Economic optimism drives stockmarket highs

BARELY a day goes by at the moment without Wall Street hitting a new record high. The market has kept marching upwards despite all the headlines about the North Korean nuclear threat, a potential break-up of NAFTA, and natural disasters like hurricanes.

If you want to know why the market keeps rising, just look at the latest poll of global fund managers by Bank of America Merrill Lynch. Almost half of all the managers now expect above-trend growth and below-trend inflation, what is dubbed the Goldilocks economy (she wanted porridge that was not too hot, or too cold, but just right). That is the highest proportion recorded in the history of the survey. Indeed, for the last six years, a plurality of managers have taken the view that both inflation and growth would be below trend.

A net 41% of those managers think global growth will strengthen over the next 12 months. Putting their money behind those beliefs, a net 45% are overweight (have a higher holding than usual) in equities. A remarkable 85% of managers think bond…Continue reading

This post was originally published in the Economist.

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Economic optimism drives stockmarket highs

More airlines are offering free Wi-Fi for messaging services

AT A time when all aspects of air travel seem to come with a price tag, one service quite suddenly has become free. And it is not in-flight dining or checking in a bag or securing an exit-row seat. 

The increasingly common free service is onboard messaging. Earlier this month, Delta Airlines began allowing passengers to use its Wi-Fi system to send free messages on third-party apps, such as iMessage, WhatsApp, and Facebook Messenger. Passengers can do so on their smartphones, laptops or tablets. (Mobile-network services, like 4G, tend to be unreliable after lift off). Delta is following the lead of Alaska Airlines, which rolled out a similar service earlier this year, as the Los Angeles Times reports, and American Airlines which announced its own plans to offer messaging in the near future.

Sadly, this is still a far cry from a free internet service. Airlines still charge for browsing and they have a…Continue reading

This post was originally published in the Economist.

More airlines are offering free Wi-Fi for messaging services

Carriers in America are doubling down on budget airfares

GLEN HAUENSTEIN, the president of Delta, is optimistic about the future of basic economy. On a conference call this week, he boasted that the stripped-down airfares actually act as an incentive for passengers to upgrade to the more expensive standard economy tickets. Despite Mr Hauenstein describing it as a product that “people don’t really want”, the airline says it will expand the revenue-boosting basic-fares system in 2018.

Delta was the first carrier to roll out basic economy fares—sometimes called “last class”—in America in 2012. Since then the model has caught on. Both American and United quickly introduced similar services on some domestic routes. By taking away a perk here and adding another there, each airline has created a unique version of the same miserable experience.

The new fare system is not without its critics. Many have <a…Continue reading

This post was originally published in the Economist.

Carriers in America are doubling down on budget airfares

The finance industry ten years after the crisis

MANY people complain that the finance industry has barely suffered any adverse consequences from the crisis that it created, which began around ten years ago. But a report from New Financial, a think-tank, shows that is not completely true.

The additional capital that regulators demanded banks should take on to their balance-sheets has had an effect. Between 2006 and 2016, the return on capital of the world’s biggest banks has fallen by a third (by more in Britain and Europe). The balance of power has shifted away from the developed world and towards China, which had four of the largest five banks by assets in 2016; that compares with just one of the biggest 20 in 2006.

The swaggering beasts of the investment-banking industry have also been tamed. The industry’s revenues have dropped by 34% in real terms, with profits falling by 46%. Return on equity has declined by two-thirds. Staff are still lavishly remunerated, but pay is down by 52% in real terms. (Perhaps…Continue reading

This post was originally published in the Economist.

The finance industry ten years after the crisis

Taxing the rich

FOR once, The Daily Mail and the Guardian, British newspapers of the right and left, agree. In the former, Alex Brummer says “IMF’s new line of thinking of tax should please Corbyn & co” while the latter says that the IMF “analysis supports tax strategy of Labour in UK“. Both are responding to the IMF’s fiscal monitor which does indeed say that

 there would appear to be scope for increasing the progressivity of income taxation without significantly hurting growth for countries wishing to enhance income redistribution.

The report details how income tax progressivity in advanced economies declined in the 1980s and 1990s and that the tax system has done little to reduce inequality in…Continue reading

This post was originally published in the Economist.

Taxing the rich

Kobe Steel admits falsifying data on 20,000 tonnes of metal

THE port city of Kobe, on the southern side of Japan’s main island, is known for luxury beef from pampered cattle, fine sake and precision engineering. Its reputation for the last of those products took a blow on October 8th when one of its oldest industrial firms, Kobe Steel, admitted that that it had falsified data on many of its aluminium, copper and steel products. By October 11th, the company’s shares had fallen by a third, reducing its market value by ¥180bn ($1.6bn).

 Kobe Steel has admitted to falsification over the past year relating to large quantities of four types of material; 19,300 tonnes of aluminium sheets and poles; 19,400 aluminium components; 2,200 tonnes of copper products and an unspecified amount of iron powder that was supplied to over 200 customers. These items were certified as having properties—such as a level of tensile strength, meaning stiffness—that they did not in fact possess.

No deaths or accidents have yet resulted, but the…Continue reading

This post was originally published in the Economist.

Kobe Steel admits falsifying data on 20,000 tonnes of metal

Crafty app developers are ripping off big-name brands

THE new app for an upmarket British department store certainly looks the part. Released on Google Play, a shop for Android software, on September 5th, it has the right logo, the correct vibrant colour and offers fashionable clothes and accessories. But the app is not authorised by the brand, is littered with pop-up ads and is painfully slow (furious users gave it one-star ratings). Its developer, Style Apps, has also launched apps for other clothing brands that are household names in America.

Such fake apps are designed by crafty developers to trick inattentive users. Google and Apple police their app stores but many impostors get through. In third-party app stores, unofficial platforms run by someone other than the two tech giants, the problem is even worse. Users are tricked in two ways. Some apps fill a gap in the market. Selfridges, a chain of British fashion stores, for instance, has a legitimate app for Apple devices but not for Android ones. RadioShack, an American electronics…Continue reading

This post was originally published in the Economist.

Crafty app developers are ripping off big-name brands