Economist 5/9/14

  1. The cost of an MBA at selected business schools after taking into account tuition fees and forgone salary. Two-year courses at prestigious American institutions are the most expensive. An MBA at Wharton costs $330,000 on average, in part because it enrolls well-paid executives. But the immediate return on such degrees is small. Graduates tend to land jobs just a few notches above the ones they left. Cheaper, shorter MBAs around the world offer better returns. Students at HEC make enough extra money upon graduation to pay off their degrees in less than two years. Schools, such as IESE, that enroll lots of students from poor countries who then find jobs in the West also fare well.
  2. travel retail” (which takes place mostly, but not entirely, in airports) is now a big part of many brands’ strategies and of airports’ revenues.  Luxottica, an Italian maker of sunglasses, calls airport sales “the Formula 1 of retail”. Airports income from landing fees and passenger charges has been squeezed by regulators and budget airlines. Airports have responded by boosting “non-aeronautical income”, a big part of which is their cut of sales in shops. he abolition of duty-free sales within the European Union in 1999 looked like the end for a big chunk of the business.In 2013 travel retailers sold around $60 billion of goods, according to Generation Research, a Swedish firm. (This does not count shopping in ordinary stores by tourists who later claim back value-added tax.) Sales at airports alone will grow by 73% from 2013 to 2019, predicts Verdict Retail, a consultancy. Cosmetics and perfumes have eclipsed alcohol and tobacco as the biggest-selling category. For most of L’Oréal’s high-end brands, “travel retail” is one of the three biggest markets.Airports are also laboratories. Luxottica opened three Sunglass Hut boutiques in Italian airports in part to see how they might fare in the country at large.Dubai eclipsed Heathrow as the busiest international airport this year.
  3. THE war on those stashing undisclosed money offshore intensified this week when 47 countries, including the Group of 20 and some prominent tax havens, sealed a pact that will shake up the sharing of tax information.. In future the signatories—and dozens of others that will be pressed into joining later—will automatically exchange information once a year. This will include bank balances, interest income, dividends and the proceeds of sales. The catalyst for the agreement was America’s Foreign Account Tax Compliance Act (FATCA). The law, passed in 2010, will soon impose stiff penalties on foreign financial firms that fail to declare their American clients. Once America began pushing for automatic declarations, other big countries did the same.
  4. Total bank assets in Italy stand at a relatively modest 2.6 times GDP, compared with 3.2 times in the whole of the euro area. Italian banks generally shunned the sorts of toxic financial instruments that brought down banks in America and Germany.Yet for all their sobriety, Italian banks are struggling amid a mountain of bad debts from Italian businesses, big and small. These are rising by about 20% a year and now stand at more than 8% of all bank loans, or almost 17% of GDP.   In addition, a slow legal system makes it difficult for creditors to recover money owed to them. Italy’s bankers are also contributing to a dangerous downward spiral by withholding credit from firms that are growing. Faced with the prospect of large write-offs, bankers are generally retreating from risk.  Intesa and Unicredit, Italy’s two biggest banks, earlier this year posted combined losses of almost €19 billion ($25 billion) in part due to write-downs.
  5. A SPECTRE is haunting global markets: the withdrawal of central-bank support. The Federal Reserve is “tapering” steadily, reducing its bond purchases by $10 billion a month. The Bank of England has stopped its quantitative easing (QE) programme altogether. That is one explanation for why stockmarkets are near record highs and bond yields near record lows.But it seems likely that the Fed’s programme has had a significant impact by cutting the volume of securities that investors can buy: the same demand is chasing a smaller supply.

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