An EU summit shows unity in the face of Brexit

“BRITAIN has had the same foreign policy objective for at least the last 500 years: to create a disunited Europe.” Like many lines delivered by Sir Humphrey, the roguish civil servant in Yes Minister, a British television comedy from the 1980s, this carried the ring of truth. But on April 29th it became clear that the current British government has achieved the opposite. One month after Theresa May, the prime minister, triggered Article 50 of the Lisbon treaty, notifying the European Union of Britain’s intention to leave, the club’s 27 other leaders met in Brussels to approve a set of negotiating guidelines for the two-year Brexit talks to come. They rubber-stamped the text within minutes of sitting down, and applauded themselves for doing so. Donald Tusk, who chaired the summit as president of the European Council, said it had been far easier to keep unity among “the 27” (as they have come to be called) than he anticipated. 

The Europeans...Continue reading

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America’s economic growth slows to 0.7%

What's Keeping GM Going Strong Probably Won't Last

Most multinationals performed better outside the U.S. in the first quarter. Not so the Detroit car makers, which barely made any money outside North America. Their home bias will eventually become a problem.

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Put a Kitten in Your Tank: Big Oil Gets Less Bold

Exxon Mobil and Chevron quarterly results show a shifting emphasis that will affect big oil’s results in future commodity cycles.

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Qualcomm Gets Pelted by Apple

Qualcomm said it was informed by Apple that it effectively would withhold payments by not paying its manufacturers for Qualcomm’s royalties. Having formally recognized its worst-case scenario, Qualcomm’s main challenge now will be convincing investors there is nowhere to go but up.

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Macedonian nationalists storm the parliament to hold on to power

“I AM still alive,” said Radmila Sekerinska in a shaken voice. “That is a cause for relief, considering the alternative.” The deputy head of Macedonia’s Social Democrats required stitches after being dragged by the hair on the evening of April 27th, when a mob supporting VMRO, the nationalist former ruling party, smashed into the country’s parliament.

Macedonia has been in a state of political crisis for more than two years, but the attack in Skopje may prove a turning point. For weeks VMRO had been filibustering efforts by the Social Democrats and their allies, an ethnic Albanian party, to elect a new speaker. On April 27th they at last managed to vote in Talat Xhaferi, an ethnic Albanian MP. Several hundred VMRO supporters, who had been demonstrating outside parliament, stormed the chamber and assaulted Social Democrats, ethnic Albanians and journalists. At least four deputies were hurt, one badly.

VMRO claimed that parliamentary rules had been violated....Continue reading

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Economy Needs Consumers to Shop Again

First-quarter slowdowns have become such a regular feature of the U.S. economy that investors will be tempted to brush off this last one. They shouldn’t.

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The market in Initial Coin Offerings risks becoming a bubble

WOULD you care to invest in Gnosis, a prediction market where users can bet on outcomes of events such as elections? Or in ZrCoin, a project to produce zirconium dioxide, used to make heat-resistant alloys? How about an “immersive reality experience” called “Back to Earth”?

These are just three of a new wave of what are called Initial Coin Offerings (ICOs). Nearly $250m has already been invested in such offerings, of which $107m alone has flowed in this year, according to Smith+Crown, a research firm. But it was in April that ICOs, or “token sales”, as insiders prefer to call them, really took off. On April 24th Gnosis collected more than $12m in under 15 minutes, valuing the project, in theory, at nearly $300m.

ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. Instead, they often serve as the currency for the project they finance: to pay users for a correct prediction, as does Gnosis; or for the content users contribute. Investors hope that...Continue reading

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Credit Suisse unveils another change of course

EUROPE’S most troubled big banks may at last be on the road to recovery. Not only is economic growth perking up; uncomfortable decisions, put off too long, are also being taken. In recent months UniCredit, Italy’s largest lender, has written down bad debt by €8.1bn ($8.7bn) and tapped shareholders for €13bn. Deutsche Bank, Germany’s biggest, has raised €8bn in equity and decided to keep a retail business it had hoped to sell. On April 27th it reported first-quarter net income of €575m, up from €236m a year earlier, although revenue fell.

Like Deutsche, Credit Suisse is freer to make plans after a recent settlement with American authorities over mis-selling mortgage-backed securities before the financial crisis. On April 26th Switzerland’s second-biggest bank reported first-quarter net income of SFr596m ($594m), far better than forecast, reversing a SFr302m loss a year before. Along with most of Wall Street, which published earnings earlier in the month, and Deutsche it benefited from a good quarter for fixed-income trading. It expects to wind up a unit in which it has dumped unwanted assets by the end of 2018, a year ahead of schedule.

Credit...Continue reading

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The threat of war can bring much-needed investment

PONDER the dire state of infrastructure in America and some other advanced economies, and their governments’ fecklessness boggles the mind. Time was when they were able to make badly needed investments; the roads and the universities were a priority. What changed? Not for nothing do pundits cite the hustling governments of China and Singapore as evidence that liberal democracies are no longer fit for purpose. But democracy is not the problem; rather, governments may lack motivation in what is, despite appearances, an unusually peaceful world.

War is hell; the less of it the better. Yet it has also been a near-constant feature of human history, and a constant stimulus to political evolution. Defence is a textbook example of a public good. Security benefits all residents of a country, and cannot be denied to citizens who prefer not to pay for it. There is little incentive for private forces to provide defence—unless by doing so they can take over the right to extract compensation from the society they protect. Throughout history, the legitimate government is the one that can best defend its people.

As populations have grown and technology has advanced, the job of...Continue reading

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Exchange-traded funds become too specialised

THERE comes a time when every financial innovation is taken a bit too far—when, in television terms, it “jumps the shark” and sacrifices plausibility in search of popularity. That may have happened in the exchange-traded fund (ETF) industry. The latest ETF to be launched is a fund that invests in the shares of ETF providers.

The notion has a certain logic. The ETF industry has been growing fast, thanks to its ability to offer investors a diversified portfolio at low cost. The assets under management in these funds passed $3trn last year, up from $715bn in 2008. Some investors might well want to take advantage of that rapid expansion.

But by no stretch of the imagination would this be a well-diversified portfolio; it would be a focused bet on the financial sector. And many of the companies in the portfolio, such as BlackRock, a huge fund manager, and NASDAQ, a stock exchange, are involved in a lot more than just ETFs. Even if the ETF industry keeps growing, the bet could still go wrong.

The new fund (with the catchy title of the ETF Industry Exposure and Financial Services ETF) is just the latest example of the industry’s drive to specialisation. The...Continue reading

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Protecting American steel from imports makes no sense

AS AN example of all that is wrong with Donald Trump’s view of trade, the probe he has ordered into the steel industry is particularly hard to beat. If it results, as seems to be the plan, in blanket punitive tariffs slapped on steel imports, the consequences would be dire: the American economy would be hurt by a rise in the price of an essential material; it would invite retaliation that would cost American jobs, not save them; and the underlying problem—massive global steel overcapacity—would persist.

For Trumpists, steel is an emblem of their country’s descent from greatness. Ever since the 1960s, when production peaked at 168m tonnes a year, the industry has been in decline. Today it makes half as much as 50 years ago and employs just a third of the workers. Steelmakers have long blamed foreign rivals for their woes and lobbied hard for protection. So Mr Trump is not the first president to try to shield the industry from foreign competition. In the 1980s Ronald Reagan signed a series of agreements to limit imports. In 2002 George W. Bush imposed tariffs of up to 30%. Back then the bogeymen were steelmakers in Europe and Japan; now it is China, where a glut of steel has squashed prices.

Cheap steel, however, is a boon to many producers as well as to consumers. Higher prices would hit firms that use the metal, such as carmakers. Mr Bush’s...Continue reading

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The Trump administration starts to turn up the heat on trade

“WELL, I’m mostly there on most items,” said Donald Trump of his 100-day plan. As far as trade policy is concerned, his self-assessment would indeed be true—if tweets and executive orders ratcheting up tensions in a growing number of trade disputes constituted progress.

However, although Mr Trump has withdrawn America from the Trans-Pacific Partnership (TPP), a 12-country trade deal, he has neither labelled China a currency manipulator nor made progress in renegotiating the North American Free-Trade Agreement (NAFTA). On April 26th his administration denied reports that it was poised to trigger America’s withdrawal from the agreement. No new “America-first” trade deals have emerged, and his trade-related executive orders have requested reports or investigations. Mr Trump has created more work for pencil-pushers than for exporters.

The slow pace might reflect the obvious ideological infighting within his team, a desire for evidence before acting or the realisation that Congress, which sees trade policy as within its remit, must be kept on side. Congress officially delegates responsibility for trade to the United States Trade Representative. But it...Continue reading

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Europe's Surprising Inflation Could Catch Markets Off Guard

Europe isn’t following the script many had for it this year. April’s inflation numbers are a challenge to perceptions of the eurozone.

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The pope visits Egypt

“SHOW me just what Muhammad brought that was new and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached.” So said Manuel II Palaiologos, a Byzantine emperor, of Islam’s founder. Some six centuries later, in 2006, Pope Benedict XVI used the quotation in a speech about reason and religion. The Muslim world was not pleased.

Jorge Bergoglio, then a cardinal in Argentina, criticised Benedict’s comments. In 2013, when Father Bergoglio succeeded Pope Benedict, taking the name of Francis, he immediately called for more interfaith dialogue. Two weeks later, when the new pope washed the feet of prisoners in Rome, a Christian ritual, he included two Muslims. In 2014 he toured Jordan, Israel and Palestine, further mending the Vatican’s relations with Islam.

Pope Francis hopes to continue improving relations between Christians and Muslims when he visits Cairo on April 28th-29th, the first such trip since...Continue reading

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Pressure Mounts on Barclays in More Ways Than One

UBS appears to grab more of U.S. investment banking recovery than its U.K. rival.

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Sony Finds Success in All the Right Places

Sony reported strong results Friday but what should excite investors are the rosy forecasts for the future.

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Shining a Bright Light on Dodgy Chinese Data

Chinese GDP data is widely considered to be unreliable. But new estimates of growth from a surprising source hint that the recent uptick isn’t pure fiction.

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Tech's Titans Go From Big to Bigger

The newfound prominence of big tech companies now can be chalked up to a few factors.

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First 100 Days: The Trump Trade's 'Ridiculous Standard'

Donald Trump’s first 100 days in office have produced a strong stock market but weak economic growth; he should get an incomplete for both

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A new spin on why the travel ban is unconstitutional

SIX weeks ago, when judges in Hawaii and Maryland blocked Donald Trump’s second attempt to limit travel from a handful of Muslim-majority countries, the 45th president said the rulings were made “for political reasons” and promised to appeal them “all the way to the Supreme Court”. Mr Trump’s refugee and travel ban may indeed wind up in the justices’ hands, including those of his newly installed jurist, Neil Gorsuch. But there are stops along the way at the United States Circuit Courts of Appeals. On May 8th, the entire 15-member Fourth Circuit court in Virginia will hear arguments in International Refugee Assistance Project v Trump; and on May 15th, a three-judge panel of the Ninth Circuit court in California will hear an appeal in State of Hawaii v Trump. If the plaintiffs challenging the ban win either case, Mr Trump’s travel restrictions will remain stymied nationwide.

It seems the president faces an uphill battle in both tribunals: the Ninth Circuit is commonly described as the most liberal in America; and with six recent Barack Obama appointees, the Fourth Circuit is no...Continue reading

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What Can Stop the World's Best Selling Drug?

AbbVie rides its blockbuster anti-inflammatory drug, Humira, to another strong quarter, but the question remains: How long can this juggernaut can last?

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PayPal Does More for Less, But for How Long?

PayPal is earning less per transaction, but usage is growing fast

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ECB Keeps Extreme Measures Despite More Ordinary Times

Mario Draghi drew a sharp contrast between the ECB’s views on growth and inflation. The tipping point away from ultra-loose policy remains some way off.

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Win or lose, Emmanuel Macron has altered French politics

THREE years ago, he was largely unknown to the public. Today he is a step away from becoming France’s president. Emmanuel Macron’s remarkable rise from obscurity to favourite for the presidential election on May 7th carries symbolic value well beyond his homeland. If he defeats Marine Le Pen of the National Front (FN), as polls suggest he will, the country will have shown the rest of the world not only that it can favour youth over seniority, and optimism over fear, but that pro-European liberalism can still triumph over populism and nationalism.

A former Socialist economy minister and one-time investment banker, the 39-year-old Mr Macron topped first-round voting on April 23rd with 24%. Ms Le Pen came a close second, with 21%. The pair, neither of whom comes from an established mainstream party, knocked out candidates from both of the two political groupings that have held the French presidency for the past 60 years. François Fillon, a former prime minister who ran for the Gaullist Republican party, came third on 20%. Benoît Hamon, the Socialists’ candidate and a former backbench rebel, sank to a dismal fifth place, on 6%. Despite a late surge, the Communist-backed...Continue reading

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If France used America’s system, Marine Le Pen might have won

Marine Le Pen’s second-place finish behind Emmanuel Macron has been hailed as a sign that the global wave of populist nationalism which Donald Trump rode to victory is receding. But if France used America’s system for electing presidents, Ms Le Pen might have won. In America’s electoral college, every state gets one vote for each of its senators and members of the House of Representatives. Imagine that France’s 18 regions were treated as states. Each would have two senators, and they would divide 157 House members according to population (with each region guaranteed at least one). Like Hillary Clinton, the cosmopolitan Mr Macron won the most-populous urban regions, such as the one around Paris. But like Mr Trump, Ms Le Pen won more of the rural regions, which an electoral college would favour. Mr Macron and Ms Le Pen would have ended up with 90 electoral votes each. Under the American system, if no candidate gets a majority, the House of Representatives picks the president, with each state getting one vote. Ms Le Pen won eight regions to Mr Macron’s six, and came higher in three of the other four, so she could well have triumphed. The difference between a...Continue reading

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Russia bans the Jehovah’s Witnesses, just as the Soviet Union did

WHEN the KGB men came to his family flat, they split up Yaroslav Sivulsky and his parents into separate rooms. Mr Sivulsky, then a young boy in the Soviet Union, watched as agents searched their belongings for “banned literature”. His grandparents had been exiled to Siberia for belonging to the Jehovah’s Witnesses, a Christian denomination founded in America in the 19th century; his parents had kept the faith alive in their home.

Now Mr Sivulsky and the 175,000 other Jehovah’s Witnesses in Russia face the prospect of returning to an underground existence. On April 20th, the Russian Supreme Court outlawed the group’s activities, declaring it an “extremist” organisation. “It’s all happening again,” says Mr Sivulsky. “Back then they came after us for ideological reasons, and now because our faith is not of the ‘right kind’.”

The ruling puts the group, whose members preach non-violence and refuse to serve in the military, on the same legal footing as several neo-Nazi groups. Lawyers from the Russian Ministry of Justice argued that they pose a threat to “public order and public security”. The group’s property and assets are set to be...Continue reading

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Europhiles happy about France should worry about Poland

IT IS crucial to keep Siemiatycze pretty, says Piotr Siniakowicz, the mayor, himself resplendent in bright-blue suit and silk pocket-square. The border with Belarus is a hop and a skip away, so this small town in eastern Poland may mark visitors’ first encounter with the European Union. Siemiatycze brims with well-maintained nursery schools and a gleaming sports centre, thanks to EU funds lavished on the region since Poland joined in 2004. Remittances from thousands of émigrés in Belgium have poured into handsome houses, and businesses depend on those who return for holidays: Siemiatycze, beams Mr Siniakowicz, boasts 50 hair salons. Not bad for a town of 15,000.

Yet despite all this, the nationalist-conservative Law and Justice (PiS) party took 38% of the vote here in 2015. A similar score nationwide won it a majority in parliament. Since then, PiS has set about dismantling Poland’s institutional checks and balances, alarming Polish liberals and startling the rest of the EU.

So amid Europe’s relief at Emmanuel Macron’s win in the first round of France’s presidential election on April 23rd, spare a thought for places like Siemiatycze. The unashamedly...Continue reading

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Award: Tom Nuttall

Award: Tom Nuttall, our Brussels correspondent, has won the 2017 Evens Prize for European Journalism, awarded for making the European project easier to understand.

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The Alternative for Germany decides to remain a protest party

HISTORY has a way of repeating itself. In 2013 a group of anti-euro intellectuals led by Bernd Lucke, an economist, formed the right-wing Alternative for Germany (AfD) party. Two years later he was ousted by Frauke Petry, an erstwhile ally, who led the party to a series of sensational results in state elections by angrily opposing Angela Merkel’s refugee policies. But in recent months, as the refugee crisis has moved off the headlines, the AfD’s poll numbers have slumped into single digits. On April 22nd it was Ms Petry’s turn to be shunted aside, at the party’s conference in Cologne. Her nemesis: Alexander Gauland, a traditionalist with the grand air of a British aristocrat, who had helped her defenestrate the moderate Mr Lucke.

This was more complicated than a rightward lurch. Three groups have dominated the AfD since Mr Lucke’s fall, each led by two main figures. The events of Cologne saw control of the party shift decisively within this sextet.

One could call the first group the Power-Seekers: Ms Petry and Marcus Pretzell, her husband and one of the AfD’s members of the European Parliament. Impressed by Marine Le Pen, France’s nationalist presidential candidate, they want to combine shrill politics (Ms Petry has said border guards should use arms against illegal immigrants) with a sharper, more disciplined image, a rejection of overt...Continue reading

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What’s behind the fad for “natural” wine?

The secret ingredient is: nothing

AT “Rawduck”, a restaurant in London’s trendy Hackney neighbourhood, clients crowd around communal tables under dim lights, inspecting a menu of delights such as charred purple sprouting broccoli, shaved yellow courgette and goat’s curd. Along with food, the venue offers classes in pickling vegetables and making kombucha (a Japanese fermented tea). The greatest emphasis is on the wine list, all of it billed as “natural” or organic. But on this front, though the venue strives for eccentricity, it is part of a much larger trend.

The craze for “natural” wine started in France in the 1990s, recalls Bertrand Celce, a wine blogger. A small group of bacchanalians started opening offbeat organic wine bars across Paris. Now the city boasts hundreds, with many others elsewhere in France. Since the mid-2000s they have spread across Europe and to parts of America. “Raw”, a London-based wine fair which started in 2012, has now opened in Berlin, Vienna and New York; this November, it will have its first show in Los Angeles. Well-heeled restaurants such as Claridge’s in London have also...Continue reading

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Donald Trump takes aim at Canada

“CANADA, what they’ve done to our dairy-farm workers, it’s a disgrace,” snapped Donald Trump from the Oval Office on April 20th. Mr Trump had just heard complaints from American producers of ultra-filtered milk, used to make cheese and yogurt, who said they were shut out of the regulated Canadian market after a change in the rules. “We will not stand for this,” Mr Trump tweeted a few days later. Ron Versteeg, who along with his brother milks 120 Holstein cows at their farm near Ottawa, does not seem perturbed. “That’s the US-Canada relationship,” he says affably. “They take a dig, we take a dig.”

Canada’s prime minister, Justin Trudeau, has tried to sound equally unruffled since the United States elected its protectionist president last November. He had grounds for confidence. While Mr Trump encouraged voters to blame their grievances on Mexico, the third partner in the North American Free-Trade Agreement (NAFTA), he was much gentler towards the United States’ northern neighbour. The situation with Canada is “much less severe” than with Mexico, he told Mr Trudeau during a visit to Washington in February. The trade relationship just needs...Continue reading

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Latin America’s great re-election debate

IF YOU need a pretext for a political climbdown in Latin America, they don’t come much better than a plea from the pope. That was the excuse that Horacio Cartes, Paraguay’s president, used to drop his plan to run for a second consecutive term in 2018, which required changing the constitution. He was inspired to desist, he wrote to the archbishop of Asunción this month, by Pope Francis’s call for peace and dialogue. An attempt to ram the change through congress had provoked a riot in which the parliament building was set on fire.

After ten days of hesitation, during which Mr Cartes’s Colorado Party failed to withdraw the amendment, on April 26th congress voted unanimously to reject it. But Paraguay’s decision will not quiet debate across Latin America about whether or not to allow presidential re-election.

When in the 1970s and 1980s Latin America emerged from a period of dictatorship, its politicians were keen to place limits on executive power. Most countries either barred presidents from seeking re-election, or allowed them to do so only after waiting out at least one term.

Since then, there has been a gathering trend in the region to relax term...Continue reading

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São Paulo’s mayor tries to make the city greener

Looking for places to hang a garden

THE phrase “concrete jungle” might have been coined for São Paulo. Brazil’s megalopolis has 2.6 square metres (28 square feet) of green space for each of its 11m inhabitants, a tenth as much as New York and a fifth of what the World Health Organisation recommends. As with wealth, greenery is unequally distributed. Rich central districts, many with jardim (garden) in their names, have more trees than residents. In Itaim Paulista, on the poor eastern periphery, there is one for every 17 people.

João Doria, the mayor since January, wants more foliage. In March he inaugurated the first section of what will become the world’s biggest “green corridor”. The “vertical gardens”, sprouting from wall-mounted pockets made from felt, will stretch for 3.5km (2.2 miles) down Avenida 23 de Maio, a congested ten-lane road in the city’s centre. They are expected to absorb as much carbon dioxide as 3,300 trees.

In elections last year Mr Doria, a marketing tycoon, defeated a left-wing mayor, Fernando Haddad, who was fond of cycle lanes but did little to make the city greener. Under...Continue reading

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The declining quality of Venezuela’s propaganda

IN WEEKS of almost daily protests, opponents of Venezuela’s authoritarian regime have found different ways to express their anger. They have held raucous banner-waving marches, a silent demonstration and a sit-in on Caracas’s main roads. At least 29 people have died since March in the worst unrest in three years. Many of these were killed by armed gangs that support the government, called colectivos. The protests persist because the government has made life intolerable: shortages of food and medicine are acute, the murder rate is probably the world’s highest and democracy has been extinguished.

But all is well in the world of Nicolás Maduro, the country’s much-loathed president. While chaos engulfs Venezuela’s cities, his social-media team has been seeking to humanise the dictator with video vignettes that emphasise his homespun origins and simple wisdom. In one video, posted on his Facebook page, he rhapsodises on the innocence of childhood as he perches awkwardly on a playground swing. In another, he admires a panorama of an apparently tranquil Caracas from the safety of a cable-car gondola....Continue reading

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China’s bullying is backfiring in South Korea’s presidential race

ANY excuse for a party. On April 25th North Korea celebrated the 85th anniversary of the founding of its glorious army. Ten days before its young despot, Kim Jong Un, had marked the 105th birthday of his grandfather, Kim Il Sung, the country’s founder, with a vast military parade. Mr Kim loves fireworks, too. He set off a ballistic missile in honour of his grandpa, though it fizzled on launch. Rumours of a nuclear test still hang in the air. Of North Korea’s five underground blasts to date, the young Mr Kim, in power since 2011, is responsible for three.

Mr Kim’s growing nuclear ambitions have agitated Donald Trump. This week America’s president called both his Chinese counterpart, Xi Jinping, and Japan’s prime minister, Shinzo Abe, to discuss them. He also summoned the entire Senate to the White House for a briefing on the subject. And an American aircraft-carrier, the USS Carl Vinson, has finally shown up for reassuring annual drills with South Korea, after an embarrassing incident in which American officials claimed it was on its way to the Korean peninsula when in fact it was going in the other direction.

Heaven knows South Korea...Continue reading

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Malaysia and Abu Dhabi strike a deal over 1MDB

FOR the past year 1MDB—a Malaysian state investment firm at the heart of one of the world’s biggest financial scandals—has been locked in dispute with IPIC, a sovereign-wealth fund from the oil-rich emirate of Abu Dhabi, with which it was once chummy. Terse statements released on April 24th suggest the pair are finally making up. 1MDB has agreed to pay IPIC $1.2bn, reportedly to settle a complaint that it reneged on the terms of a bail-out IPIC provided in 2015. The two companies have also agreed to enter into “good-faith discussions” about other disputed payments, which may total as much as $3.5bn.

Past dealings between 1MDB and IPIC are a focus for investigators hunting huge sums that have gone missing from the Malaysian state-owned company since its founding in 2009. In 2012 IPIC offered to guarantee loans that 1MDB needed to acquire two power firms. But IPIC said last year that it had never received collateral and other monies supposedly due to it under this deal. Instead 1MDB appears to have wired payments to an account held by an unrelated shell company registered in the British Virgin Islands, which had adopted a name similar to that of one of...Continue reading

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South Korea’s presidential election fuels a row about gay rights

“IT IS 2017. Moon Jae-in just opposed homosexuality,” thundered the headline of a newspaper following a live television debate among South Korea’s presidential candidates. Gay sex is legal in South Korea, but stigmatised. Mr Moon, a former human-rights lawyer and the liberal candidate, who leads the polling for the election on May 9th, had just confirmed that he disapproved of it.

Mr Moon’s statement caused a stir on social media, but his view is not that unusual. Of the five main presidential candidates, only Shim Sang-jung of the Justice Party, the only woman running, has expressed support for gay rights. A decade ago a bill outlawing discrimination on various grounds foundered because sexual orientation was one of them. MPs have blocked it twice more since then. Last week representatives of Mr Moon and three rivals attended a “Protestant Public Policy Forum”; all made statements against gay rights, in keeping with the stance of many of South Korea’s influential churches.

The denunciations come on the heels of a report from an NGO called the Military Human Rights Centre of Korea, which claims that the army is “hunting down” gay soldiers. The...Continue reading

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Why India’s opposition is nearly irrelevant

TWO years ago voters in Delhi, the Indian capital, whistled a warning to prime minister Narendra Modi. It was less than a year since he had led his Bharatiya Janata Party (BJP) to power in a sweeping general-election triumph. Yet suddenly, at the very seat of the national government, a puny upstart party running a shoestring anti-corruption campaign had nabbed no fewer than 67 of the 70 seats in the city’s main legislature. The BJP had captured a paltry three. Could it be that Mr Modi’s vaunted electoral juggernaut was not invincible after all?

This was certainly what the critics of the Hindu-nationalist BJP hoped. Yet in test after test since then, from obscure by-elections to the campaign for the state assembly in Uttar Pradesh, with a population of 220m, the party has surged relentlessly ahead. In addition to the national government, the BJP and its allies now control 17 out of India’s 31 state legislatures, together representing more than 60% of the country’s people (see chart). At a recent party rally in the eastern state of Odisha, Amit Shah, the BJP’s grizzled master strategist, actually evoked the Jagannath Temple, a local landmark that inspired the word...Continue reading

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Australia’s prime minister is not the man he used to be

Mr Abbott looms over Mr Turnbull

MALCOLM TURNBULL had always seemed to be what Australians call a “small-l liberal”. Unlike many in the Liberal Party, which despite its name is Australia’s main conservative force, he was a defender of progressive causes. In 1986, as a lawyer, he successfully challenged a bid by the British government to prevent the publication in Australia of the memoir of a former British spy. He led the failed campaign in 1999 for Australia to become a republic. And unlike his fellow Liberal and predecessor as prime minister, Tony Abbott, he has no doubts about global warming.

Yet since becoming prime minister two years ago, Mr Turnbull seems to have jettisoned many of his small-l views. The most obvious reversal concerns immigration. In 2013, when a government led by Labor, now the main opposition party, sought to curb temporary work visas, known as 457s, Mr Turnbull called the visas the “heart of skilled migration”; he dismissed as “chauvinistic rhetoric” claims that they robbed Australians of jobs. Yet Mr Turnbull recently announced sharp restrictions on 457s: most recipients will no longer be able to apply for...Continue reading

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Neglecting the State Department does real damage

FEW Americans would have known it, but on New Year’s Eve their diplomats probably prevented scores of killings in central Africa, and perhaps a war. President Joseph Kabila, Congo’s long-stay autocrat, had refused to leave power, as he was obliged to do. Angry protesters were taking to the streets of Kinshasa and Mr Kabila’s troops buckling up to see them there. Yet through a combination of adroit negotiating and the high-minded pushiness that comes with representing a values-based superpower, Tom Perriello, the State Department’s then special envoy for the Great Lakes, and John Kerry, the then secretary of state, helped persuade Mr Kabila to back down. The resulting deal, brokered by the Catholic church, committed Mr Kabila to a power-sharing arrangement and retirement later this year. That would represent the first-ever peaceful transition in Congo. But it probably won’t happen.

Three weeks later, Donald Trump became president and the State Department’s 100-odd political appointees, including Mr Kerry and Mr Perriello, shipped out. That is normal in American transitions. But the most senior career diplomats were also pushed out, which is not. And only Mr Kerry has so...Continue reading

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Donald Trump vows to fight a court ruling on sanctuary cities

IN ITS defence of Donald Trump’s order threatening to pull federal funding from “sanctuary cities”—localities that refuse to help the federal government deport people—lawyers from the Department of Justice tried to lower the stakes. Executive Order No. 13768, “Enhancing Public Safety in the Interior of the United States”, signed on January 25th, has no legal effect to speak of, Mr Trump’s lawyers assured William Orrick, a district judge. The order was just an example of the president using his “bully pulpit” to broadcast his views on immigration policy. So San Francisco and Santa Clara, California have nothing to worry about; their billions of dollars in federal grants are safe.

This turned out to be a losing move. On April 25th, Mr Orrick provisionally extended a canopy over these sanctuary cities and handed Donald Trump another legal setback. After seeing both the first and revised versions of his travel ban halted by federal judges from east to west, Mr Trump has now been reprimanded a third time. Mr Orrick pointed to Mr Trump’s statement upon signing the order that “he was willing and able to use ‘defunding’ as a ‘weapon’ so that sanctuary cities would change their...Continue reading

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Donald Trump’s first 100 days

AT A rally in Gettysburg, Pennsylvania last October, Donald Trump presented his “100-day action plan”, a long list of goals to reform government. Achieving these was always a tall order, and the president has certainly kept busy. He is expected to sign 30 executive orders by the end of his first 100 days in office (see chart), more than any other president since Harry Truman.

True to his word, he has withdrawn America from the Trans-Pacific Partnership, a trade pact, appointed a conservative Supreme Court justice and authorised the building of the Keystone oil pipeline. The president even seems intent on building his border wall with Mexico, although the financing is still hazy. Mexico, he now claims, will pay for the barrier “at a later date…in some form”.

But plenty of promises remain unfulfilled. Mr Trump has declined to label China a currency manipulator. His attempt to ban travellers from several Muslim-majority countries has twice been thwarted by the courts. His plan to “repeal and replace Obamacare” never made it to a vote in Congress, though another attempt may be imminent.

According to the Partnership for Public Service,...Continue reading

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In pursuit of WikiLeaks

THE hypocrisy is breathtaking. But it looks as if the Trump administration really is going after WikiLeaks and Julian Assange, the self-styled transparency campaigner who runs it from the Ecuadorean embassy in London, where he has been holed up for five years evading extradition to Sweden to face a rape allegation.

As a candidate, Donald Trump said he loved WikiLeaks for helping his campaign by publishing embarrassing e-mails from the Democratic National Committee, hacked by the Russians. Now he is in the White House, he views leaks less indulgently. On April 20th the attorney-general, Jeff Sessions, declared that the arrest of Mr Assange had become “a priority”. He added: “We are going to step up our efforts, and are already stepping up our efforts, on all leaks.” The Department of Justice is said to be preparing charges against Mr Assange.

In a speech made a few days before Mr Sessions’s announcement, the director of the CIA, Mike Pompeo, excoriated WikiLeaks as “a non-state hostile intelligence service often abetted by state actors like Russia”. Mr Pompeo’s wrath had been incurred after the release by Mr Assange’s outfit of information about...Continue reading

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An alcoholism epidemic among the Lakota Sioux

Killing Time at Pine Ridge

THE Pine Ridge Indian reservation in South Dakota, the site of the battle of Wounded Knee, contains one of the poorest counties in America; and every one of its residents is affected, in some way, by alcoholism. So says Robert Brave Heart senior, one of the leaders of Red Cloud, a private Catholic school founded in 1888 by Jesuits at the request of Red Cloud, a chief of the Oglala Lakota, the tribe of Crazy Horse. Most of his people, says Mr Brave Heart, cannot drink alcohol in moderation. He thinks he is one of them. After bad experiences with booze as a teenager, he has not touched alcohol for 40 years.

Alcohol has been banned in Pine Ridge since 1889, except for a few months in the 1970s. Yet two-thirds of adults on the reservation are alcoholics; alcohol-fuelled domestic violence is rampant; and one in four babies born on the reservation is irreversibly damaged by fetal-alcohol syndrome, a range of neurological defects caused by mothers drinking alcohol during pregnancy.

One of the main sources of alcohol for the reservation’s residents is Whiteclay, a tiny hamlet of 11 residents just a short walk away...Continue reading

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John Kasich’s lament

WHEN historians look back at the earthquake that shook American politics in 2016, two books deserve recognition as important early warnings. The first, “Bowling Alone” by Robert Putnam, was published way back in 2000. With the prescience of a ranch-hound growling at a far-off tremor, Mr Putnam, a political scientist, reported that Americans were living increasingly solitary lives, slumped in front of televisions or surfing the internet, rather than competing in bowling leagues or volunteering for such civic groups as the Knights of Columbus.

The second book, clanging like a ranch-bell as the first tremors arrived, was “The Big Sort: Why The Clustering of Like-Minded America is Tearing Us Apart” by Bill Bishop. Published in 2008, this reported that when Americans emerge, blinking, from their TV dens they increasingly inhabit communities which share their partisan, religious or cultural views. In the presidential election of 1976, some 27% of Americans lived in “landslide counties” which Jimmy Carter either won or lost by at least 20 percentage points. By 2004, when George Bush narrowly won re-election, 48% of counties saw landslides.

Now comes a third book...Continue reading

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Higher minimum wages may make bad restaurants close

To go

WITH Republicans in charge in Washington, the federal minimum wage is unlikely to alter soon. But debate over the impact of local pay floors is as hot as ever. Little wonder: 18 states and 22 cities and counties raised their minimum wages at the start of 2017, according to the National Employment Law Project, a campaign group. Left-wing activists have for years pushed politicians to guarantee minimum pay of $15 an hour, more than twice the federal minimum of $7.25, which last went up in 2009.

A new working paper by Dara Lee Luca of Mathematica Policy Research and Michael Luca of Harvard Business School looks at the impact of higher minimum wages from a new angle. Traditionally, scholars have focused on whether or not minimum wages reduce employment. But the Lucas asked something else: does it force firms out of business? In particular, they looked at the restaurant industry—about half of minimum-wage workers toil over food—in the San Francisco Bay Area, which contains 15 of the 41 cities and counties that have changed their minimum wages since 2012. Their analysis relies on data from Yelp, a restaurant-review app favoured by...Continue reading

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Paying for public transport in Los Angeles

WHEN the Los Angeles transit authority extended a railway to link the city’s towering downtown to Santa Monica, a swanky seaside neighbourhood, last May, Angelenos rushed to experience it as if to glimpse a celebrity. For six decades, there had been no rail connection from the centre to the Westside beaches. So exciting was the concept that queues formed at 9.30am to catch the first train at noon.

A year later Los Angeles is gearing up to build a rail link to the traffic-strangled International Airport, introduce new rapid-transit bus routes and extend subway lines, among other things. The ventures will be financed by money from Measure M, a ballot proposal passed handsomely last November to increase the sales tax by half a cent to pay for public transport. Growing congestion and reduced state and federal funding have spurred other cities to do the same: voters in Atlanta and Seattle also passed transit referendums in November. But they are dwarfed by the Los Angeles measure, which is expected to come into effect in July and collect a whopping $120bn for transport over the next 40 years.

It is not before time. Los Angeles County’s population has grown fast...Continue reading

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A new way to remember the civil war

Cyclorama drama

BEFORE there were IMAX cinemas, there were panoramas. Typically around 400 feet long and 50 feet high, the immersive paintings toured America in the last decades of the 19th century, sometimes accompanied by 3-D dioramas. They weren’t meant to last, and when ticket sales dwindled, most were discarded like old fairground rides. Only two made in their heyday can still be seen in the country. One is at (and of) Gettysburg; the other, known as the Atlanta cyclorama, encapsulates the problems involved in commemorating the civil war—and a possible solution.

The cyclorama was made by a team of German artists in Milwaukee in the mid-1880s: photographs of their workshop reveal a lubricating beer supply and a patriotic pin-up of Kaiser Wilhelm I. The subject was the Battle of Atlanta, a crucial Union victory, specifically the afternoon of July 22nd 1864. Many midwestern soldiers fought there. The picture was intended profitably to celebrate northern heroism.

When the cyclorama made its way south—first to Chattanooga and then, in 1892, to Atlanta itself—its meaning was reversed. An impresario recoloured the uniforms of captured...Continue reading

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Saudi Arabia’s young prince U-turns on reform

EVEN at the height of the Arab spring the Saudi regime had few domestic opponents. At their best they mustered a few hundred protesters to gather for a “day of rage” in March 2011 outside the interior ministry demanding a freely elected parliament and a constitutional monarchy. Many of its organisers were later jailed; but fear is only part of the reason for absence of protest. In a kingdom which acts like a (heavily armed) charity doling out cradle-to-coffin welfare, few see a reason to upset the felafel stand. Two-thirds of Saudi Arabia’s 21m citizens are employed by the government and expect annual pay rises whether working or not.

Confronted with vast deficits after the oil price collapsed in 2014, the king’s favoured son, Muhammad bin Salman (pictured centre), set out to change all that. The 31-year-old, who serves as deputy crown prince, defence minister and head of the committee that runs the economy, is widely considered to be Saudi Arabia’s de facto ruler, given the great age (81) of his father. His ministers called civil servants lazy and not only unveiled a transformation plan with austerity measures, but actually began implementing...Continue reading

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In its third year of war, Yemen risks fragmentation

Welcome to Aden

FROM the balcony of his hilltop palace, the governor, Major-General Ahmad bin Bourek, surveys Mukalla, the port and capital of Yemen’s largest province, Hadramawt. It is not yet his kingdom. But to mark the first anniversary of the expulsion of al-Qaeda, the jihadist group that seized the city in 2015, he declared a public holiday and hosted thousands of grandees at a conference at which he pushed his demand for autonomy. Flunkeys distribute badges with his portrait, hang banners proclaiming him leader along the city’s highways and organise military parades. Backed by the United Arab Emirates (UAE), which last April wrested back control of the port in an assault by land and sea, he sees a new political map of Yemen emerging from two years of war. “We can’t wait for them to liberate the rest of the country,” he says. “If the conflict lasts much longer, Yemen will split into duwailat (principalities).”

If so, it would be reverting to type. For 139 years, the British avoided the north and nannied 14 bickering sheikhdoms across southern Yemen. When the British Empire withdrew, socialists in the south...Continue reading

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Deutsche Bank Slogs While Investment Banking Rivals Soar

If Deutsche Bank has found the right balance in investment banking, it is hard to spot the benefits.

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Markets uninspired by Trump tax plan

REMEMBER why the "Trump bump" began, all the way back in November? The rationale for the surge in stockmarkets was that the new administration would cut taxes and allow American growth to accelerate. And so we waited for the details. When they came yesterday, it was only a one-page set of bullet points, containing around 200 words. If, as one expert pointed out, it had really taken 100 experts to come up with the plan, they averaged two words each.

The response from the markets was a yawn. Analysts at Clear Treasury said that

Much of yesterday was a non-event, markets were waiting to hear what came of Trump’s tax plans but there was certainly an air of disappointment when finally released.

The S&P 500 and Dow Jones Industrial Average were slightly lower on the day, and the European markets have fallen today. Of course that could be related to the other story floating around yesterday - that the US might withdraw from Nafta. With the US also reviving its trade complaints about Canadian lumber and imported steel, Citigroup has taken to issuing a "US Protectionism Round-Up". But this is only a reminder that, in market terms, there has always been a "Trump lite"...Continue reading

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Tech Leader Samsung Needs to End Its Old-Fashioned Ways

Samsung Electronics’ decision against a holding-company structure is disappointing

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On Taxes, Don't Forget the Deficit

President Donald Trump doesn’t seem to be paying much mind to what his tax plan could do to the budget deficit, but investors should.

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Can Under Armour Rebound?

Under Armour is the worst-performing S&P 500 stock so far this year. Thursday’s earnings might finally be the catalyst it needs to give shares a lift.

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There's Trouble in Capital One's Wallet

Worries over credit-card indebtedness rise as Capital One Financial raises its estimate for loan losses this year.

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How Good Can Europe's Recovery Get?

With politics pushed aside, investors may need to price in a more durable European economic recovery.

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Podcast: How will France's election affect business?

A row over the colours in Argentina’s flag

ARGENTINA’S national colours are instantly recognisable. The flag’s sky-blue stripes and golden sun adorn everything from football shirts to fridge magnets. A huge monument in Rosario, a port city, marks the site where Manuel Belgrano, a founding father, raised the first flag in 1812. On the anniversary of his death, June 20th, schoolchildren pledge to honour the “white and sky-blue” colours.

But are they saluting the right shade of blue? A study published in a recent edition of Chemistry Select, a peer-reviewed journal, suggests not. Researchers at Argentina’s scientific research council (CONICET) and Brazil’s Federal University of Juiz de Fora examined silk threads from what is thought to be the oldest surviving flag, the enormous but faded San Francisco flag. The shocking discovery: its blue was ultramarine, a much darker pigment.

This is about more than just getting the tint right. Years of civil war followed Argentina’s independence from Spain in 1816. The Federalists, led by Juan Manuel de Rosas, a bloodstained autocrat, fought for decentralised government with strong provinces under dark-blue colours. The...Continue reading

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Chile in a Spanish mirror

A LONG dictatorship ended in a negotiated transition to democracy. The centre-left took office with a moderate programme, reassured the right by pursuing pro-market economic policies, added better social provision and reconnected the country to the world. Power later switched to the right, which persuaded the country that it had become democratic. Then the centre-left returned, this time as a new generation critical of the compromises of the transition. It veered further left but faced economic difficulties.

Spain? Yes. But Chile, too. Since the dictatorships of Generals Franco and Pinochet, politics in the two countries has run along uncannily parallel tracks, with Chile lagging Spain by ten to 15 years. In Spain, Felipe González, the Socialist prime minister in 1982-96, laid the foundations of democracy, combining liberal economic reforms with a new welfare state and leading the country into Europe. When José María Aznar of the conservative People’s Party (PP) took over, he continued many of Mr González’s policies. Then the Socialists returned under José Luis Rodríguez Zapatero, who confronted the right through progressive social reforms (such as abortion and gay...Continue reading

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The arrest of two fugitive Mexican governors

ONE of the odder pieces of evidence turned up by investigations of Javier Duarte, a former governor of the state of Veracruz, was an exercise book with his wife’s scrawl. “Sí merezco abundancia” (“Yes I deserve wealth”), she had written, over and over. During six years in charge of the state on the Gulf of Mexico, Mr Duarte allegedly did his best to acquire it. He was arrested at a resort in Guatemala on April 15th, after six months on the run. Five days earlier Tomás Yarrington, an ex-governor of the northern state of Tamaulipas, was nabbed in Florence, Italy. He had been eluding justice for five years.

The two fugitive governors are both former members of the Institutional Revolutionary Party (PRI), to which Mexico’s president, Enrique Peña Nieto, belongs. The attorney-general has investigated at least 11 state governors since 2010, nine of them from the PRI. Mr Peña once praised Mr Duarte and two other tainted governors as exemplars of the PRI’s “new generation”. This does its image no good ahead of an election in June in the State of Mexico, Mr Peña’s political home. The outcome will be a harbinger of next year’s...Continue reading

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New Brazilian corruption probes and their consequences

THE latest revelations of wrongdoing in high places struck Brazil with the force of a Netflix release: they are riveting, but so far have left the real world undisturbed. On April 12th Edson Fachin, the supreme-court justice who is overseeing a vast probe into corruption centred on Petrobras, the state-controlled oil company, authorised prosecutors to investigate eight government ministers, 24 senators, 39 deputies in the lower house of congress and three state governors. He sent dozens of cases to lower courts; they will now consider whether to launch new criminal inquiries into nine more state governors and three former presidents. All the big political parties and most front-runners in next year’s presidential election have been tarnished (see chart).

This fresh scourging of the political class comes at an awkward time. Brazil’s worst recession on record has not ended. Michel Temer, who became president last year after the impeachment of his predecessor, Dilma...Continue reading

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Reducing rates for “pass-through” businesses will be tough to justify

Podcast: How will France's election affect business?

As the presidential race narrows to two strongly contrasting candidates, we explore what a victory for each would mean for businesses. The digital revolution is making measuring GDP a bit trickier. Also, how a website that crowdsources algorithms for quantitative finance could disrupt the industry

Credit Suisse's Smarter Plan to Raise Capital

Credit Suisse capital raise is a better alternative to its now abandoned spinoff plan. But claims that the bank has money to invest in growth and to pay better cash dividends from this year onward should be taken with a pinch of salt.

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Google's Costs Don't Always Click

How Google generates advertising revenue that now totals nearly $80 billion a year is no easy feat—especially at the double-digit rates the company has been reliably pulling off for years.

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Netflix's China Deal May Prove a House of Cards

Netflix has gained an entry into China, but its gains may be diluted since it had to partner with a local player for access to the vast market.

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An Excess of Faith at Indian Banks

Indian banks have high valuations, but their outlook is getting cloudier.

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The problems of family planning in Nigeria

WHEN Alheri Yusuf first heard about family planning from a relative she wasn’t convinced. “I thought she didn’t want me to give my husband more children,” says the 33-year-old mother of four, as she waits to have her contraceptive implant replaced by a hormonal injection at Yusuf Dantsoho Hospital in Kaduna. “But when I thought about it I realised it was for my own good, because she wanted me to be able to recover well after childbirth.”

It is impossible to be sure how many Nigerians there are. The World Bank’s estimate of 182m in 2015 is based on the 2006 census, which was probably inflated (politicians have exaggerated population counts since colonial times, to grab more parliamentary seats and government money for their regions). Most observers agree, though, that Nigeria’s population is growing at around 3% a year. Its economy will struggle to grow that fast, and indeed shrank during 2016 owing to a low oil price. A quarter of young people, who make up many of the recruits of jihadists in the north-east and militias in the oil-rich Delta, are unemployed (many more are underemployed). Many Nigerians still see their booming population as a source of...Continue reading

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Why America has a trust problem

TRUST IN politicians in America is at an all-time low. Recent polling suggests that the president is less trusted than ABC or MSNBC—a poor performance, given that in 2016 only 21% of Americans suggested that they had confidence in television news. But the legislative branch may be the least trusted wing of government: only 9% of Americans reported confidence in Congress in 2016. Technology and globalisation are commonly cited culprits for this parlous of affairs. But there is a simpler explanation for much of the slide: a reasonable perception that politicians are not working in the best interests of voters.

The government’s trust problem certainly predates Donald Trump: trust has been falling for decades. Apart from a short-lived spike in support after the terror attacks on New York in September, 2001, the last time a majority of Americans suggested that the government in Washington, DC could be trusted to do what is right was in 1972, according to the Pew Research Centre. By 2015, less than one in five Americans held that view. And the trust problem spreads beyond government: survey evidence suggests that answers to the question “do you think most people can be trusted?” are also at a...Continue reading

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Get Ready for Another Grim Quarter for Twitter

The social-media site is expected to suffer declines in revenue, user engagement and advertising.

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Nasdaq 6000: Betting on Big Tech Getting Bigger

Nasdaq’s record run doesn’t feed the appetite for richly valued tech startups.

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A Good Deal for LVMH at a High Price for Bernard Arnault

Having long shared a boss, Christian Dior and LVMH are set to be united under the same corporate umbrella.

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The Great Divide on Stocks and the Economy

Deep disagreements on America’s outlook could mean one thing for the stock market, another for the economy.

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Corporate Feud Exposes Big Profits on Drug Sales

A dispute between the largest pharmacy benefit manager and a health insurance giant has shown how profitable some relationships have become—giving more ammunition to critics of the health-care system.

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Another Bubble Bursts in Hong Kong

The plunge in property developer Fullshare’s stock is another example of murky trading practices in one of Asia’s biggest equity markets.

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Reports of populism's death are premature

MONDAY was a day when, in the latest jargon, the markets went "risk on". Equities rose, the spread between the yields of French and German bonds narrowed and the euro rebounded. The reason was the first round of the French presidential election. As the results emerged on Sunday night, it was clear that a)the nightmare of a second round between Marine Le Pen and Jean-Luc Mélenchon had been avoided and b)Ms Le Pen's vote was no better than her poll rating, indicating there was no reservoir of shy, far-right voters. The centrist Emmanuel Marcon (pictured) topped the poll and is predicted to get more than 60% of the vote in the second round, far outside the pollsters' margin of error.

So France will not follow the US and Britain down the path that led to the election of Donald Trump and the Brexit referendum. But it is way too early to say, as some do, that populism is in retreat. First, France has a much greater tradition of support for the far left...Continue reading

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The U.S. Economy's Full-Tank Conundrum

As in other areas of the U.S. economy, hard energy data is lagging behind buoyant consumer confidence.

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T-Mobile Is the Envy of the Wireless World

First-quarter earnings for Verizon and T-Mobile highlighted the vast differences in their strategic options.

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Barack Obama says he want to focus on training young leaders

HE WAS humble, articulate and conciliatory. On April 24th, in his first public appearance since January, Barack Obama charmed his audience with his ability to listen and his unwillingness to boast. As a community organiser on the South Side, "I am the first to acknowledge that I did not set the world on fire," Mr Obama said. “This community gave me a lot more than I was able to give in return.”

Mr Obama held his presidential farewell speech on January 11th in Chicago, his adopted hometown, and returned to the Windy City for his re-emergence in public life after an extended holiday. In his farewell speech the former president had reflected on the fragility of democracy. This time he focused on civic engagement and community organising in a 90-minute discussion with a panel of half a dozen youthful activists at the University of Chicago’s Logan Center for the Arts in front of an audience of mainly college students.

In his remarks Mr Obama brandished political polarisation, which he blamed on gerrymandered electoral districts, money in politics, a politicised media landscape and voter apathy, especially among young people. He admitted that his much-quoted comment at the Democratic...Continue reading

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Bleak Outlook for Big Drug Makers

Without price increases or deals to boost earnings, the pharmaceuticals sector faces a weak earnings season.

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Don't Succumb to Sticker Shock on Becton Dickinson Deal

Becton Dickinson’s acquisition of C.R. Bard is worth the high price.

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Akzo Running Out of Reasons to Snub PPG

U.S. paint giant PPG has sensibly combined its latest offer for European rival Akzo Nobel with a raft of commitments to staff and other local interest groups.

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French Election Result Helps Euro Slip Political Shackles

When it comes to the euro, what doesn’t kill it should make it stronger. The existential threat posed to the single currency by the French elections has faded. The focus should move to the economy and the European Central Bank.

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What Credit Suisse Needs to Get Investors Back on Side

Europe’s investment banks need a big first quarter, none more so than Credit Suisse, where tensions have grown over bonuses and performance.

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Ethiopia enters its seventh month of emergency rule

THE three-hour bus-ride to Ambo from Addis Ababa, Ethiopia’s capital, offers a glimpse into the country’s future. The road is well paved; irrigation ditches and polytunnels criss-cross commercial farmland; electricity lines leap over forested hills. The signal granting access to mobile internet is clear and constant. As the bus pulls into Ambo, a trading centre in Oromia, the largest and most populous of Ethiopia’s nine ethnically based regions, the street is bustling.

But there are signs, too, that not all is well. An army truck rolls down the main road. Federal police surround the entrance to the local university. Unemployed young men playing snooker in bar point at a building across the road: it used to be a bank, but it was burnt down. Three years ago 17 local boys were shot dead by security guards as they protested on the doorstep, the young men say.

Ambo has a reputation for dissent. It was on these streets that protests against authoritarian rule started in 2014 before sweeping across the country. They culminated in the declaration of a six-month state of emergency on October 9th last year.

Students from Ambo University led the charge in...Continue reading

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A Chinese Property Stock Surge That Is Set to Crumble

The 40%-plus rise in China Evergrande stock over the past month has been built on a share buyback program it can’t afford.

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A Moment of Truth for Alcoa-Arconic Split

Alcoa’s and Arconic’s big gains following last year’s split will be put to the test when both report earnings this week.

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Semiconductor Gear: Still Some Chips to Play

A big shift in flash memory production will drive further gains for Lam Research and Applied Materials.

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French Election Results Let Markets Breathe -- For Now

With politics on the back burner, Europe will look more attractive for investors than it has for some time

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Macron and Le Pen advance to the second round of the French election

AFTER the most volatile and closely run campaign in recent history, the French first-round vote has yielded an extraordinary outcome, putting two party outsiders into the final round of the country’s presidential election. According to estimates by Ipsos, a pollster, for France 2 Télévision based on a sample of polling-station results, Emmanuel Macron, a pro-European centrist independent, came first with 23.7%. Marine Le Pen of the far-right National Front (FN), followed with 21.9%. The pair will go through to a run-off vote on May 7th.

This result means that for the first time in modern French history, the second round will not include a candidate from either of the two political families—the Socialists and the Republicans—that have held the presidency since the Fifth Republic was established by Charles de Gaulle in 1958. François Fillon, a former prime minister and the Republicans’ beleaguered candidate, came third, with 19.7% of the vote, closely trailed by the far-left Jean-Luc Mélenchon at 19.2%, who failed to sustain a late surge during the closing weeks of the campaign.

The selection of Ms Le Pen and Mr Macron for the run-off, on a high...Continue reading

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The Economy's Confidence Game

High levels of consumer and business confidence don’t jibe with a slow-growing U.S. economy. That can’t last.

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Too Many Questions on Too Big to Fail

The Trump administration is reviewing Dodd-Frank’s provisions regarding how to wind down failing financial institutions. It may struggle to come up with an alternative.

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Investors Unmoved by Auto Results

Auto makers have had much to cheer about lately, but investors don’t seem to care. The U.S. market remains a cloud on everyone’s horizon.

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Political polarisation has grown most among the old

IN THE aftermath of the 2016 presidential election, much blame was heaped on social media for fuelling partisan rancour. Even Mark Zuckerburg, the boss of Facebook, considered the idea that social media may have enabled the spread of "fake news" and helped exacerbate political polarisation. But recent analysis suggests that the part of the electorate that has become more polarised is not one commonly associated with social media platforms, but old people. And social media may provide a partial solution.

The authors of the report, Levi Boxell, Matthew Gentzkow at Stanford University and Jesse Shapiro at Brown University, accept there is strong evidence of growing polarisation in terms of measures like "straight-ticket" voting: selecting one party’s candidates for every race on the ballot. But they argue that demographic evidence points away from social media as a cause. Social media use is concentrated amongst young people—around four out of five adults under the age of 40 used applications like Facebook and Twitter in 2012 compared to one in five of those above 65. The polarisation problem is concentrated amongst older voters. For adults under the age of 40, there is very little evidence of growing...Continue reading

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A market-related twist to the Dortmund bombing

WHEN three explosive devices hit a bus carrying the Borussia Dortmund football team on April 11th, it was immediately assumed that it was another Islamist attack. Notes were found at the scene of the crime alleging that Islam was the motivation, with the author claiming a link to the terrorist group Islamic State. But prosecutors in Germany allege a completely different rationale. They say that the suspect, a 28-year-old man, had borrowed money and taken out put options, which would benefit from a decline in Borussia Dortmund shares (which fell 3% on the day after the attack). 

As yet, the suspect has not been convicted. But if proved, the story would seem to come straight out of Hollywood. In the film “Casino Royale”, James Bond (as played by Daniel Craig) foils a plot to blow up an airliner owned by the fictional firm Skyfleet, after villain Hugo le Chiffre had sold the company's shares short (ie, bet on their price to fall). In “The Fear index”, a Robert Harris novel, a hedge fund's trading programme shorts an airline's stock just before a fatal crash. It was rumoured, after the September 11...Continue reading

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An attack in Paris makes the French election even more unpredictable

TODAY was supposed to be a moment for candidates in the French presidential election to go into overdrive ahead of first-round voting on April 23rd. Strict electoral rules ordinarily shut down campaigning at midnight. But last night’s fatal shooting of a policeman on the capital’s symbolic main avenue, the Champs-Elysées, has brought an abrupt early end to the campaign. The gunman, who opened fire on a police van with an automatic weapon, was shot by the police as he fled. French news reports named him as Karim Cheurfi, a 39-year-old French citizen with a history of violent crime and imprisonment, who was known to French counter-terrorism services. Investigators are treating the attack as terrorism. Most candidates, in response, cancelled their final rallies and campaign events.

François Fillon, the conservative Republican candidate, who, along with the other ten candidates was taking place in a final live television interview when the news broke, was the first to cancel his events. Others followed suit. Emmanuel Macron, a centrist independent, had planned to hold two rallies in two different towns today, but cancelled both. Candidates seemed to judge the...Continue reading

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Are Markets Prepared for a French Election Surprise?

Political surprises in 2016 mean investors have taken greater precautions ahead of the French presidential vote—but there could still be fireworks on Monday.

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Trump's Steel Battle Looks Unwinnable

A big steel tariff is unlikely do much to boost U.S. growth or employment, given China’s advantages.

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Banks and Borrowers are Waiting on Washington

Regional banks are seeing both optimism and angst in the American heartland, reporting that their customers are waiting for clues from Washington before taking action.

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GE Is Overdue for Some Good News

GE’s earnings report Friday could be the needed catalyst to get the conglomerate’s shares going again.

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Bill O’Reilly’s political legacy

ON OCTOBER 7th, 1996, on Fox News Channel’s first day of broadcasting, Bill O’Reilly lamented to viewers that television news was “mostly a rehash of what most educated viewers already know.” He promised he would be different.

More than two decades later, Americans can lament that Mr O’Reilly delivered on his promise. “The O’Reilly Factor” helped usher in an era of television “news” that educated viewers definitely did not know: that Al Qaeda had links with Saddam Hussein before the Iraq war; that the science on climate change was not settled; that white people were more likely to be killed by police than black Americans. Mr O’Reilly was television’s most successful purveyor of fake news long before there was a name for it.

On April 19th Mr O’Reilly was forced out of Fox News amid an escalating scandal over sexual harassment lawsuits and allegations against him. A report in the New York Times—detailing payments he and the network made of $13m to five women—was followed by a massive exodus of advertisers from his show. The network, run by Rupert Murdoch, was initially supportive of Mr O’Reilly, but Mr Murdoch’s sons James, chief executive of 21st...Continue reading

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