Most stockmarket returns come from a tiny fraction of shares

IN his book about the use of language, “The King’s English”, Kingsley Amis describes a tug-of-war. On one side are “berks”, careless and coarse, who would destroy the language by polluting it. On the...

Sino-American interdependence has been a force for geopolitical stability

IN THE 1990s America and Europe had a trade dispute over bananas. No one worried that tanks might soon roll as a result. But trade is about more than economics. The European Union, the...

As Western lenders retreat, African banks see an opportunity

ADE AYEYEMI’S office in Lomé, the capital of Togo, is a good place to think about crossing borders. Ghana is ten minutes’ drive away. From his window the boss of Ecobank can watch trucks...

Rate rises affect global markets—and may feed back to America

ON JUNE 13th the Federal Reserve raised its benchmark interest rate by a quarter of a percentage point, the seventh such increase since it began shouldering rates away from zero in December 2015. Markets...

In developing countries, many people cannot afford not to work

AMERICA’S unemployment statistics attract close attention, even from presidents. Early on June 1st President Donald Trump tweeted that he was looking forward to the latest figure (3.8%), released that morning. China’s unemployment numbers, by...

President Trump’s tariffs have united his opponents at home and abroad

“HOW am I going to compete?” asks Sohel Sareshwala. He runs Accu-Swiss, a Californian company making customised components for the manufacture of semiconductors and cars. President Donald Trump’s tariffs on steel and aluminium, both...

The number of new banks in America has fallen off a cliff

THE single-storey main branch of the Texas Hill Country Bank, in Kerrville, sits at the back of a tired shopping centre, in the shade of a six-storey Wells Fargo building. When Roy Thompson, the...

Turkey’s central bank has streamlined its fight against inflation

THE baroque era in Turkish architecture lasted deep into the 19th century, leaving behind lavish buildings, such as the Lily Mosque in Istanbul and waterside pavilions that seem to float on the Bosphorus. The...

Italy’s political crisis is roiling financial markets once more

HERE we go again. Financial markets don’t much like uncertainty. Thanks to Italy’s politicians, in recent days they have had plenty. By May 30th some calm had returned: it seemed possible that a pair...

Why even bears about the government-bond market can find merit in Treasuries

JOHN KENNETH GALBRAITH, a quotable economist, observed that one of the deeper mysteries is why, in a falling market, there is still a buyer for every seller. It is a conundrum that bond investors...

Dear oil helps some emerging economies and harms others

When they are not fretting about the American dollar or Chinese debt, policymakers in emerging economies keep a close eye on the oil market. The price of Brent crude has risen by nearly 50%...

Why it makes sense to invest in Treasury bonds

JOHN KENNETH GALBRAITH, a quotable economist, observed that one of the deeper mysteries is why, in a falling market, there is still a buyer for every seller. It is a conundrum that bond investors...

Bad loans remain a concern in Italy and across southern Europe

ITALY’S next government, a coalition between the populist Five Star Movement and the far-right Northern League, is giving investors plenty to worry about. Leaked plans, hastily abandoned, suggested it might want to leave the...

NAFTA negotiators are struggling to meet a congressional deadline

AS FAR back as the campaign trail, President Donald Trump had promised to renegotiate or rip up the North American Free Trade Agreement (NAFTA). But Paul Ryan, the Speaker of the House of Representatives,...

How Turkey fell from investment darling to junk-rated emerging market

MANY of the most famous hedge-fund trades have been bets that things were about to go wrong. Think of Enron’s bankruptcy or the souring of subprime mortgage bonds in America. The best trade made...

China’s vanished current-account surplus will change the world economy

NOT long ago China was a leading culprit in global economic imbalances. Whether blame was ascribed to its undervalued yuan or its frugal people, the problem seemed clear. China was selling a lot abroad...

A WTO ruling on aircraft subsidies raises the risk of a tariff war

THE manufacture of airliners may be the world’s most globalised industry. Only two firms make big civil jets: Boeing of America and Airbus of Europe. Most of their revenues—55% for Boeing and 70% for...

Big investors are giving university digs an upgrade

The way we wereTHE words “Unite Students” are emblazoned on Aston University’s residence halls and on signs all over campus. They are the name of a firm that builds, buys and manages student accommodation...

A Canadian startup applies machine-learning to corporate bond issuance

WITH the exception of a few governments big enough to run their own auctions, anyone wishing to issue bonds must seek bankers’ help. A hefty fee will buy assistance in calibrating the size, structure...

Lessons to a columnist’s previous self

IN A British television show, “Doctor Who”, the titular character is able to travel anywhere in time and space in his Tardis police box. Given access to that technology, what useful message would this...

Argentina’s economic woes – Macrinomics

ON MAY 8th, as the peso continued to tumble, Mauricio Macri, Argentina’s president, addressed his nation on television. His government had opened negotiations with the IMF for a credit line in order to “avoid...

The world’s biggest Muslim country wants to boost sharia finance

Still pretty interestingTHE Indonesia Stock Exchange greeted its latest listing on May 9th: that of BRIsyariah, the Islamic arm of state-controlled Bank Rakyat Indonesia, the country’s biggest bank by assets. The initial public offering...

Barriers to entry

SCIENCE is supposed to be the ultimate meritocracy. People might sneer at a thinker’s background or training, but there can be no arguing with a powerful new idea which explains the world better than...

Sluggish exports leave India needing to curry favour with investors

More like these, pleaseIN THE spring of 1991, Indian officials desperate to fend off a balance-of-payments crunch secretly airlifted 20 tonnes of gold confiscated from smugglers into the vaults of UBS, a Swiss bank....

Make Bank of America great again

IN THE skyscraper that is Bank of America’s New York headquarters, the chief executive, Brian Moynihan, looks relaxed. The bank has just announced record first-quarter earnings. Its return on equity is comfortably in double...

A bondholder finds a sneaky way to trigger insurance against default

IN 2013 Codere, a Spanish gaming firm, owed money it could not repay. Its bonds were trading at just over half face value. Blackstone, a private-equity firm, offered it a cheap $100m loan. But...

European universal banks can succeed. But can Deutsche Bank?

AFTER just 18 days as Deutsche Bank’s chief executive, Christian Sewing had two tasks to perform on April 26th. The easy one, inherited from his ousted predecessor, John Cryan, was to report predictably glum...

Even though more people are doing it, studying is still worthwhile

WHICH has provided a better return in recent decades: America’s stockmarket or education? The latter, according to a research review by George Psacharopoulos and Harry Patrinos for the World Bank. The two economists looked...

Where will the next crisis occur?

INTEREST rates are heading higher and that is likely to put financial markets under strain. Investors and regulators would both dearly love to know where the next crisis will come from. What is the...

Hong Kong defends its dollar peg in both directions

THE Hong Kong dollar is one of the most and least manipulated monies in the world. For over 34 years the territory’s monetary authority, the HKMA, has kept it pegged to America’s currency at...

America’s Treasury refrains from naming any currency manipulators

MOST governments are happy when foreigners want their bonds, especially when those foreigners are long-term holders, like central banks. But America is different. It worries that some foreign governments buy its debt to keep...

Indicators that signal financial-market trouble are flashing

WATCHING financial markets can be like watching a horror film. A character walks into the darkness alone. A floorboard creaks. The latest spooky sign is the spread between the three-month dollar London interbank offered...

Economists still lack a proper understanding of business cycles

THE aftermath of the 2007-08 financial crisis ought to have been a moment of triumph for economics. Lessons learned from the 1930s prevented the collapse of global finance and trade, and resulted in a...

Catching the bitcoin bug – Buttonwood

SINCE the heady days of late 2017 and January of this year, crypto-currencies have gone into retreat. Bitcoin, the best-known example, is now worth just a third of its value at its peak (see...

The next Japan is not China but Thailand

TWENTY years ago Thailand was the most torrid of emerging markets. After a spell of overheated growth and wide current-account deficits, it had exhausted its foreign-exchange reserves and lost its currency’s peg to the...

A trade war between America and China takes shape

TALK of tariffs is in danger of developing into cries of trade war. On April 3rd America published a list of some 1,300 Chinese products it proposes to hit with tariffs of 25%. Just...

America’s trade strategy has many risks and few upsides

AMERICA’S president claims to view China as a friend. But the friendship is going through a rocky patch, to say the least. America’s trade deficit with China, “the largest deficit in the history of...

China wants to reshape the global oil market

TRADITIONALLY, to count as an oil power a country had to be a big producer of the black stuff. China is the world’s biggest importer but still wants to break into that exclusive club....

The average American is much better off now than four decades ago

JUST how bad have the past four decades been for ordinary Americans? One much-cited figure suggests they have been pretty bad. The Census Bureau estimates that for the median household, halfway along the distribution,...

India’s economy is back on track. Can it pick up speed?

IT IS easy to be awed by the Indian railway network. The 23m passengers it carries daily travel, in total, over ten times the distance to the sun and back. It is just as...

Insurers and undertakers profit as people prepay their last bill

With all the trimmings“WHEN are you thinking of dying?” asks John Cleese, a British comedian, in a recent television ad. Dressed as the Grim Reaper, he addresses the viewer as he prepares a cup...

More market volatility seems likely

“FASTEN your seat belts. It’s going to be a bumpy night.” Those famous lines of Bette Davis in “All About Eve” may turn out to be the motto for the markets in 2018. After...

Europeans fret that Chinese investment is a security risk

“WE ARE not naive free traders. Europe must always defend its strategic interests,” said Jean-Claude Juncker, the president of the European Commission, last year as he introduced plans to screen foreign investment into the...

Wall Street looks overvalued – Buttonwood

FEW measures of stockmarket valuation are as controversial as the cyclically adjusted price-earnings ratio, or CAPE. American equities have looked expensive on this measure for most of the past 20 years, which is why...

What if China corners the cobalt market?

COBALT derives its name from Kobold, a mischievous German goblin who, according to legend, lurks underground. For centuries it vexed medieval miners by lookinglike a valuable ore that subsequently turned into worthless—and sometimes noxious—rubble....

America’s public markets are perking up. Can it last?

FOR years, discussions of America’s public markets have usually featured a lament for their dwindling appeal. According to Jay Ritter of the University of Florida, the number of publicly listed companies peaked in 1997...

How digitisation is paying for DBS

MOST banks gush about digital technology, fearing all the while that some born-digital usurper, large or small, will do to them what Amazon has done to retailers, Uber to taxi-drivers and Airbnb to hoteliers....

Active fund managers hold fewer and fewer stocks

THE past decade has been tough for conventional “active” fund managers, who try to pick stocks that beat the market. They have been losing business to “passive” funds—those that try to replicate a benchmark,...

Capital is on its way to America, but for bad reasons

ACCORDING to President Donald Trump, money is pouring into America from abroad. The tax reform he signed into law in December means American firms can no longer defer paying taxes on profits left sitting...

Russia’s credit rating rises; Brazil’s falls

BRAZIL and Russia, the third- and fourth-biggest emerging economies, have much in common beyond their size. Each boasts annual GDP per person of around $10,000, which depends more than either would like on natural...
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