed should be independent, not untouchable

28 May 2024

Allies of Donald Trump want to blunt the Federal Reserve’s autonomy if the former US president wins a second term. That would be economically disastrous. But a mighty central bank with a $7 trln balance sheet requires better scrutiny, especially outside monetary policy.

Japan’s new widowmaker trade may have shorter life

23 May 2024

For more than two decades, investors who bet against Japanese government bonds lost their shirts. Taking a long position in the yen has been similarly painful recently as the currency dropped by 50% against the dollar. Yet there are several reasons why the slide could reverse.

Copper’s M&A mania obscures a dysfunctional market

23 May 2024

The red metal is the main driver of BHP’s $46 bln bid for Anglo American. But despite expectations that the energy transition will boost demand, prices are still too low to tempt miners into expanding production. Mergers may help break the deadlock, but aren’t certain to do so.

The $5 trln AI boom could both succeed and fizzle

21 May 2024

Tech giants are making hefty investments in artificial intelligence in the hope of gigantic future profits while enjoying frothy valuations. Yet past frenzies in railways and telecom show capital-intensive innovations can change the world while leaving investors short-changed.

German consumer is poor substitute for China trade

21 May 2024

Consumption is up but won’t be enough to lift the country out of its funk, with growth of just 0.2% this year. Exports to the People’s Republic are threatened by worsening relations between Brussels and Beijing. Meanwhile a split Berlin government looks unable to launch reforms.

Pricey stocks overlook the world’s troubles

19 May 2024

Trade tension between the US and China will dampen growth, while rising defence spending means higher taxes and lower profits. Equity markets, now at record highs on both sides of the Atlantic, aren’t cheap. Add in these headwinds and investors have more downside than upside.

Private credit wonder drug works in limited dose

17 May 2024

The quantity of loans channelled directly to companies by funds has exploded to more than $2 trln. The economic benefits of diversified lending just about make up for the risks. The challenge is making sure financial innovation does not starve banks to death.

Japan’s value push will turn into a shove

16 May 2024

Shareholder meetings next month will help gauge progress in the official campaign to boost corporate performance. Toyota, SoftBank and Fast Retailing have not signed up. Given the importance of ensuring resilience in the $4.2 trln economy, Tokyo is likely to apply more pressure.

Bank treasurers hold keys to an investor mystery

15 May 2024

Executives who manage lenders’ exposure to interest-rate swings are more important than ever. But it’s tough for shareholders to pick their way through the complex hedging programmes of $570 bln JPMorgan and its peers, adding volatility to their share prices.

Memo to McKinsey: Avoiding Arthur Andersen’s fate

14 May 2024

After coughing up $1 bln for opioid-related settlements, the elite consultant may face criminal charges, too. There are notable differences from when a 2002 US indictment killed the auditing giant. But the looming existential threat increases the likelihood of costly concessions.

The world can survive a strong dollar – for now

13 May 2024

The greenback has gained 17% against major currencies in three years. Other countries avoided repeating past crises through better fiscal policies and less foreign borrowing. But in the long run a mighty buck will put economies under stress, especially in emerging markets.

Economic hard landing is delayed but not cancelled

10 May 2024

It’s two years since the Federal Reserve started hiking interest rates, yet economic growth has picked up and stocks have hit new highs. There are several reasons why the US economy is less responsive to tighter monetary policy. But it cannot avoid the effects indefinitely.

New ASML CEO’s job is harder than it might look

9 May 2024

The $360 bln Dutch firm is the sole maker of machines that produce the most advanced chips for Intel and TSMC. New boss Christophe Fouquet effectively runs a monopoly. But he still faces risks from staff retention, China-US spats, and as-yet-opaque risks to ASML’s domination.

Securitization limbers up for the oddball Olympics

8 May 2024

The race is on to find esoteric assets that can be sliced, diced and sold to investors. Taco Bell receipts, IP addresses and Picassos have so far cleared the bar. While many buyers of the $150 bln-plus in unusual deals will recoup their gold, some may overstretch.

Europe has little to fear as ECB and Fed part ways

7 May 2024

The European Central Bank is set to cut rates before the US Federal Reserve for the first time in its history. Hardliners warn that will weaken the euro and feed inflation. But the effects are likely to be muted. Besides, a lower currency helps exports more than it hurts imports.

BHP bombshell puts South African mining in a hole

6 May 2024

The Australian miner’s $39 bln tilt at Anglo American highlights the decline of the country’s once-mighty industry. Blocking the deal would send an even worse signal about South Africa as an investment destination. Pretoria would do better to push for a more acceptable outcome.

Inditex’s golden era is coming to an end

3 May 2024

Asian disruptor Shein is threatening the $142 bln Zara owner’s fast-fashion crown with ultra-cheap wares. Dismissing the risk may threaten its market share. To protect the Spanish giant’s business, CEO Óscar García Maceiras has plenty of cash but no obvious M&A solution.