Some Inconvenient Truths About 7-Eleven's Owner

Shares in Japan’s Seven & I haven’t budged much since activist shareholder Dan Loeb won a boardroom battle there last year.

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Allegations of sexual abuse have ended Harvey Weinstein’s career

STORIES about Harvey Weinstein, the mogul who brought best-picture winners “Shakespeare in Love” and “The King’s Speech” to the screen, had been whispered around Hollywood for years. Famous actresses warned others about his behaviour. Powerful men—stars, studio bosses, talent agents—had heard that he mistreated women. So had some journalists. Yet Mr Weinstein reigned among them as a king of independent film, able to make and break the careers of young women.

Until now. On October 5th the New York Times detailed allegations of sexual harassment by Mr Weinstein over decades, including eight settlements with women. On October 10th the New Yorker published an account of multiple allegations of rape and other sexual misconduct by Mr Weinstein. Many of the allegations involved Mr Weinstein scheming to be alone in a hotel room with a young actress while he was dressed only in a bathrobe. Gwyneth Paltrow and Angelina Jolie also went...Continue reading

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Say Goodbye to the China Bid

The flow of Chinese money into assets around the world is coming to an end.

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Oculus Vision Is a Long Way From Reality

Mark Zuckerberg has answered the question of whether he is still committed to virtual reality. Other questions remain unanswered.

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How Alibaba Will Foot a Growing Research Bill

Alibaba’s plan to triple research and development spending may not turn out to be as ambitious as it seems at first glance.

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Watch Out As Risky Loans Overtake Junk Bonds

Yield-hungry investors have made borrowing easier than ever for riskier companies. One sign: this year loans have raced ahead of bonds as the preferred form of debt. But when interest rates rise, this preference could mean trouble.

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How “regularising” undocumented immigrants brings benefits

ON OCTOBER 8th, the Trump administration issued a set of hardline "immigration principles and policies" that it suggested would be tied to any deal to extend the Deferred Action for Childhood Arrivals (DACA) programme, an Obama-era executive initiative that stalled deportation for nearly 800,000 undocumented young people brought to America as children. The list of demands includes funding for Donald Trump’s border wall, further restricting of asylum applications and tighter rules for unaccompanied child refugees. These conditions are considered deal breakers for Congressional Democrats who in September announced they had reached a tentative deal with the president to replace DACA days after he had announced its end. 

But the new “principles” are in line with countless calls from Mr Trump and his supporters for immigration curbs on the grounds that immigrants are taking jobs, bringing crime, and refusing to adopt “American values.” The irony is that ending the uncertainty faced by DACA immigrants and their families would...Continue reading

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Raila Odinga takes a gamble by threatening to boycott Kenya’s election

IN THE rickety wooden markets in Nairobi, where traders flog old books, second-hand clothes and kitchenware, walking away is a buyer’s last negotiating ploy. If he is lucky, he will be chased down the street and offered a better price. Raila Odinga, Kenya’s softly-spoken opposition leader, seems to be hoping a similar strategy may rescue his electoral chances.

On October 10th Mr Odinga withdrew from a re-run of the presidential election scheduled for October 26th, arguing that if it went ahead then it would not be free or fair. Courts had already annulled the presidential part of a wider set of elections held on August 8th, after finding problems with the way in which it was run. But no reforms have been made to the electoral process since then, he argued.

It had already been clear for several weeks that Mr Odinga did not plan to contest the election. His coalition of parties, the National Super Alliance (NASA), had been running a bare-bones campaign. The...Continue reading

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Richard Thaler’s work demonstrates why economics is hard

RICHARD THALER has won the Nobel prize in economic sciences this year for his contributions to behavioural economics. It's a well-deserved prize and a clarifying one, as far as economics is concerned. For a very long time, economists hoped to treat individuals a bit like particles in physics, whose activity can be described by a few well-understood rules, which allow researchers to model and understand complex interactions between particles. The rules, they reckoned, were things like perfect information, forward-looking reasoning and rationality. Of course economists understood that individuals didn't always behave according to those rules, but the idea was that, in aggregate, the rules would allow for a pretty good approximation of reality.

Then came the behavioural economists, who made it their task to find ways in which human activity systematically diverges from models using those basic assumptions. For many of them, the goal was probably to come...Continue reading

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China's Next Five Years---Squeezing the People to Feed the State

China’s twice-a-decade Communist Party reshuffle this month will hand even more power to President Xi Jinping, whose emerging grand strategy for managing the economy—and avoiding a debt crisis—will shape global asset markets for years to come.

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Scott Pruitt signs a measure to repeal the Clean Power plan

TIE off and collar open, Scott Pruitt unveiled his plan to repeal the Clean Power Plan to loud applause in Hazard, Kentucky, a sleepy coal town in the state’s mountainous south-east. “The war on coal is over,” said Mr Pruitt, head of the Environmental Protection Agency (EPA), on October 10th. The next day, in Washington, DC he signed a rule aimed at rescinding the Obama-era policy, which seeks to curb carbon emissions from power plants by 32% in 2030, compared to 2005 levels. But far from being the end of the Clean Power Plan, Mr Pruitt’s announcement is an opening salvo in a battle which could last for years.

The plan, which was drawn up more than three years ago, has never gone into effect. Just days after it was finalised, energy companies marshalled an impressive legal offensive, even recruiting Mr Obama’s mentor at Harvard Law School to claim that his his protégé  was “burning the constitution”. A federal court delayed implementing it until the EPA, now under new management, could issue a revised plan. Mr...Continue reading

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The Catalan leader puts independence on hold for talks

THE formula seemed contradictory. On October 10th Carles Puigdemont, the president of Catalonia’s devolved government, told his parliament that he was “assuming the mandate” for Catalonia to become an independent republic and thus leave Spain. But he asked the parliament to “suspend the effects of the declaration of independence” to allow for negotiations.

This followed an unconstitutional referendum on independence held on October 1st in which, his administration says, 2.3m (around 43% of the electorate) voted, 2m of them in favour. For many of the thousands of flag-waving demonstrations outside the parliament, that was enough to declare independence straight away, and many were deflated. But business leaders and opposition politicians in Catalonia warn that Mr Puigdemont is propelling the region towards a costly political void. By suspending independence, he is trying to play for time.

All eyes now turn to Mariano Rajoy, Spain’s conservative prime...Continue reading

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How Nvidia Keeps Driving Higher

Richly valued chipmaker Nvidia benefits from a consolidated industry with more diverse growth opportunities ahead.

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P&G Shares Look Expensive, With or Without Nelson Peltz

Procter & Gamble is the world’s biggest marketing company, so investors shouldn’t be too surprised if it managed to shout down Nelson Peltz’s efforts to win a board seat.

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What Could Dash the Hopes of Bank Investors

The third quarter was pretty dull for American banks, which is not so bad considering what was happening a decade ago. Maybe investors like boring, because they gave bank shares a nice boost at the end of the quarter.

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When investors get stuck in the past

THE award of the Nobel economics prize to Richard Thaler is a reminder that economics has been struggling, in the past 30 years, to adapt its models to the real-life decision-making processes of actual humans. The problem applies as much in investment as anywhere else.

One of the biggest problems is the tendency to assume that the future will resemble the past. Despite all the warnings inserted by regulators, investors often believe that fund management performance will persist, but the evidence is against it. Another issue is the assumption that overall market returns will persist. 

This may be one of the factors explaining the big deficits at state and local pension funds in America. Those funds are allowed to make their own calculations...Continue reading

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Liquor Makers Need to Sober Up to the Decline in Teenage Drinking

Move over millennials: Today’s smartphone-obsessed teens, Generation Z, are the consumers of the future. Worryingly for liquor producers, they’re shaping up to be an antisocial lot.

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Why Richard Thaler Matters to Investors

Richard Thaler, the Nobel Prize winner, used psychological insights to explain why markets aren’t always efficient.

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A High-Quality Problem for Videogame Makers

Videogame publishers have been on a strong run this year. The transition of the business to digital distribution has boosted profit margins and allowed game makers to generate multi-year returns from games that once measured their shelf life in months.

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Donald Trump ties hardline immigration demands to a deal on DACA

DONALD TRUMP prides himself on his skills as a negotiator. Among the tips he offers in “The Art of the Deal” is to “think big.” “To me it’s very simple,” he explains. “If you’re going to be thinking anyway, you might as well think big.” Of course, maximalism has always seemed more credo than negotiating strategy for Mr Trump. But it provides a lens through which to view the set of immigration “principles” that the president sent to Congress on the evening of October 8th. 

In September, Mr Trump announced a six-month wind-down for an Obama-era programme called Deferred Action for Childhood Arrivals (DACA), which gives two-year work and residency permits to young undocumented immigrants, without criminal records, who were brought to America before they were 16, provided they are in or have graduated from high school or university or were honourably discharged from the army. That surprised nobody; Mr Trump campaigned hard against illegal immigration, and his administration abounds in immigration...Continue reading

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Relations between Turkey and America are near breaking point

TWO weeks after Donald Trump declared they were as good as ever, America’s relations with Turkey have sunk to their lowest point in over four decades. On October 8th the American embassy in Ankara announced it was suspending visa services across the country to “reassess” the Turkish government’s commitment to the security of its diplomatic facilities and staff members. Within hours, Turkey countered by saying it would no longer accept visa applications by American citizens. (About 450,000 Americans visited Turkey last year.)

The Turkish lira plummeted as much as 6.6% against the dollar on the news, the biggest drop since the abortive coup of July 2016. Turkish Airlines, the country’s national carrier, saw its shares fall by 8%.

The spark that lit the powder keg came on October 4th, when police in Istanbul arrested Metin Topuz, a Turkish member of staff at the American consulate, on charges relating to the coup and to espionage. (A total of about 50,000...Continue reading

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The Nobel in economics rewards a pioneer of “nudges”

NOT long ago, the starting assumption of any economic theory was that humans are rational actors who maximise their utility. Economists summarily dismissed anyone insisting otherwise. But over the past few decades, behavioural economists like Richard Thaler have progressively chipped away at this notion. They combine economics with insights from psychology to show how heavily economic decisions are influenced by cognitive biases. On September 9th Mr Thaler’s work was recognised at the highest level when the Nobel Committee awarded him this year’s prize in economics. Mr Thaler thus becomes only the second behavioural economist to win the prize (after Daniel Kahneman, a laureate in 2002).

Mr Thaler’s has been a prolific career, spanning over four decades, the last two of them at the University of Chicago’s Booth School of Business. His research has touched on subjects as varied as asset prices, personal savings and property crime. For example, Mr Thaler developed a theory of mental accounting, which explains how people making...Continue reading

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Why Investors Should Care About Trump Tax Cuts' Fairness

Whether the rich would be the biggest beneficiaries of tax-reform efforts is a matter of fierce political debate. But they would likely be among its first beneficiaries, and for investors that alone would matter.

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Time to Reconsider India's Hot Run

India has been among the best-performing stock markets in the world this year, yet faces backtracking in the kinds of government reforms investors tend to like.

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Why Deutsche Bank Should Keep John Cryan

Deutsche Bank still has a long journey to good returns and it won’t get there quicker by changing its chief executive.

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Why Big Tech Is Tuning In to Speakers

The world’s largest tech companies are pumping up the volume on home speakers. They have good reason to.

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ECB May Choose a Long, Slow Goodbye to Extraordinary Stimulus

The ECB’s October date with destiny is looming. Investors are wondering by how much the central bank’s monthly bond purchases will be scaled back. But how long purchases run matters as much as how big they are.

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Messy Jobs Report Obscures Potential Turning Point for Wages

A sloppy jobs report had a clear message about wage gains and it isn’t positive news for stock investors.

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The Beltway Factor Drug Shareholders Must Take Seriously

New FDA commissioner Scott Gottlieb is reshaping the drug industry with an ambitious agenda. Investors should watch him closely.

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Americans respond differently to violence at home and abroad

THE tragic shooting in Las Vegas on October 1st took many more lives than were lost in recent terror attacks in Europe including in London and Manchester. But while Donald Trump responded to those attacks with numerous tweets, he was comparitively quiet over the Las Vegas slaughter. In this case at least, the president’s relative level of social media concern appears to reflect broader American attitudes. Past evidence suggests that mass shootings at home do not have the same impact on American behaviour that terrorism abroad does. While that is good news for the nearly one in three of all workers in the Southern Nevada region who are employed by the leisure and hospitality industry, it also points to one reason why America’s gun laws are so hard to reform.

Until Las Vegas, the most deadly mass shooting in recent American history was the attack in June 2016 at Pulse nightclub in Orlando, Florida—another city that is economically dependent on tourism. But that attack had no noticeable impact on tourist arrivals to the...Continue reading

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No Reason to Buy Renault's Fanciful Plans

While General Motors is retreating to its lucrative but shrinking home market, Renault is pinning extravagant hopes on emerging-markets growth.

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Looking for Bubbles in All the Wrong Places

A key European junk-bond index yields less than 10-year U.S. Treasurys, the global benchmark for risk. It’s worth looking a little closer at this apparent through-the-looking-glass moment.

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SoftBank's Soft Valuation Is an Opportunity

The market seems to be undervaluing the Japanese tech conglomerate’s collection of stakes in tech companies.

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Indonesian politics are becoming less predictable

WITH an eager smile and only a few tufts of hair on his chin, Ibrahim, a 30-year-old protester in Jakarta, does not seem like much of a Muslim firebrand. Yet on September 29th he and his four-year-old son, Alid, who clutched a flag emblazoned with the opening lines of the Koran, joined thousands of hard-line Islamists marching in protest against the government. Their concern? Communism and the “criminalisation” of Islam in the world’s most populous Muslim country, he says. In a feat of doublethink, he rails against capitalism, too: “There’s no distribution of wealth, so the rich become richer and the poor become poorer.” Ibrahim may have a fuzzy idea of what exactly he is protesting against. But his muddled ideology could still present a threat to President Joko Widodo, commonly known as Jokowi, who is likely to seek a second five-year term in 2019.

Jokowi’s election in 2014 was hailed by enthusiastic observers as a turning-point in Indonesian politics. When campaigning he...Continue reading

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The air around North Korea is getting crowded

“DO YOU want to be pretty?” asks a teasing male voice. “Do you want to lose weight?” Such is the enticing introduction to a recent radio show aimed at North Koreans, “Let’s Learn Market Economics”. After a jaunty jingle and a skit about how falling in love will make the listener healthier and leaner, the remaining half-hour is devoted to a worthy, but rather less gripping, profile of a successful South Korean businessman.

Competition for North Koreans’ attention is increasing. The country’s approved media are crammed with fawning reports about the latest “field guidance” from its dictator, Kim Jong Un—indispensable tips on topics such as growing juicy apples or perfecting a nuclear weapon. But those who buy illicit short-wave radios can pick up at least ten foreign stations targeting North Koreans. The latest, BBC News Korean, went on air on September 25th.

The broadcasters’ motives vary, as does their quality. Some are staffed by defectors who hope...Continue reading

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Australia admits more migrants than any other big Western country

Japanese voters want a plan to handle a declining population

Village life

THE city of Fukuoka, the biggest on the island of Kyushu, is buzzing. Hip young things at Fukuoka Growth Next, a city-run corporate incubator, bash away on their laptops. As the sun sets they gather to sup in the chi-chi bars beside the river. Fukuoka is Japan’s fastest-growing metropolis, including for 15-29-year-olds. It would be idyllic, but for the fact that these are the people who wonder how they will bear the burden of Japan’s declining and greying population. The current election campaign, alas, is doing little to reassure them.

Demographers reckon Kyushu, the southernmost of Japan’s four main islands, will lose 19% of its people by 2040. Over the same period the share of Japan’s population over the age of 65 will rise to 35%, compared with 28% today. The median age will rise by almost seven years, to 54. Although Fukuoka is still growing, thanks to immigration from smaller towns and villages, Kitakyushu, the island’s second city,...Continue reading

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India’s prime minister is attacked from an unexpected quarter

Events in Catalonia and Kurdistan are causing pangs in Taiwan

FOR a small island-nation, bobbing about on the opposite side of the globe, Taiwan has been paying close attention to the recent referendums that have taken place, amid much controversy, in Catalonia and Kurdistan. Interest in the Catalonian stand-off is perhaps to be expected. After all, the disputed vote on independence on October 1st, which the Spanish authorities did their damnedest to stop, has shaken Europe. More striking is that, in a media landscape more given to trivia and sensationalism, Formosa Television, whose viewers favour formal independence for Taiwan, sent a film crew to provide in-depth coverage of Kurdistan’s vote last month on seceding from Iraq.

Small, plucky peoples seeking independence: Taiwan falls into the category. It is a model of self-determination, peace and the promotion of human rights—the core principles of the UN. Formerly a thuggish one-party dictatorship under martial law, over three decades Taiwan has transformed itself into a vibrant democracy that...Continue reading

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Rio’s post-Olympic blues

IN THE warren of alleyways that make up Rocinha, Brazil’s largest favela, the air is heavy with foreboding. A feud between factions of the Amigos dos Amigos (Friends of Friends, or ADA), a drug gang that has controlled the slum since 2004, erupts in daily violence. Police in patrol cars creep through the lanes, their rifles poking out of the windows. Residents share news of shoot-outs on WhatsApp. “We are scared to walk around,” says Raquel, who sells colourful prints to a few brave tourists. At a command post a squad of policemen prepares for yet another operation. “It’s a never-ending war,” sighs José (not his real name), an officer drafted in from a nearby neighbourhood.

The city of Rio de Janeiro, which hosted the Olympic games in 2016, is having a grim year. Shoot-outs in favelas, or shantytowns, have killed dozens of people. A third of adults aged 18 to 24 are out of work. Many Olympic venues are abandoned; a fire in July...Continue reading

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The death of Venezuela’s Humboldt glacier

VENEZUELA is a tropical country, with rainforest in the south and east, and baking savannah stretching towards its northern Caribbean coast. The Sierra Nevada de Mérida mountain range in the north-west offers relief from the heat. In 1991 five glaciers occupied nooks near their peaks. Now, just one remains, lodged into a cwm west of Pico Humboldt. Reduced to an area of ten football pitches, a tenth of its size 30 years ago, it will be gone within a decade or two. Venezuela will then be the first country in the satellite age to have lost all its glaciers.

The retreat of the Humboldt glacier, named for Alexander von Humboldt, a German explorer of the 19th century, is the final stage of a 20,000-year process, the recession of an ice sheet that covered 600 square km (about 230 square miles) of Venezuela in the most recent ice age. Climate change has sped it up.

Scientists want to study the glacier in its final years but Venezuela’s tumultuous politics is making that...Continue reading

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Deciphering Donald Trump’s thinking on Latin America

IT IS a mystery that has baffled American and Cuban officials for months. Who and what was behind what the State Department calls the “attacks of an unknown nature” that inflicted hearing loss and headaches on 18 staff and four spouses from the United States’ embassy in Havana? With no sign of an answer, on September 29th the State Department announced that it was withdrawing all but emergency personnel from Havana. Noting that some of the “attacks” took place in hotels, it also advised Americans not to visit Cuba. This week it expelled 15 Cuban diplomats from Washington.

Despite this, the administration of Donald Trump does not contradict Cuba’s claim that it had nothing to do with the incidents. Cuba has allowed the FBI to investigate. Even so, the strange episode is helping to reverse the opening to Cuba that was a central element in the Latin American policy of Barack Obama, Mr Trump’s predecessor.

This adds to the difficulty of deciphering Mr Trump’s...Continue reading

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Netflix Needs a Bigger Box Office

The second season of the streaming service’s “Stranger Things” launches later this month—conveniently about a week after many of the company’s U.S. subscribers will be notified that their prices are going up.

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Europe Hardens Bad Loan Stance Just as Italy's Oldest Bank Returns

European regulators are turning up the heat on bad loans and Italy’s banks will feel it most

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Latinos have become Chicago’s second-largest ethnic group

“THE next mayor of Chicago will be Latino,” predicts John Hagedorn at the University of Illinois in Chicago. Latinos recently became the second-largest ethnic group in the city, accounting for 29.7% of the population, overtaking African-Americans (29.3%) and rivalling whites (32.6%). For decades the local Democratic Party’s machine was able to ignore Latinos. Today this would be political suicide. The closeness of Rahm Emanuel, Chicago’s mayor, to Luis Gutiérrez, a congressman and perhaps the city’s most powerful Latino politician, reflects this. On October 2nd Mr Emanuel, flanked by Mr Gutiérrez, who is of Puerto Rican origin, and dozens of Latino aldermen and city officials, announced that he is inviting “tens of thousands” of Puerto Ricans fleeing their hurricane-ravaged island to Chicago. About 1,600 have already arrived in the city. Gilbert Villegas, chairman of the city council’s Hispanic caucus, predicted that as many as 100,000 Puerto Ricans could pour into Chicago, which would double the city’s Puerto Rican...Continue reading

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Ethiopia’s ethnic federalism is being tested

Syria’s destruction revives a dream of rebuilding Lebanon’s railway

TRAVELLERS to Lebanon have long bemoaned the state of the country’s roads. Writing in the 1850s, an Irish banker, James Farley, called the route from Beirut to Damascus a “wretched mule path”. The perilous journey over rough mountain passes took four days, as long as you dodged bandits and avoided the winter snow. The mules have gone but the sorry state of the country’s roads persists. Years of political chaos, low investment and more recently the influx of 1.5m Syrian refugees, which has sapped resources, exacerbated the problem. Could a revival of railways save the day?

The fate of Lebanon’s rail network tracks the rise and fall of the country’s fortunes. Built by an enterprising French count when Beirut was still ruled by the Ottoman Turks, the first line opened in 1895, cutting the trip to Damascus to nine hours. Tourism, trade and a nascent wine industry set up by a French road engineer flourished. When T.E. Lawrence’s band of saboteurs blew up parts of the...Continue reading

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Jalal Talabani’s mediating skills will be much missed

FUNERALS can bring estranged parties together. And if anyone’s could heal the fissure between leaders in Baghdad and those in Iraq’s Kurdish enclave, that of Jalal Talabani should be the one. Mr Talabani died on October 3rd in Germany, aged 83. For 60 years “Mam”, or uncle, as Arabs and Kurds alike called him, made a career out of bridging differences.

After Saddam Hussein fell in 2003, he became Iraq’s first non-Arab president. A Sunni preacher’s son, he kept excellent relations with Shia politicians, particularly in Iran. He kissed both Iran’s president, Mahmoud Ahmadinejad, and America’s secretary of state, Condoleezza Rice. For years he battled his Kurdish rival, Masoud Barzani, pitting his humble origins and leftist leanings against the Barzanis’ tribal heft. (In 1996 Mr Barzani even summoned Saddam’s tanks to invade Mr Talabani’s eastern fief, Sulaymaniyah.) But in recent years Mr Talabani, ever the conciliator, endorsed Mr Barzani’s extended...Continue reading

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The birthplaces of African leaders receive an awful lot of aid

IN 2010 Yang Jiechi, then China’s foreign minister, visited Yoni, a village in Sierra Leone. Mr Yang had a job to do: hand over a fancy new school, financed by Chinese aid, to the local authorities. Sierra Leone certainly needed more schools, but some wondered why the Chinese chose the middle of the bush for the project.

It just so happens that Yoni is the home village of Ernest Bai Koroma, Sierra Leone’s president. Yoni’s residents, note Daron Acemoglu and James Robinson, two economists, live in new houses that would pass for “palaces” by the standards of rural Africa.

Scholars have long had a hunch that Chinese aid could be more easily manipulated than the Western sort, which often comes with strings attached. A Chinese white paper in 2014 stated that the government would not impose any “political conditions” on countries asking for help. The commerce ministry, China’s lead aid agency, says most projects are initiated by recipient states. This approach makes aid more vulnerable to misuse by local leaders, say critics.

But proving such corruption is difficult. China regularly blends aid with commercial loans, confusing researchers. Since 2013, however, AidData, a research lab based at the College of William and Mary in America, has scanned through media reports to categorise Chinese giving, making it easier to compare apples with...Continue reading

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The Palestinians try to reconcile

Mr Hamdallah (right) tries to shake loose some concessions

IT MUST have felt like déjà vu for Rami Hamdallah, the Palestinian prime minister, as he crossed the heavily-fortified border into Gaza on October 2nd. It was his first visit in two-and-a-half years. There were speeches, rallies and lofty promises to end the schism that has paralysed Palestinian politics for more than a decade. It was like a replay of a trip he made in 2014 to inaugurate a new unity government— which fell apart within weeks.

The Palestinian territories split in 2007, a year after Hamas, the militant Islamist group, won a majority in parliament. It seized control of Gaza after months of bloody fighting with its nationalist rival, Fatah. Since then Hamas has run the coastal strip as a separate fief, with its own civil servants and police. The two parties have signed six reconciliation deals meant to end the split, but none held. Hamas was loth to give up its enclave.

Now...Continue reading

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