FINANCIAL NEWS

The threat of tough regulation in Asia sends crypto-currencies into a tailspin

THE ECONOMIST - Thu, 01/18/2018 - 16:48

IT HAS been another week of vertiginous swings in the prices of bitcoin and other crypto-currencies. This time, the moves have mostly been downwards, with some days seeing falls of over 20%. Views on this were as divided as they were during the giddy climb: did it mark the definitive bursting of a bubble as rapidly inflated as any in history (see chart)?

Asia provides both an explanation of this week’s sell-off and a glimpse of crypto-currencies’ future. The threat of a ban in bitcoin-trading in South Korea was the proximate cause of the plunge. As to the future, the question is which Asia? At one end of the spectrum...Continue reading

Categories: FINANCIAL NEWS

A weak market for football rights suggests a lower value for sport

THE ECONOMIST - Thu, 01/18/2018 - 16:48

Might Paul’s wages fall?

FOR years the cost of rights to broadcast major sports in America and Europe has trended in one direction—up. This gravity-defying law shapes the economics of modern sport: as television operators bid ever more substantial sums, teams take in more revenue and star-player salaries (and transfer fees) climb higher. In 2017 that trajectory continued as broadcasters splurged on rights for Champions League football matches for 2018-21.

This year gravity is reasserting itself. Top-flight football rights are out for tender in two major European leagues—England and Italy—and are expected to be put up for sale this year in France and Spain, too. Analysts expect relatively small increases in pay-outs (though Spain’s La Liga boss predicts a 30% rise)—and possibly a decline in Italy. “The happy days are over,” says Claire Enders of Enders Analysis, a research firm.

The chief problem is fundamental weakness at the bidding...Continue reading

Categories: FINANCIAL NEWS

Masayoshi Son may raise yet more cash to pump into tech

THE ECONOMIST - Thu, 01/18/2018 - 16:48

AT AN investor briefing in 2015, Masayoshi Son, chief executive of SoftBank, flashed up a picture of a goose. The company is like the bird of legend that produces golden eggs, he explained. In his quest to encourage more laying, Mr Son has taken SoftBank well beyond its telecoms business. The firm also manages the world’s largest tech-investment fund, the $100bn Vision Fund, which has a slew of wealthy backers, including Saudi Arabia’s Public Investment Fund and Apple.

Using both the firm and the fund, Mr Son has acquired stakes in tech companies at a frenetic pace, by one count opening his chequebook once every four days on average in 2017. Such shopping sprees do not come cheap. SoftBank is one of Japan’s most highly leveraged companies, with debt exceeding ¥15trn ($139bn), not least because of its purchase in 2013 of a controlling stake in Sprint, an American mobilenetwork operator.

News reports this week suggest SoftBank is now hatching a plan to raise ¥2trn by...Continue reading

Categories: FINANCIAL NEWS

Innovative materials from bamboo are helping a new industry to sprout

THE ECONOMIST - Thu, 01/18/2018 - 16:48

A bamboo spider rides high

FANNING out from the sodden delta of the Yangtze, and southward to the flanks of the Nanling mountains, over 6m hectares of emerald bamboo groves—one-fifth of the world’s reserves—flourish in China. Giant pandas nibble the softest shoots. Around 40bn pairs of disposable chopsticks are made from bamboo twigs annually in China, for use with everyday meals. Steel scaffolding is still often shunned for bamboo on skyscrapers under construction in even the ritziest parts of Hong Kong. The history of the grass is colourful, too. Before paper, Chinese wrote on bamboo slips; they used bamboo tubes for irrigation, and later stuffed them with gunpowder to ignite muskets.

Yet for all its importance and abundance bamboo is “China’s forgotten plant”, says Martin Tam, an expert in Hong Kong. To demonstrate its potential, he greets visitors with a can of bamboo juice, proffers a bamboo business card, and gestures to a bamboo armchair near his desk....Continue reading

Categories: FINANCIAL NEWS

Chinese tech companies plan to steal American cloud firms’ thunder

THE ECONOMIST - Thu, 01/18/2018 - 16:48

WHICH of the world’s tech giants boasts the fastest-growing computing cloud? Many would guess either Amazon or Google, which operate the world’s largest networks of data centres, but the correct answer is Alibaba. In 2016 the cloud-computing business of the Chinese e-commerce behemoth grew by 126%, to $675m. Growth is unlikely to slow soon. Simon Hu, president of Alibaba Cloud, wants it to “match or surpass” Amazon Web Services (AWS) by 2019.

That is a stretch: AWS is estimated to have generated revenues of about $17bn in 2017. But Alibaba’s cloud (known locally as Aliyun) is one of a thriving group: China’s cloud-computing industry as a whole is growing rapidly. Even more intriguing than its speedy expansion is the fact that China’s cloud is different to that of Western firms in important ways.

The technology that China’s cloud-computing providers use is not so dissimilar. Indeed, the fact that Western tech firms have released much of the necessary code as open-source...Continue reading

Categories: FINANCIAL NEWS

After a huge loss on old reinsurance contracts, GE contemplates a break-up

THE ECONOMIST - Thu, 01/18/2018 - 16:48

Flannery kitchen-sinks it

DECISIONS made long ago, and often long since forgotten, can come back to haunt. General Electric (GE), an American industrial conglomerate, has discovered that to its chagrin. On January 16th the company said it would have to take a $9.5bn charge (before tax) on old reinsurance contracts in its financial arm, GE Capital—despite exiting the insurance business in the mid-2000s. The firm also said it would have to set aside up to $15bn of additional reserves for GE Capital over seven years. The conglomerate had already been struggling, with its share price down by over 40% in the past year. News of the latest hit, which the company’s chief executive, John Flannery, called “deeply disappointing”, sent its shares plunging by a further 3% on January 16th alone.

The issue at hand concerns reinsurance contracts in GE Capital’s American life- and health-insurance portfolio. Jack Welch, an idolised former GE boss, had massively expanded the...Continue reading

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The hedge-fund delusion that grips pension-fund managers

THE ECONOMIST - Thu, 01/18/2018 - 16:48

HEDGE-FUND managers may be feeling quietly smug about their performance in 2017. They returned 6.5% on average, according to Hedge Fund Research, a data provider, their best year since 2013.

But those returns do not really suggest that they are masters of the investing universe. The S&P 500 index, America’s main equity benchmark, returned 21.8%, including dividends, last year. More tellingly, a portfolio split 60-40 between the S&P 500 and a mixture of government and corporate bonds (an oft-used benchmark for institutional portfolios) would have returned 14.8%. Last year was the fifth in a row when hedge funds underperformed the 60/40 split (see chart).

That ought to be a salutary lesson for those institutions who think that backing hedge funds is the answer to their prayers. Despite the highs recorded by stockmarkets, many employers are struggling to fund their final-salary pension promises. In 2016 the average American public-sector plan was just 68%-funded, according to the Centre for...Continue reading

Categories: FINANCIAL NEWS

Something doesn’t ad up about America’s advertising market

THE ECONOMIST - Thu, 01/18/2018 - 16:48

IMAGINE a world in which you are manipulated by intelligent advertisements from dusk until dawn. Your phone and TV screens flash constantly with commercials that know your desires before you imagine them. Driverless cars bombard you with personalised ads once their doors lock and if you try to escape by putting on a virtual-reality headset, all you see are synthetic billboards. Your digital assistant chirps away non-stop, systematically distorting the information it gives you in order to direct you towards products that advertisers have paid it to promote.

Jaron Lanier, a Silicon Valley thinker who was an adviser on “Minority Report”, a bleak sci-fi film, worries that this could be the future. He calls it a world of ubiquitous “digital spying”. A few platform firms, he fears, will control what consumers see and hear and other companies will have to bid away their profits (by buying ads) to gain access to them. Advertising will be a tax that strangles the rest of the economy, like medieval...Continue reading

Categories: FINANCIAL NEWS

Amazon narrows list to 20 for its second headquarters

AP Business - Thu, 01/18/2018 - 16:32
NEW YORK (AP) -- Amazon, which is on the hunt for a second home, said Thursday that it narrowed its choices to 20 locations from the 238 proposals it received....
Categories: FINANCIAL NEWS

Credit costs, tax reform take bite out of Home BancShare's profit

AMERICAN BANKER - Thu, 01/18/2018 - 16:30
The Arkansas company's earnings fell 52% from a year earlier, reflecting a higher provision, a revaluation of its deferred tax asset and higher costs following a series of bank acquisitions.
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BNY Mellon's 4Q assist from tax law: $427 million

AMERICAN BANKER - Thu, 01/18/2018 - 16:30
BNY Mellon plowed some of its tax law savings into restructuring efforts.
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Emirates throws lifeline to Airbus’s A380

FINANCIAL TIMES - Thu, 01/18/2018 - 16:27
Order for 20 aircraft with an option on 16 more carries a $16bn catalogue value
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Mulvaney requests 'zero' money for CFPB

AMERICAN BANKER - Thu, 01/18/2018 - 16:14
Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, has requested no funding from the Federal Reserve in the second quarter and instead will use reserves to fund the agency.
Categories: FINANCIAL NEWS

Emirates throws Airbus A380 a lifeline with $16 billion deal

AP Business - Thu, 01/18/2018 - 16:13
DUBAI, United Arab Emirates (AP) -- The Middle East's largest airline, Emirates, is throwing Airbus a lifeline for its troubled A380 jumbo jet....
Categories: FINANCIAL NEWS

A list of the 20 places still vying for Amazon's 2nd HQ

AP Business - Thu, 01/18/2018 - 16:13
Here's a list of the 20 places still in contention for Amazon's second headquarters:...
Categories: FINANCIAL NEWS

Qualcomm Secures EU Approval for NXP Deal

WALL STREET JOURNAL - US. BUSINESS NEWS - Thu, 01/18/2018 - 16:06
Qualcomm won conditional European Union antitrust approval for its $39 billion acquisition of NXP Semiconductors.
Categories: FINANCIAL NEWS

Trump says no immigration deal without border wall

FINANCIAL TIMES - Thu, 01/18/2018 - 16:06
President’s hardline comments complicate negotiations as government shutdown looms
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Fee income, lending niches help boost BB&T profits 4%

AMERICAN BANKER - Thu, 01/18/2018 - 15:58
Highlights at the North Carolina bank included deposit service charges, CRE lending and margins, which all offset one-time costs related to tax reform.
Categories: FINANCIAL NEWS

Blockchain being considered to resurrect crisis-era mortgage product

AMERICAN BANKER - Thu, 01/18/2018 - 15:43
A group of big financial institutions wants to use the blockchain to help resurrect the packaging of home mortgages into securities, a business that almost destroyed the global banking system in 2008.
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