Breakingviews

Edward Hadas: The uses and abuses of GDP

By Edward Hadas
May 20, 2015

The standard measure of output is a useful indicator of short-term trends. It can also help compare levels of development. In poor countries, faster GDP growth is a good policy goal. But in richer countries, GDP-think misses important economic changes and challenges.

Bond turmoil signals new era of return-free risk

May 15, 2015

Forget the risk-free rate - investment safe havens are in short supply. Cash can be costly. Gold is a dollar proxy. And recent gyrations in the largest debt markets have undermined the concept of risk-free returns. When this last compass fails, investors are really at sea.

EU growth surprises hide clear pattern

By Edward Hadas
May 13, 2015

Recovering Spain was still the GDP star in the first quarter, but traditionally strong Germany did no better than perpetually stagnant Italy, while France defied gloomy predictions and the UK disappointed. Behind the mix-up, the recoveries are real, but mostly slow and unsteady.

Ahold-Delhaize is a 25 bln euro deal full of hope

May 11, 2015

The shares of both Dutch-listed grocer and its potential Belgian-listed target were up strongly on reports of renewed merger negotiations. A combination of the two U.S.-centric companies makes sense. But financing could be an issue, and the American market will still be tough.

UBS pulls ahead of both activist and rivals

May 5, 2015

The Swiss lender’s Q1 profit leapt 88 pct to 2 bln francs. A strong return at the leaner investment banking unit further discredits Knight Vinke’s case for an exit. And with better capital ratios on both main metrics, UBS is piling pressure on less decisive competitors.

French investment banking has less than meets eye

April 23, 2015

Returns at BNP Paribas’ and Societe Generale’s trading and advisory businesses are better than peers. But the pair’s divisions carry less equity against gross assets than rivals. Before dashing in, investors should consider what the return would be with greater leverage restraint.

EU migration policy is economically short-sighted

By Edward Hadas
April 20, 2015

For many desperate and poor people, Europe is the nearest safe place to go to make a living. A sensible migration policy would recognise the region’s international appeal and manage the reality. But inward-looking politics make for bad economics and heighten the risks to life.

Review: Some of what is wrong with economics

By Edward Chancellor
April 17, 2015

Meghnad Desai mocks his fellow economists for not seeing trouble ahead during the early 2000s credit bubble. The retired professor wisely calls for more study of history and a less narrow perspective, but he is still too conventional. He ignores the crucial financial cycle.

Europe’s credit boom locks in mediocre returns

April 16, 2015

Investors are throwing money at European companies. Carrefour and Danone paid little over 1 pct a year to borrow for a decade; Novartis got 20-year funds at similar levels. A Breakingviews calculator shows how bond buyers’ generosity could backfire.

Hairy deals mean European animal spirits returning

April 15, 2015

Shell-BG and Nokia-Alcatel are complicated, long-mooted deals finally coming to fruition. Exor’s move is just plain ballsy. American firms powered last year’s $3.5 trln global M&A bonanza. With Old World boards and bosses becoming more daring, Europe looks set to catch up.