Breakingviews

Believe bonds not stocks on Brexit damage

June 30, 2016

Stocks have rebounded after the referendum, suggesting Britain’s prospects aren’t too grim. Yet falling gilt yields point to bleaker outcomes. In the absence of hard economic data, a post-vote slump in consumer morale supports the pessimistic thesis.

Austerity has no place in post-Brexit Britain

June 27, 2016

Chancellor George Osborne has since 2010 aimed to cut public debt and deficits in the name of financial stability. He may now need to row back to cope with any post-vote economic slowdown. Investors’ reaction so far suggests his fiscal rigour was over-zealous in the first place.

Money trail shows China sticking to bad habits

May 16, 2016

Total credit jumped again in April, suggesting Beijing is making little progress weaning the economy off its addiction to debt. Infrastructure and property investment are still expanding quickly. Despite renewed talk of reform, growth still seems to be the main priority.

Dixon: Vote to quit EU could tip UK into recession

April 18, 2016

A victory for Brexit will trigger political turmoil and acrimonious divorce talks. Investment will grind to a halt as firms wait for the fog to clear. That could cause a recession.

Bank CoCos deserve all the brickbats

March 18, 2016

Deutsche Bank’s John Cryan thinks new hybrid bank bonds are flawed. Market turmoil is forcing regulators to clarify when baffled investors get coupons. Yet unless there is also standardisation of when they convert from debt to equity, CoCos will always be prone to death spirals.

Peugeot could rev revival by scrapping luxury line

February 24, 2016

The French group has become one of Europe’s most profitable mass-market carmakers under boss Carlos Tavares, with a 5 pct operating margin in 2015. But a costly plan for a new premium brand risks spoiling the performance. Junking the idea would speed an already healthy recovery.

Chinese banks start new year with old bad habits

February 16, 2016

Lenders dished out $385 bln in new loans in January as the authorities pumped cash into the slowing economy. Fresh credit can stimulate spending and help companies repay overseas borrowings. But adding to the overall debt pile only makes the eventual cleanup even more painful.

Unruly markets could derail Abenomics

February 12, 2016

A weak yen and buoyant stocks were key to Japanese Prime Minister Shinzo Abe’s fight against deflation. A flight from risk has reversed those gains and overwhelmed the Bank of Japan’s surprise shift to negative interest rates. The turmoil threatens Abe’s whole economic project.

Darkening German economy could be Merkel’s nemesis

February 9, 2016

Falling industrial production and weak exports suggest emerging markets may be chipping away at Germany’s economic miracle. Chancellor Angela Merkel has ridden out a refugee crisis. But if economic weakness is allowed to reach labour markets, her political fate could be sealed.

China index: Xi’s annus horribilis

February 1, 2016

Breakingviews’ Tea Leaf Index may have ended the year on a modest high, but a look back over 2015 shows China’s economy moving slowly. Sagging steel production, exports and rail freight contributed to the lowest 12-month average since President Xi Jinping first took office.