Jerome Powell's game of Kerplunk

THERE is an old children's game called Kerplunk. It is similar in concept to Jenga. Marbles are poured into a plastic tube through which sticks have been threaded. The players take it in turns to remove the sticks with the aim of avoiding the fall of marbles. The normal pattern is for a few marbles to drop until the unlucky player removes the strut that keeps up the rest. A noisy crash ensues.

Jerome Powell (pictured), the new chairman of the Federal Reserve, may be that unlucky player. Janet Yellen, his respected predecessor, managed to pull out five sticks (ie, raised rates five times) before she departed, leaving both the economy and the markets in fine shape. Doubtless, Ms Yellen was not happy when President Donald Trump denied her a second term. But it may have been a blessing in disguise. The task of the central banker gets a lot more difficult from here.

Mr Powell's first Congressional testimony as Fed chair yesterday was seen as bullish on the economy...Continue reading

from Business and finance https://www.economist.com/blogs/buttonwood/2018/02/fed-and-markets?fsrc=rss
https://www.economist.com/sites/default/files/20180303_BLP507.jpg

Forecasting congressional votes could yield juicy returns

STOCK traders hang on central bankers’ every utterance. They scan news sites for market-moving events, such as terrorist attacks, and monitor President Donald Trump’s tweets for hostility towards publicly traded firms. Curiously, though, few analyse goings-on in Congress, which can shift the course of the world’s largest economy. Jonathan Strong, a former reporter (including at Roll Call, a sister publication of The Economist), hopes to change that.

With the help of 0ptimus, a firm of Republican data wonks, he has spent three years building Legis, an algorithm powered by vast quantities of data and a neural network (a computer system modelled on the human brain), which predicts the outcome of congressional votes. Each of the 44 votes it has forecast so far has been correct. Last year a hedge fund (which does not want to be named) began trading derivatives using its predictions.

According to legend, carrier pigeons brought news of the Duke of Wellington’s...Continue reading

from Business and finance https://www.economist.com/news/business-and-finance/21737474-number-crunching-neural-network-helps-traders-profit-forecasting-congressional?fsrc=rss
https://www.economist.com/sites/default/files/images/2018/02/articles/main/20180303_fnp502.jpg

A brawl on a cruise ship raises worries about security at sea

Money stolen by Bernie Madoff is still being found

WHEN bankruptcy trustees were appointed over a hectic weekend late in 2008, there seemed no end to the losses caused by the collapse of Bernie Madoff’s Ponzi scheme. Cash in the bank was no more than $150m. But the losses have been less, and the assets available for compensation greater, than had been feared.

On February 22nd Irving Picard, the bankruptcy trustee overseeing the liquidation of Mr Madoff’s firm, announced that a fund set up to reimburse customers would make its ninth distribution, of $621m, bringing the total handed out so far to $11.4bn. Another $1.8bn is held in reserve for contested claims. This is on top of a separate distribution of $723m last November from a separate fund run by the Department of Justice. Another $3bn remains to be distributed in that fund and the bankruptcy trustees hold out hope that substantially more will be recovered and returned.

Mr Madoff, who will turn 80 in April, is serving a 150-year sentence in a North Carolina prison. At his...Continue reading

from Business and finance https://www.economist.com/news/business-and-finance/21737446-almost-decade-after-ponzi-scheme-collapsed-trustees-are-still-returning?fsrc=rss
https://www.economist.com/sites/default/files/images/2018/02/articles/main/20180303_fnp501.jpg

One of Russia’s most successful private entrepreneurs sells–to the state

IN THE Russian business community Sergei Galitsky served as a rare example of a self-made billionaire who rose with relatively little state help and outside the natural-resources trade. He built his retail company, Magnit, from scratch into Russia’s largest network; it has more than 16,000 stores. Rather than moving to Moscow, he kept his headquarters in his hometown of Krasnodar, where he also founded a football club. On February 16th he made a telling exit, announcing he would sell nearly all of his shares in Magnit—29.1%—to VTB, a state bank.

That Mr Galitsky (pictured, above) decided to sell is the result of a tough business cycle and some strategic mistakes. More remarkable is that he found a buyer not on the domestic private markets, or from among foreign investors. Selling to a public-sector bank reflects the growing role of the state in the Russian economy. Russia’s federal anti-monopoly service puts its share at 70%. Yet the retail sector had largely been insulated from the trend. Now...Continue reading

from Business and finance https://www.economist.com/news/business/21737303-sergei-galitskys-sale-291-his-shares-magnit-vtb-state-owned-bank-sign?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_WBP004_0.jpg

Europe’s flourishing gunmakers

Beretta hits its sales target

IT WAS a blunder by Heckler & Koch, a big German gunmaker. On February 15th the firm apologised for a “mistake” after its American subsidiary posted a Valentine’s image showing a handgun surrounded by ammunition arranged in the shape of a heart. The image went out to social media shortly after a deadly school shooting in Florida.

The post was also a reminder that although Europeans often criticise lax firearm-ownership laws across the Atlantic, the region’s firms are increasingly present in America’s market for small arms—defined as revolvers, pistols, rifles and shotguns. Americans buy far more such weapons than any other nationality and their appetites have been growing steadily. This year they are likely to buy 14.5m such firearms, notes Jurgen Brauer of Small Arms Analytics, a consultancy. Europeans have proved deft at grabbing a sizeable portion of all this.

Continue reading

from Business and finance https://www.economist.com/news/business/21737295-firms-sig-sauer-glock-and-beretta-have-growing-share-americas-firearms-market-europes?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_WBP001_0.jpg

The spoils from American corporate tax reform are unevenly spread

“IT’S always a lot of fun when you win,” President Donald Trump enthused after his tax package was approved by Congress in December. Company bosses nodded along. The centrepiece of the reform is a drastic cut to the corporate-tax rate, from 35% to 21%, taking it below the rich-country average. Although its impact is partly offset by some revenue-raising measures, the congressional Joint Committee on Taxation estimates that American business will gain around $330bn from the reform over the next ten years. Yet within that are sizeable variations in terms of which firms and industries benefit most.

The biggest winners are more domestically oriented companies. These typically face higher effective tax rates than American companies with a big presence overseas, which do business in lower-tax countries. Bosses are also evaluating other new measures. So-called “full expensing”, for example, helps those with big spending plans by allowing them to deduct investment costs up front. But...Continue reading

from Business and finance https://www.economist.com/news/business/21737290-all-american-firms-benefit-most-multinationals-less-spoils-american-corporate-tax?fsrc=rss
https://www.economist.com/sites/default/files/images/2018/02/articles/main/20180224_wbp503.jpg

OPEC mulls a long-term alliance with Russia to keep oil prices stable

OIL bears beware. On February 20th Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades.

The result will not be, he insists, a “supergroup”. The notion of Saudi Arabia and Russia joining forces as the Traveling Wilburys of the oil world may be a bit jarring. It remains an idea in “draft” form. But whatever its chances, it attempts to shift a belief widely held by participants in oil markets: that non-American oil producers are helpless against the shale revolution.

That belief has strengthened because of a renewed flood of American shale production in the latter part of 2017 after prices of West Texas Intermediate climbed above $50 a barrel. The International Energy Agency...Continue reading

from Business and finance https://www.economist.com/news/finance-and-economics/21737262-one-aim-allay-fears-current-pact-will-unravel-opec-mulls-long-term?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_FND002_0.jpg

Economists cannot avoid making value judgments

AMID the name-calling and bluster that mar many fights between economists are a few common tactics. Belligerents may attack the theory used to support a claim, or the data analysis used to quantify an effect. During the debate over President Donald Trump’s tax bill, to take a recent example, economists bickered over which side had more credibly calculated the economic effect. They did not, for the most part, argue about whether it was morally acceptable to pass a regressive tax reform after years of wage stagnation and rising inequality. To do so would strike many economists as entirely un-economist-like. Yet economics has not always been so shy about moral philosophy. As well as “The Wealth of Nations”, Adam Smith wrote a “Theory of Moral Sentiments”. Great 20th-century economists like Paul Samuelson and Kenneth Arrow also took questions of values very seriously. Their successors would do well to take several pages from their books.

Modern economists have attempted...Continue reading

from Business and finance https://www.economist.com/news/finance-and-economics/21737256-lessons-repugnant-market-organs-economists-cannot-avoid-making-value?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_FND000_0.jpg

A banking centre seeks to reinvent itself

ON A clear day, sunset over Lake Zug is magnificent. Snow-dusted mountains cut through the orange glow above and are mirrored in the lake below. “Zug is our spiritual home,” says Jeremy Epstein, from Washington, DC, who has just taken 40 foreigners to tour the small Swiss town south of Zurich. They came not for sunsets, though, but to find out how Zug has become known as “crypto-valley”—meaning the home of many firms dealing in crypto-currencies and related activities.

Switzerland’s famous banking secrecy is falling to a global assault on money-laundering and tax evasion. But financial security remains in demand. The country should seek to become the “crypto-nation”, said the economy minister, Johann Schneider-Ammann, last month. Zug aims to be the capital of that nation.

To that end, Switzerland is maintaining loose rules for crypto-businesses, even as other countries are tightening theirs. An industry is developing to store tangible crypto-assets, such as the hard drives...Continue reading

from Business and finance https://www.economist.com/news/finance-and-economics/21737255-switzerland-embraces-digital-currencies-and-crypto-entrepreneurs-banking-centre?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_FNP002_0.jpg

Snap, chatter and pop goes the share price

KYLIE JENNER, a model and reality TV star best known for being the, er, second most famous Kylie in the world, managed to cause a stir on Wall Street. With this idiosyncratic tweet

sooo does anyone else not open Snapchat any more? Or is it just me...ugh this is so sad

she knocked back the share price of Snap, the parent company of the video- and picture-sharing app. Ms Jenner’s influence in the target market is deemed to be huge; she has 24.5m Twitter followers, and her message has (at the time of writing) been retweeted 58,000 times and “liked” by 310,000. 

Snap’s share price fell 6%, reducing the company’s market value by $1.3bn. The decline was not just down to the influence of Ms Jenner, who recently gave birth to a daughter Stormi, named after the weather/porn star/grime artist. Investors were already worried about the impact of a recent app redesign. More than 1.2m people signed a...Continue reading

from Business and finance https://www.economist.com/blogs/buttonwood/2018/02/billion-dollar-tweet?fsrc=rss
https://www.economist.com/sites/default/files/20180224_BLP510.jpg

The rapid rise and fall of the Anbang empire

RARELY in corporate history has a giant come and gone so quickly. Anbang was founded in 2004 as a small Chinese car-insurance company. By the start of last year it ranked among the world’s biggest insurers with some $300bn of assets, including stakes in hotels and financial firms across America, Europe and Asia. Given another ten years, boasted Wu Xiaohui, its swashbuckling founder, Anbang’s scale would “exceed your imagination”. But then, just as vertiginous as its ascent, came its fall. Alarmed at its debt-fuelled expansion, regulators started blocking its overseas deals, reined in its insurance business and detained Mr Wu. On February 23rd its disgrace became complete: the Chinese government announced that it had taken over Anbang and would prosecute Mr Wu for economic crimes.

The insurance regulator said it had intervened because illegal operations could have “seriously endangered” the company’s solvency. It did not spell out the exact nature of Anbang’s alleged...Continue reading

from Business and finance https://www.economist.com/news/business-and-finance/21737343-chinas-government-takes-control-its-would-be-financial-colossus-rapid-rise?fsrc=rss
https://www.economist.com/sites/default/files/images/2018/02/articles/main/20180224_blp511.jpg

A pharmaceutical firm bets big on a cancer drug

WHEN Ken Frazier, chief executive of Merck, an American pharmaceutical giant, started his job in 2011, he had a hard decision to make. The firm had promising new drugs—such as Januvia, for diabetes, and Gardasil, a vaccine against cervical cancer. But the pharma industry was struggling with dismal returns on R&D and investors were questioning if companies were overspending on science. Some surrendered and started buying in drugs instead. But Mr Frazier opted to carry on backing his labs and promised publicly to spend on R&D for the long term, not for the stockmarket’s immediate gratification.

An opportunity to implement the pledge soon arrived. Merck’s merger with another pharma firm, Schering-Plough, in 2009, had brought it an obscure new cancer drug. At first Merck’s scientists were unimpressed and relegated the drug to a list of assets to be licensed out. There was widespread scepticism at the time about whether drugs that attacked cancer using the immune system would...Continue reading

from Business and finance https://www.economist.com/news/business/21737309-shareholders-worry-merck-may-be-betting-too-heavily-cancer-products-such?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_WBD001_0.jpg

Chinese cities are competing to woo overseas entrepreneurs

The coffee’s on us

WHEN Maria Veikhman, founder of SCORISTA, a Russian credit-scoring startup, was considering expansion abroad, China immediately came to mind. She believes the scope there is vast, for two-fifths of Chinese have no credit records. Ms Veikhman settled in Tianfu Software Park, a state-owned incubator in Chengdu, capital of Sichuan province where city authorities “offer almost everything for free”. Complementary facilities range from office space, basic furniture and logistics services to detailed guidance on entrepreneurial methods.

Chengdu aims to catch up with Beijing, Shanghai, and Shenzhen, which at present are in a different entrepreneurial league—together they have over a hundred unicorns, or private startups worth over $1bn. The south-western city allocated 200m yuan ($30m) in 2016 to an innovation-and-startup fund for overseas founders, and hands out up to 1m yuan in cash to well-capitalised foreign startups and joint ventures. If the...Continue reading

from Business and finance https://www.economist.com/news/business/21737304-authorities-are-offering-foreign-founders-office-space-cash-advice-logistics-services-and?fsrc=rss
https://www.economist.com/sites/default/files/images/print-edition/20180224_WBP002_0.jpg

A brawl on a cruise ship raises worries about security at sea

Money stolen by Bernie Madoff is still being found

WHEN bankruptcy trustees were appointed over a hectic weekend late in 2008, there seemed no end to the losses caused by the collapse of Bernie Madoff’s Ponzi scheme. Cash in the bank was no more than $150m. But the losses have been less, and the assets available for compensation greater, than had been feared.

On February 22nd Irving Picard, the bankruptcy trustee overseeing the liquidation of Mr Madoff’s firm, announced that a fund set up to reimburse customers would make its ninth distribution, of $621m, bringing the total handed out so far to $11.4bn. Another $1.8bn in held in reserve for contested claims. This is on top of a separate distribution of $723m last November from a separate fund run by the Department of Justice. Another $3bn remains to be distributed in that fund and the bankruptcy trustees hold out hope that substantially more will be recovered and returned.

Mr Madoff, who will turn 80 in April, is serving a 150-year sentence in a North Carolina prison. At his...Continue reading

from Business and finance http://www.economist.com/news/business-and-finance/21737446-almost-decade-after-ponzi-scheme-collapsed-trustees-are-still-returning?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180303_fnp501.jpg

Economists cannot avoid making value judgments

AMID the name-calling and bluster that mar many fights between economists are a few common tactics. Belligerents may attack the theory used to support a claim, or the data analysis used to quantify an effect. During the debate over President Donald Trump’s tax bill, to take a recent example, economists bickered over which side had more credibly calculated the economic effect. They did not, for the most part, argue about whether it was morally acceptable to pass a regressive tax reform after years of wage stagnation and rising inequality. To do so would strike many economists as entirely un-economist-like. Yet economics has not always been so shy about moral philosophy. As well as “The Wealth of Nations”, Adam Smith wrote a “Theory of Moral Sentiments”. Great 20th-century economists like Paul Samuelson and Kenneth Arrow also took questions of values very seriously. Their successors would do well to take several pages from their books.

Modern economists have attempted...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737256-lessons-repugnant-market-organs-economists-cannot-avoid-making-value?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_FND000_0.jpg

A banking centre seeks to reinvent itself

ON A clear day, sunset over Lake Zug is magnificent. Snow-dusted mountains cut through the orange glow above and are mirrored in the lake below. “Zug is our spiritual home,” says Jeremy Epstein, from Washington, DC, who has just taken 40 foreigners to tour the small Swiss town south of Zurich. They came not for sunsets, though, but to find out how Zug has become known as “crypto-valley”—meaning the home of many firms dealing in crypto-currencies and related activities.

Switzerland’s famous banking secrecy is falling to a global assault on money-laundering and tax evasion. But financial security remains in demand. The country should seek to become the “crypto-nation”, said the economy minister, Johann Schneider-Ammann, last month. Zug aims to be the capital of that nation.

To that end, Switzerland is maintaining loose rules for crypto-businesses, even as other countries are tightening theirs. An industry is developing to store tangible crypto-assets, such as the hard...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737255-switzerland-embraces-digital-currencies-and-crypto-entrepreneurs-banking-centre?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_FNP002_0.jpg

The rapid rise and fall of the Anbang empire

RARELY in corporate history has a giant come and gone so quickly. Anbang was founded in 2004 as a small Chinese car-insurance company. By the start of last year it ranked among the world’s biggest insurers with some $300bn of assets, including stakes in hotels and financial firms across America, Europe and Asia. Given another ten years, boasted Wu Xiaohui, its swashbuckling founder, Anbang’s scale would “exceed your imagination”. But then, just as vertiginous as its ascent, came its fall. Alarmed at its debt-fuelled expansion, regulators started blocking its overseas deals, reined in its insurance business and detained Mr Wu. On February 23rd its disgrace became complete: the Chinese government announced that it had taken over Anbang and would prosecute Mr Wu for economic crimes.

The insurance regulator said it had intervened because illegal operations could have “seriously endangered” the company’s solvency. It did not spell out the exact nature of Anbang’s alleged...Continue reading

from Business and finance http://www.economist.com/news/business-and-finance/21737343-chinas-government-takes-control-its-would-be-financial-colossus-rapid-rise?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180224_blp511.jpg

Snap, chatter and pop goes the share price

KYLIE Jenner, a model best known for being the, er, second most famous Kylie in the world, managed to cause a stir on Wall Street. With this idiosyncratic tweet

sooo does anyone else not open Snapchat any more? Or is it just me...ugh this is so sad

she knocked back the share price of Snap, the parent compnay of the video- and picture-sharing app. Ms Jenner's influence in the target market is deemed to be huge; she has 24.5m Twitter followers, and her message has (at thew time of writing) been retweeted 58,000 times and "liked" by 310,000. 

Snap's share price fell 6%, reducing the company's market value by $1.3bn. The decline was not just down to the influence of Ms Jenner, who recently gave birth to a daughter Stormi, named after the weather/porn star/grime artist. Investors were already worried about the impact of a recent app redesign. More than 1.2m people signed a petition calling for the...Continue reading

from Business and finance http://www.economist.com/blogs/buttonwood/2018/02/billion-dollar-tweet?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180224_BLP510.jpg

The Santander experiment

TAKING a business onto the global stage is hard. Doing it with banks can be suicidal owing to their complexity and leverage. For over 100 years an assortment of adventurers and visionaries have almost always tried one of two approaches. Either they spread firms thinly over scores of countries and focus on servicing big companies and facilitating trade. This is the way of Citigroup and HSBC, and the path that China’s big lenders are racing down. Or they focus on investment banking from hubs; think of JPMorgan Chase or Deutsche Bank in New York, Hong Kong and London. Both blueprints have often resulted in buckets of tears.

In the 1990s a “third way” emerged from provincial Spain; creating a global retail bank with a deep presence in many countries, allowing true economies of scale. The pioneer was Santander, a middle-weight bank from the Bay of Biscay. Today it is the king of the euro zone: the bloc’s largest lender by market value, with 133m clients, mainly in Brazil, Britain, Mexico and...Continue reading

from Business and finance http://www.economist.com/news/business/21737258-europes-banking-champion-took-unique-approach-globalisation-has-it-been-vindicated?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBD000_0.jpg

Europe’s flourishing gunmakers

Beretta hits its sales target

IT WAS a blunder by Heckler & Koch, a big German gunmaker. On February 15th the firm apologised for a “mistake” after its American subsidiary posted a Valentine’s image showing a handgun surrounded by ammunition arranged in the shape of a heart. The image went out to social media shortly after a deadly school shooting in Florida.

The post was also a reminder that although Europeans often criticise lax firearm-ownership laws across the Atlantic, the region’s firms are increasingly present in America’s market for small arms—defined as revolvers, pistols, rifles and shotguns. Americans buy far more such weapons than any other nationality and their appetites have been growing steadily. This year they are likely to buy 14.5m such firearms, notes Jurgen Brauer of Small Arms Analytics, a consultancy. Europeans have proved deft at grabbing a sizeable portion of all this.

Continue reading

from Business and finance http://www.economist.com/news/business/21737295-firms-sig-sauer-glock-and-beretta-have-growing-share-americas-firearms-market-europes?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBP001_0.jpg

A pharmaceutical firm bets big on a cancer drug

WHEN Ken Frazier, chief executive of Merck, an American pharmaceutical giant, started his job in 2011, he had a hard decision to make. The firm had promising new drugs—such as Januvia, for diabetes, and Gardasil, a vaccine against cervical cancer. But the pharma industry was struggling with dismal returns on R&D and investors were questioning if companies were overspending on science. Some surrendered and started buying in drugs instead. But Mr Frazier opted to carry on backing his labs and promised publicly to spend on R&D for the long term, not for the stockmarket’s immediate gratification.

An opportunity to implement the pledge soon arrived. Merck’s merger with another pharma firm, Schering-Plough, in 2009, had brought it an obscure new cancer drug. At first Merck’s scientists were unimpressed and relegated the drug to a list of assets to be licensed out. There was widespread scepticism at the time about whether drugs that attacked cancer using the immune system would...Continue reading

from Business and finance http://www.economist.com/news/business/21737309-shareholders-worry-merck-may-be-betting-too-heavily-cancer-products-such?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBD001_0.jpg

Chinese cities are competing to woo overseas entrepreneurs

The coffee’s on us

WHEN Maria Veikhman, founder of SCORISTA, a Russian credit-scoring startup, was considering expansion abroad, China immediately came to mind. She believes the scope there is vast, for two-fifths of Chinese have no credit records. Ms Veikhman settled in Tianfu Software Park, a state-owned incubator in Chengdu, capital of Sichuan province where city authorities “offer almost everything for free”. Complementary facilities range from office space, basic furniture and logistics services to detailed guidance on entrepreneurial methods.

Chengdu aims to catch up with Beijing, Shanghai, and Shenzhen, which at present are in a different entrepreneurial league—together they have over a hundred unicorns, or private startups worth over $1bn. The south-western city allocated 200m yuan ($30m) in 2016 to an innovation-and-startup fund for overseas founders, and hands out up to 1m yuan in cash to well-capitalised foreign startups and joint ventures. If the...Continue reading

from Business and finance http://www.economist.com/news/business/21737304-authorities-are-offering-foreign-founders-office-space-cash-advice-logistics-services-and?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBP002_0.jpg

One of Russia’s most successful private entrepreneurs sells–to the state

IN THE Russian business community Sergei Galitsky served as a rare example of a self-made billionaire who rose with relatively little state help and outside the natural-resources trade. He built his retail company, Magnit, from scratch into Russia’s largest network; it has more than 16,000 stores. Rather than moving to Moscow, he kept his headquarters in his hometown of Krasnodar, where he also founded a football club. On February 16th he made a telling exit, announcing he would sell nearly all of his shares in Magnit—29.1%—to VTB, a state bank.

That Mr Galitsky (pictured, above) decided to sell is the result of a tough business cycle and some strategic mistakes. More remarkable is that he found a buyer not on the domestic private markets, or from among foreign investors. Selling to a pubic-sector bank reflects the growing role of the state in the Russian economy. Russia’s federal anti-monopoly service puts its share at 70%. Yet the retail sector had largely been insulated from the trend....Continue reading

from Business and finance http://www.economist.com/news/business/21737303-sergei-galitskys-sale-291-his-shares-magnit-vtb-state-owned-bank-sign?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBP004_0.jpg

The spoils from American corporate tax reform are unevenly spread

“IT’S always a lot of fun when you win,” President Donald Trump enthused after his tax package was approved by Congress in December. Company bosses nodded along. The centrepiece of the reform is a drastic cut to the corporate-tax rate, from 35% to 21%, taking it below the rich-country average. Although its impact is partly offset by some revenue-raising measures, the congressional Joint Committee on Taxation estimates that American business will gain around $330bn from the reform over the next ten years. Yet within that are sizeable variations in terms of which firms and industries benefit most.

The biggest winners are more domestically oriented companies. These typically face higher effective tax rates than American companies with a big presence overseas, which do business in lower-tax countries. Bosses are also evaluating other new measures. So-called “full expensing”, for example, helps those with big spending plans by allowing them to deduct investment costs up front. But using debt will become less attractive, as interest payments are no longer fully deductible.

Some firms experienced high volatility in their earnings for the final quarter of 2017 thanks to the treatment of so-called “deferred tax assets”. These are past tax losses carried forward to set against future tax bills, and such assets have shrunk in value because of the lower...Continue reading

from Business and finance http://www.economist.com/news/business/21737290-all-american-firms-benefit-most-multinationals-less-spoils-american-corporate-tax?fsrc=rss
http://ifttt.com/images/no_image_card.png

Protestantism might be good for the wallet, after all

Spirit and flesh

CAN religion make people wealthier? In 1905 Max Weber, a German sociologist, argued that it had happened in Europe. Protestants did not invent capitalism in the 16th century, he suggested. But, by discarding monastic asceticism and embracing the notion that diligence and self-improvement are pleasing to God, they became particularly good at it.

Weber’s idea is unfashionable these days, partly because so many non-Protestant countries have become rich and partly because of a cause-and-effect problem. Were Protestants truly better at business, or were ambitious, business-minded people drawn to Protestantism? One way of settling that question is through a randomised controlled trial of religion. A National Bureau of Economic Research working paper released on February 19th reports on an experiment in the Philippines that suggests Weber was onto something.

International Care Ministries (ICM), an evangelical charity, tries to help the...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737282-evangelical-charity-helps-randomised-controlled-trial?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180224_fnp502.jpg

Changing the guard at HSBC

YOU spend 38 years at a mighty global bank, the last seven as chief executive. As boss you clean up a stinking mess, the legacy of ill-conceived acquisitions and shoddy practice. You shell out billions in fines and legal costs. You shed businesses and cut jobs by a quarter. You build a solid capital base. You maintain dividends. On your last day, you announce decent results, with revenue growing after five years of shrinkage and profits up nicely. The market’s parting gift to you? The share price falls by 3%.

Analysts had expected better from Stuart Gulliver’s final report as boss of Britain’s HSBC, the world’s seventh-biggest bank by assets, on February 20th. They were surprised by charges for impaired loans to two companies, thought to be Carillion, a failed British contractor, and Steinhoff, a troubled South African retailer, and miffed that HSBC put off buying back more shares. That, the bank said, must wait until it has raised $5bn-7bn of “additional tier-1” capital...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737274-despite-sound-inheritance-stuart-gulliver-john-flint-has-plenty-work?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180224_fnp503.jpg

Japan’s central bank chooses continuity over tradition

GOVERNORS of the Bank of Japan (BoJ) tend not to linger long in their post. Twenty-two people have headed the institution since 1914, compared with 16 at the Federal Reserve and 12 at the Bank of England. The last time a BoJ governor won a second term was 1961, when Japan’s economy was growing by over 11% and inflation was over 5%. As Richard Werner, the author of “Princes of the Yen”, a history of the central bank’s failures, points out, by tradition the job alternates every five years between a candidate backed by the finance ministry and a “true-born” BoJ insider.

This tradition will be broken by the reappointment of Haruhiko Kuroda, who was nominated for a second term on February 16th. If he completes it, he will become the longest-serving governor in the BoJ’s history.

With luck that might be long enough for him to reach the central bank’s elusive inflation target of 2%, a goal set five years ago which he had hoped to meet by 2015. Although the BoJ has...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737273-governor-gets-another-five-years-try-raise-inflation-japans-central-bank?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180224_fnp504.jpg

Donald Trump mulls restrictions on steel and aluminium imports

TEN months ago the Trump administration took aim at steel and aluminium imports, giving itself a year to decide whether they threatened national security and, if so, what to do about it. On February 16th it concluded that America is indeed under threat. The president has until mid-April to choose whether to respond.

The reports handed to Donald Trump by the Department of Commerce, which led the investigations, describe America as effectively under siege. Its steel industry might struggle to respond to a crisis similar to the second world war, they fret, as foreigners are filling a third of American demand for steel, even as 28% of national capacity lies idle. The share of primary aluminium (the kind smelted from ore, rather than recycled metal) that is imported is 91%, and 61% of local smelting capacity lies cold. Doubters can point out that the Department of Defence requires a tiny slice of American steel supply, and that America’s largest supplier for both metals, Canada, is an ally (see...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737263-all-options-would-have-unintended-consequences-donald-trump-mulls?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_FND001_0.jpg

OPEC mulls a long-term alliance with Russia to keep oil prices stable

OIL bears beware. On February 20thSuhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades.

The result will not be, he insists, a “supergroup”. The notion of Saudi Arabia and Russia joining forces as the Traveling Wilburys of the oil world may be a bit jarring. It remains an idea in “draft” form. But whatever its chances, it attempts to shift a belief widely held by participants in oil markets: that non-American oil producers are helpless against the shale revolution.

That belief has strengthened because of a renewed flood of American shale production in the latter part of 2017 after prices of West Texas Intermediate climbed above $50 a barrel. The International Energy Agency...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737262-one-aim-allay-fears-current-pact-will-unravel-opec-mulls-long-term?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_FND002_0.jpg

The long-term returns from collectibles

BONDS, shares and Treasury bills are all very well, but in the end they are just pieces of paper. They are not assets you can hang on the wall or display to admiring neighbours. Many rich people like to invest their wealth in more tangible form; property, of course, but also collectibles such as art, fine wine and classic cars.

Is that wise? Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School (LBS) have run the numbers for their annual analysis of the financial markets in the Credit Suisse global investment-returns yearbook. Some of these assets have done rather better than others (see chart). Fine wine delivered the best returns; surprising to cynics who might assume that, in the long run, the value of wine vanishes as it turns into vinegar. Really old wine often has historical resonance. A bottle of Chateau Lafite Rothschild from 1787 was sold for $156,450 in 1985 because it was thought to belong to Thomas Jefferson.

Estimating the returns from these assets, after...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737259-investing-finer-things-life-long-term-returns-collectibles?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_FNC838.png

Russian meddling is only one challenge facing the social-media giant

IN ITS early days Facebook embraced the motto “move fast and break things” to describe its engineers’ strategy of rapid innovation. “Move slowly, and try not to break anything else” seems to be its new creed. In the last year Facebook has contended with several controversies, including charges that it helped spread false news, unwittingly facilitated Russian meddling in the 2016 election and fanned political polarisation (see Briefing). After denials of responsibility and little action, Mark Zuckerberg, its boss, has talked of “fixing” Facebook in 2018. It will be a huge task.

Russia’s alleged manipulation of Facebook users will harm the company. On February 16th special counsel Robert Mueller filed conspiracy and fraud charges against 13 Russians for interfering in America’s 2016 election; Facebook was mentioned no fewer...Continue reading

from Business and finance http://www.economist.com/news/business/21737300-young-americans-are-using-it-less-costs-are-soaring-and-regulation-looms-russian-meddling?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180224_WBP003_0.jpg

Why low returns are inevitable

WHEN the stockmarket is close to a record high, the chances are that recent returns will have been very strong. The terrible tendency among investors is to assume that those returns will continue. But the higher you go, the harder it is to keep rising at the same pace. 

When I visited America for a story on pensions last autumn, I was struck by how few people failed to grasp this point. Public pensions have return targets of 7-8% for their portfolios. When challenged they tend to cite their 30-year record of achieving those numbers. But that record makes it less likely, not more that they will hit their targets. 

The easiest way to think of this is via the bond market. In 1987, the yield on the ten-year Treasury bond was just under 9%. Since then it has fallen to its current level of just under 3%. So not only did bond investors get a high yield in their early years,...Continue reading

from Business and finance http://www.economist.com/blogs/buttonwood/2018/02/long-term-investing?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180224_BLP504.jpg

Latvia’s top banking official has been accused of taking a bribe

ILMARS RIMSEVICS, governor of Latvia’s central bank for the past 17 years, had been due to retire next year. Instead, he is facing calls to resign. On February 17th he was detained by Latvia’s anti-corruption authority on suspicion of taking a bribe of at least €100,000 ($123,000). The prime minister, Maris Kucinskis, says the allegations are so serious that Mr Rimsevics cannot possibly return to work. Mr Rimsevics, for his part, is staying put. Released on bail on February 19th, he denies the allegations, saying he was set up and is facing death threats.

Just a few days earlier, in an unrelated case, the US Treasury had proposed sanctions on ABLV, one of Latvia’s largest banks. It claimed ABLV had “institutionalised money laundering” and facilitated transactions with North Korea, which is under sanctions. In the days that followed €600m was withdrawn by the bank’s customers. On February 19th, seeking to stabilise the institution, the ECB froze payments by ABLV....Continue reading

from Business and finance http://www.economist.com/news/business-and-finance/21737224-claims-moneylaundering-and-corruption-stain-latvias-banking-system-latvias-top?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180224_fnp501.jpg

The world’s largest-ever tech deal now rests with Qualcomm

Hock Tan hones the art of the deal

VALENTINE’S DAY might seem like a good time to discuss a proposal. But whether it brought luck to Broadcom’s attempt to woo its rival chipmaker, Qualcomm, is still unclear. As The Economist went to press, a meeting between the boards of both firms to discuss Broadcom’s bid of $146bn (including debt) proved inconclusive. Having rejected an initial approach in November, Qualcomm’s board will soon meet to discuss next steps.

Should the board reject Broadcom’s offer, the fate of the largest-ever tech acquisition would then lie with Qualcomm’s shareholders. The deal could still proceed if they elect a majority of Broadcom’s nominees to the board at Qualcomm’s annual investor meeting on March 6th. But it would have a complicated course to run.

Neither firm may be a household name like Intel or Samsung, but a merger would create the world’s third-largest chipmaker. Scale is critical in an...Continue reading

from Business and finance http://www.economist.com/news/business/21737087-broadcom-has-offered-146bn-its-rival-chip-giant-there-are-lots-obstacles-worlds?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBP002_0.jpg

Will Comcast try to outbid Disney for Fox?

WHEN Disney struck a deal just before Christmas to buy much of 21st Century Fox for $66bn, it was a career-defining moment for the two firms’ bosses, Bob Iger and Rupert Murdoch. A third media mogul, Brian Roberts of Comcast, was left out in the cold. Having tried and failed last autumn to get Mr Murdoch to take a higher offer, Mr Roberts may now be preparing a still richer bid to upend the deal.

It is not hard to understand his motivation. Comcast is in an awkward position at a time when the media landscape is shifting. With millions of consumers dropping pay-TV for the likes of Netflix, media companies have suddenly become either buyers, to achieve scale, or sellers, to exit. Mr Roberts has always been a buyer, building the cable business his father started into a diversified empire through acquisitions, including AT&T’s broadband business in 2002 and NBC Universal in 2011. Comcast now has heft in a number of businesses—broadband and cable, television networks, a film studio...Continue reading

from Business and finance http://www.economist.com/news/business/21737085-cable-giant-has-limited-options-acquisitions-media-landscape-consolidates-will?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180217_wbp501.jpg

Indian teaching startups make work for idle thumbs

TO ANY outsider it looks as if the children have been hypnotised by yet another smartphone game. As the spying elders in a TV ad try to break the spell, the sprogs flash a grin at their screens. “It’s maths, dad,” giggles a fifth-grader to her father. The company behind the ad, Byju’s, sells an educational smartphone app which has been downloaded 14m times since its launch in 2015.

Byju’s is one of many education technology (or “edtech”) startups that have emerged in India in the past few years. Their target is vast—some 260m pupils in schools and over 30m graduates who train in order to pass entrance tests for a seat in medical, engineering and elite management institutes. KPMG, a consultancy, reckons the industry will grow eightfold to be worth around $2bn by 2021.

Much of the expected growth is due to India’s woeful record in primary-school education, where teachers are scarce, infrastructure crumbling and the culture one of rote learning. Almost half of...Continue reading

from Business and finance http://www.economist.com/news/business/21737096-byjus-has-700000-paid-users-and-investment-sequoia-capital-and-chinas-tencent-indian?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180217_wbp502.jpg

Opportunities are opening for electrified commercial vehicles

Pulls a heavy weight of expectation

ELECTRIC commercial vehicles were once a common sight in Britain’s towns and cities. A fleet of 25,000 battery-powered milk floats roved the early-morning streets delivering a crucial part of the nation’s breakfast. Short ranges and low top speed were unimportant for a milk round but near-silent running meant customers could sleep. Their demise came as supermarkets expanded, but electrification of business vehicles is gathering pace anew.

Just as better battery technology is bringing down the cost and boosting the range of passenger electric vehicles (EVs), those advances are making electrification of commercial vehicles more appealing. The purchase price is still far higher than a comparable vehicle with an internal combustion engine (ICE). But businesses are more focused than ordinary motorists on the total costs of ownership, and on other reasons to shift to electric power.

Much attention has been paid to...Continue reading

from Business and finance http://www.economist.com/news/business/21737095-battery-costs-are-falling-and-emissions-rules-are-tightening-opportunities-are-opening?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBP004_0.jpg

Japanese businesses are struggling to keep up standards

KUMIKO HIRANO has noticed a disquieting change when she goes to her neighbourhood konbini, one of Japan’s ubiquitous convenience stores. “No one is around and I have to use a loud voice to get someone to serve me,” says the 48-year-old worker in Tokyo. “It irritates me.”

This might not seem a big problem, but Japan prides itself on the standard of customer service, which approaches the level of bespoke attention elsewhere. Taxi drivers, who often wear white gloves, sometimes get out to bow when they drop off a passenger. Staff in shops and restaurants are unfailingly polite. Shoppers can order on Amazon and take delivery reliably the same day. Now Japanese are having slowly to adapt to levels of service long suffered by the rest of the world.

The human touch is becoming rarer. Lawson, another konbini chain, is automating payment during the small hours at selected stores. Some restaurants and supermarkets are following suit....Continue reading

from Business and finance http://www.economist.com/news/business/21737090-pressure-lift-returns-well-shortage-labour-mean-shoddier-customer-service-japanese?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBP001_0.jpg

Recent tax reforms in America will hurt charities

DESPITE its oft-professed pro-market orthodoxy, America has always had an unusually large non-profit sector. Americans gave $390bn to charity in 2016, with the bulk of contributions coming from individual donors. Historically, revenues at non-profits tend to track GDP growth. The recent tax reforms imply that despite strong economic growth, charitable contributions in America are poised to fall for the first time since the financial crisis.

The most significant threat to charities comes from changes to income tax. American taxpayers can choose either to “itemise” specific expenses, such as charitable gifts or mortgage payments, or take a “standard deduction”. In an effort both to simplify the tax code and to lower overall tax rates, the Republican-led Congress almost doubled the standard deduction to $12,000 for individuals and $24,000 for married couples. This will make filing taxes a lot easier for many. But it also means that far fewer Americans will have a financial incentive...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737089-local-non-profits-and-churches-will-be-affected-most-recent-tax-reforms?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180217_fnp504.jpg

The markets still have plenty to fret about

BULL markets always climb a wall of worry, or so the saying goes. For much of 2017, the main concerns were political and the markets seemed to surmount them as easily as a robot dog opens doors (the latest internet sensation).

But February has shown that the market is still vulnerable. The immediate trigger seems to have been the fear that inflationary pressures would cause bond yields to rise and central banks to push up interest rates; this week’s surprisingly high American inflation numbers will only add to the worries. In a narrow sense, that makes bonds look cheaper, compared with equities. In a broader sense, it increases the discount rate investors apply to future profits, lowering the present value of shares. (A caveat is needed: if higher rates reflect stronger growth, then estimates of future profits should rise, offsetting the discount-rate effect.)

The immediate effect has been to create uncertainty for investors about the direction of central-bank policy, after many years in which it could reliably be assumed that rates would stay low. This translates into a more volatile market, as illustrated by the sharp jump in the Vix, or volatility index, in early February.

The danger is that many investors seem to have treated volatility as an asset class, and have organised their portfolios accordingly. Eric Lonergan of M&G, a...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737086-share-valuations-so-high-volatility-junk-bonds-growth-and-china-are-all?fsrc=rss
http://ifttt.com/images/no_image_card.png

Google embraces ad-blocking via Chrome

FROM quantum computing and smartphones to self-driving cars, home thermostats and delivering the internet by balloon, Google or, technically, Alphabet, the holding company that the firm established in 2015, has its fingers in many pies. But the company’s main business, which pays for all of its dabblings elsewhere, is digital advertising, which in 2017 accounted for more than 86% of its $111bn revenue. It may seem odd, then, that Google’s latest move is to aid ad-blocking. On February 15th Chrome, its web browser, which has a 59% market share, switched on code to block certain online advertisements. 9

In doing so it joins an established trend. By last year around 27% of American internet users had installed ad-blockers, according to eMarketer, a research firm (see chart). Third-party ad-blocking software is available already for Chrome but only for its desktop version. As well as being built in and thus on by default, the new blocker will work on smartphones.

Web publishers will not...Continue reading

from Business and finance http://www.economist.com/news/business/21737081-online-ad-industry-has-strangely-hostile-relationship-those-who-consume-its?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBC763.png

Going out need no longer be a headache for teetotallers

BARS and pubs have not usually been the non-drinker’s friend. Knocking back pint after pint of juice or fizzy drink quickly gets boring. But beverage manufacturers are now showing more sympathy for their plight. Many companies regard non-alcoholic drinks as the “biggest opportunity in the market”, says Frank Lampen, who runs Distill Ventures, which helps small producers with investment and advice, and is backed by Diageo, a British drinks giant.

One of the fund’s recent investments, for example, is in Seedlip, a British firm that makes distilled, non-alcoholic “spirits” flavoured with botanicals, and which last year launched in America. Low-alcohol beer, once maligned for its paucity of flavour, is also in fashion. Technological advances mean alcohol can be filtered out of the beer without ruining its taste; other breweries use “lazy” yeast, which produces less alcohol to start with. Over the past couple of years, non-alcoholic craft breweries, such as Nirvana Brewery in London, or...Continue reading

from Business and finance http://www.economist.com/news/business/21737080-innovation-non-alcoholic-and-low-alcohol-drinks-fits-health-conscious-trends-going-out?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBD001_0.jpg

Ten years on from the first quota for women on corporate boards

THE centrepiece of the opening-bell ritual at the London Stock Exchange on February 2nd was a roll call to honour 27 global investors. They were lauded for pledging allegiance to the “30% Club”, a group which campaigns for precisely that proportion of women on corporate boards globally. Membership is a hot ticket, judging by the club’s expansion. Behemoths including BlackRock, J.P. Morgan Asset Management and Standard Life have joined, and are voting against boards that fail to appoint more women.

In much of western Europe, such efforts follow a decade-long push by governments. In 2008 Norway obliged listed companies to reserve at least 40% of their director seats for women on pain of dissolution. In the following five years more than a dozen countries set similar quotas at 30% to 40%. In Belgium, France and Italy, too, firms that fail to comply can be fined, dissolved or banned from paying existing directors. Germany, Spain and the Netherlands prefer soft-law quotas, with no sanctions....Continue reading

from Business and finance http://www.economist.com/news/business/21737079-gender-quotas-board-level-europe-have-done-little-boost-corporate-performance-or?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBP003_0.jpg

The best—and worst—places to be a working woman

“PRESS for progress” is the theme of this year’s International Women’s Day on March 8th. As our sixth glass-ceiling index shows, disparity between countries remains wide. But women have made some progress towards equality in the workplace in the past year.

The index ranks the best and worst countries to be a working woman. Each score is based on average performance in ten indicators: educational attainment, labour-market attachment, pay, child-care costs, maternity and paternity rights, business-school applications and representation in senior jobs (in managerial positions, on company boards and in parliament).

Equality-conscious Nordics typically do well while workplace parity for women in Japan, South Korea and Turkey still lags badly. America under President Donald Trump rose from 20th to 19th place thanks in part to a higher female labour-force participation rate. This year Sweden ranks first, scoring well in female labour-force participation, which is over 80%, and the share of...Continue reading

from Business and finance http://www.economist.com/news/business/21737078-america-rises-ranking-germany-falls-and-metoo-movement-makes-its-mark-south?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180217_WBC752.png

China’s stockmarket plunge: this time it’s different

A CHINESE new-year message from the American embassy in Beijing looked innocuous. It welcomed the Year of the Dog on Weibo, a microblog, with photos of the embassy staff’s pooches and a video greeting from the ambassador and his wife, each with a dog in hand. But it soon attracted 10,000 angry responses. The post had become an unlikely lightning rod for public discontent about the stockmarket.

A plunge on February 9th had left Chinese shares down by 10% on the week, their steepest fall in two years. Some punters found solace in blaming the American embassy for the rout, which started on Wall Street. For others it was a matter of convenience, because their real target, the Chinese securities regulator, knew to disable comments on its Weibo account on such a grim day for stocks.

Even so, their protests seem to have been heard. Before the market reopened this week, Chinese officials urged big shareholders to buy stocks to restore confidence. The Shanghai Stock Exchange warned...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21737077-american-embassy-becomes-unlikely-lightning-rod-investor-anger-chinas?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/2018/02/articles/main/20180217_fnp503.jpg

How to ensure Ryanair foots the bill for flight delays

THERE is little doubt that Ryanair takes umbrage at EU261, a piece of European law that guarantees passengers compensation in the event of most flight delays and cancellations. Michael O’Leary, the low-cost carrier’s boss, insists that he complies with the “ridiculous” piece of legislation. But many say otherwise. Indeed, Mr O’Leary seems to revel in refusing to give out compensation; he once told a customer who dared to ask for one “you’re not getting a refund so fuck off”. Last year, when a pilot-rostering mishap grounded thousands of Ryanair flights, Britain’s Civil Aviation Authority (CAA) accused it of “persistently misleading” customers about their rights. Which?, a British consumer group, agreed that Ryanair fell “woefully short” of its obligations. Media reports exposing poor treatment of passengers abounded. Yet, in the past five months, Gulliver has received two EU261 pay-outs from Ryanair. The circumstances surrounding them...Continue reading

from Business and finance http://www.economist.com/blogs/gulliver/2018/02/making-airline-pay?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180217_BLP508.jpg

Those Brexit clichés explained

A hamster is the latest victim in the row over emotional-support animals

THE roster of emotional-support animals that are and are not allowed onto flights in America can sound, at times, like a retelling of the story of Noah’s Ark. Although the number allowed on for nothing has grown in recent years, airlines—which believe that the loophole is being abused by those not wanting to pay to transport their pets—are fighting back. Only last month a peacock was barred from a United Airlines flight for bending the rules, and for not even being the right size for a normal plane seat. But the debate has now taken a deadly twist. The victim is a hamster.

Belen Aldecosea, a college student, booked a flight on Spirit Airlines, a low-cost carrier, from Baltimore to her home in Florida in November for medical treatment, according to the Miami Herald, a local paper. Concern about a growth on her neck had led her to buy a hamster, whom she named Pebbles, for comfort. She called Spirit to ask if she could bring Pebbles on...Continue reading

from Business and finance http://www.economist.com/blogs/gulliver/2018/02/flushed-failure?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180217_BLP501.jpg

Financial markets abhor an equilibrium

THE recent volatility in the stockmarket has come as a shock in part because equities have been performing well for an extended period. Share prices have been on a broadly upward trend ever since the spring of 2009. That follows the long bull market of 1982 to 2000. As the chart shows (on a log scale), there has been a tendency for bull markets to be longer-lasting than they were in the 1960s or 1970s. 

The same can be said for the economy. The average business cycle since the Second World War has lasted around six years. By that standard the current expansion is elderly, at...Continue reading

from Business and finance http://www.economist.com/blogs/buttonwood/2018/02/economic-and-investment-cycles?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180210_BLP515.jpg

Insider trading has been rife on Wall Street, academics conclude

The joy of knowledge

INSIDER-TRADING prosecutions have netted plenty of small fry. But many grumble that the big fish swim off unharmed. That nagging fear has some new academic backing, from three studies. One argues that well-connected insiders profited even from the financial crisis.* The others go further still, suggesting the entire share-trading system is rigged.**

What is known about insider trading tends to come from prosecutions. But these require fortuitous tip-offs and extensive, expensive investigations, involving the examination of complex evidence from phone calls, e-mails or informants wired with recorders. The resulting haze of numbers may befuddle a jury unless they are leavened with a few spicy details—exotic code words, say, or (even better) suitcases filled with cash.

The papers make imaginative use of pattern analysis from data to find that insider trading is probably pervasive. The approach reflects a new way of analysing conduct in the...Continue reading

from Business and finance http://www.economist.com/news/finance-and-economics/21736561-one-study-suggests-insiders-profited-even-global-financial-crisis-another?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180210_FNP001_0.jpg

The next generation of wireless technology is ready for take-off

NORTH KOREAN athletes will not be the only unusual participants at the winter Olympics in Pyeongchang in South Korea, which begin on February 9th. Anyone can take part, at least virtually. Many contestants will be watched by 360-degree video cameras, able to stream footage via a wireless network. At certain venues around the country sports fans will be able to don virtual-reality, head-mounted displays to get right into the action. Flying alongside a ski jumper, for instance, will offer an adrenalin rush without any risk of a hard landing.

These virtual experiences will be offered by KT, South Korea’s largest telecoms firm. They are meant to showcase the latest generation of wireless technology, known as “5G”. But just as ski jumpers never know exactly how far they will leap after leaving the ramp, it is unclear where 5G will land.

On paper, the new technology should go far. The International Telecommunication Union (ITU), a UN body which helps develop technical standards, has...Continue reading

from Business and finance http://www.economist.com/news/business/21736596-whizzy-5g-tech-has-everything-going-it-barring-strong-business-case-next-generation?fsrc=rss
http://cdn.static-economist.com/sites/default/files/images/print-edition/20180210_WBD001_0.jpg

Mining firms are dismayed by a new Congolese mining law

ROBERT Friedland, the boss of Ivanhoe Mines, a large Canadian firm that digs out copper and zinc in Africa, is not one for pessimism. In his speech to an annual mining industry jamboree, Mining Indaba, in Cape Town, his promises about the potential of the business were as copious as the ore bodies his firm mines. But amid the hyperbole about electric cars, Chinese consumers and the “most disruptive copper discovery in the world” there was a note of panic. Money, he warned, is “a coward”, and may be about to flee.

The cause of fear is a new mining code that was passed by parliament in the Democratic Republic of Congo on January 24th. Congo is Africa’s biggest copper producer; its reserves, mostly in the southern copper belt, are among the world’s richest. As important, it has emerged recently as the world’s leading producer of cobalt, a by-product of copper smelting that is used in batteries for electric cars. It also produces gold, zinc, tin and diamonds.

The new law, which has yet to be signed by Joseph Kabila, the...Continue reading

from Business and finance http://www.economist.com/news/business/21736595-they-have-more-lose-if-president-joseph-kabila-falls-power-mining-firms-are-dismayed?fsrc=rss
http://cdn.static-economist.com/sites/default/files/20180210_WBP503.jpg