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Breakingviews Headlines

Breakingviews - Hadas: Beware of the curse of financial markets

Financial markets have some things in common with professional sport. Investors and fans are both desperate for winners and despondent about losing. They are passionate about little ups and downs, while outsiders often find the rules arcane and the enthusiasm weird. And for both, all the jumping and screaming has little effect on the rest of the economy.

Breakingviews - Japanese banks sit quietly pretty in Saudi saga

Japan’s big banks may be hoping to benefit from the retreat of global rivals from Riyadh. The accusation that Saudi Arabia engaged in state-sponsored murder has led top U.S. and European bank bosses to pull out of attending next week’s Future Investment Initiative. For Mitsubishi UFJ Financial Group and Mizuho Financial Group, though, the fallout could present an opportunity to snag more of Saudi’s fee wallet. 

Breakingviews - Netflix is online video’s Walmart, and its Tiffany

Netflix has managed to pull off the double axel of retail. The $145 billion streaming-video company has both the scale of shopping giant Walmart and the pricing power of luxury-jewelry outfit Tiffany. Chief Executive Reed Hastings’ next trick is to work out how to maintain both labels.

Breakingviews - David Solomon has a people challenge

David Solomon steps into his new role at Goldman Sachs at a flattering moment. The Wall Street group reported a 21 percent increase in earnings for the third quarter of 2018. The investment bank that Solomon used to run put in a strong performance. And the firm’s annualized return on equity of 13.1 percent beat uptown rival Morgan Stanley. Big numbers aren’t really Solomon’s challenge, though – people are.

Breakingviews - Saudi fail is fresh win for U.S. banks over Europe

It’s not often one imagines Jamie Dimon with a halo over his coiffured head. But that, in effect, is what European banks have given the JPMorgan boss by dithering over whether to attend the Future Investment Initiative in Saudi Arabia next week. The accusation that Riyadh had engaged in state-sponsored murder left all attendees facing the awkward choice of whether to bail and potentially miss out on fat fees, or go and risk pariah status.

Breakingviews - China’s share-backed debt problem is a lasting one

China’s pledged stocks cast a long shadow. Shares have been used as collateral for some $220 billion of loans in the People’s Republic, a practice which threatens to exacerbate a nearly $2 trillion selloff this year. Beijing will step in to contain the immediate risk, but higher lending costs and moral hazard will hurt for longer.

Breakingviews - The Exchange: Anshu Jain

Deutsche Bank was credited with coming through the 2008 crisis in better shape than many of its rivals. Jain, who rose from running the German lender’s global markets business to eventually become CEO, stopped by Times Square to speak with Rob Cox about the state of finance.

Breakingviews - Wall Street shows Trump the way on Saudi Arabia

The Wall Street tail is wagging the Washington dog. In the past, Saudi Arabia’s alleged involvement in the disappearance of journalist Jamal Khashoggi would have met with robust condemnation from the United States government. American banks and companies would then reluctantly pass up the chance to compete for lucrative business. But in the last few days a stream of luminaries headed by JPMorgan CEO Jamie Dimon have turned that dynamic on its head.

Breakingviews - BofA punches above Wells Fargo’s weight

Bank of America is punching above Wells Fargo's weight. The Charlotte-based bank earned $6.7 billion for its common shareholders in the third quarter, or an 11 percent annualized return on equity. In other words, it lagged its West Coast rival's performance, as it typically does – this time by a percentage point. Yet the two now trade at the same multiple of 1.65 times tangible book value, an implicit valuation premium for BofA. Boss Brian Moynihan's turnaround

Breakingviews - Riyadh is clouding Masayoshi Son's $100 bln vision

Riyadh’s problems are spilling over into tech. Fallout from the disappearance of prominent Saudi journalist Jamal Khashoggi has hit Japan’s SoftBank, whose $100 billion new economy war chest is backed by the Kingdom. Masayoshi Son’s investors are rattled. Certainly, entrepreneurs like Uber’s Dara Khosrowshahi will be wary of accepting fresh Vision Fund investments. New capital will be harder to come by too.

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EU leaders prepare hardball Brexit summit for May

European Union leaders will give British Prime Minister Theresa May a tough reception in Brussels on Wednesday, warning her to rally support at home for the Brexit deal on offer or be cut loose without one in March.