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Friday, 01 August 2014

BREAKINGVIEWS

The World Trade Organization WTO logo

WTO failure weakens trade’s role as global glue

01 August 2014

India’s rejection of a global trade pact throws fresh sand at an already creaking wheel. International commerce is no longer seen as a byword for growth, which puts the promised trillion-dollar gains from removing barriers in doubt. The prospect for ambitious accords is dimming.

Tesla performance befits company one-third as big

01 August 2014

Elon Musk’s $28 bln electric car maker beat estimates and outlined impressive production targets of 100,000 vehicles by 2016. For all its success, and investor fetishization of Silicon Valley disruption, Tesla will only ever earn autoland returns. That suggests it’s worth $9 bln.

Calculator

Yahoo's Mayer nears post-Alibaba reckoning

31 July 2014

A stake in the Chinese e-commerce group makes up over half the U.S. internet firm’s value, a Breakingviews calculator shows. When investors can buy Alibaba shares directly - potentially next month - Yahoo chief Marissa Mayer will find herself under a narrower, brighter spotlight.

Demonstrators protest the U.S. Congress' proposed $700 billion bailout of the financial industry in New York's Times Square September 27, 2008. The U.S. Congress embarked on a weekend mission to strike a deal on a proposed $700 billion bailout of the fina

Too-big-to-fail at least hibernating, if not dead

31 July 2014

A new U.S. government study suggests giant banks have lost the big funding-cost advantage they had over smaller ones in the crisis years. That suggests some success in making bailouts a thing of the past. The problem, though, is whether it sticks next time markets turn nasty.

View of the Exxon Mobil refinery in Baytown, Texas

Exxon's Q2 production slump not as bad as it seems

31 July 2014

The oil giant beat estimates. But a 6 pct output drop, the worst in years, wiped up to $9 bln off its market value. Exxon, though, has several projects coming online that should reverse the decline. With capital spending on these all but over, cash flow’s healthy again, too.

Xiaomi

U.S.-backed China tech shows investment curb folly

01 August 2014

Foreign funds sank $5 bln into venture capital the first half of 2014 – three times what local funds raised. That the country’s next Alibaba will probably be funded by Silicon Valley investors may jar with national pride and official rules. But China’s economy is the undeniable beneficiary.

T-Mobile CEO John Legere announces the T-Mobile Test Drive at his company's Uncarrier 5.0 event in Seattle, Washington June 18, 2014. T-Mobile US Inc is hedging its bets by offering to buy spectrum from smaller rivals in case the takeover by Sprint Corp f

Flaky Iliad bid muddies T-Mobile US sale odyssey

31 July 2014

The $16 bln French telco has offered $15 bln for 57 pct of the No. 4 U.S. mobile operator. That’s bold, with financing not immediately to hand and the claimed premium reliant on improbable synergies. But the intervention may intensify antitrust objections to Sprint’s rival offer.

A one euro coin and a map of Europe

Corporate Europe parades bill of good health

31 July 2014

In a pre-August deluge, at least 50 companies worth a combined $2 trln reported results on Thursday. Good news trumped bad by a factor of two to one. Some of the strength is derived far from home, but it’s a fresh opportunity for global investors to revisit Plc, AG, NV and SA.

VW

VW fights symptoms not root of profit woes

31 July 2014

Volkswagen is embarking on a 5 bln euro efficiency scheme. Tackling bloated costs and poor margins at the core brand is long overdue. But the group is shying away from addressing the real causes of the malaise. It is too complex, overly centralised, and badly governed. 

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Features

Ian Campbell

Interest rates may stay low in Freelance Britain

31 July 2014

The Bank of England is beginning to wonder why wages aren’t rising. Just delay? Or something structural? It’s both. Self-employment explains almost all the gain in jobs. Austerity cuts and recession have bitten hard. Pay, inflation and interest rates will take time to recover.   

Andy Mukherjee

Workers get less, central banks get a dilemma

31 July 2014

The share of rich-nation GDP going to labour has fallen, and depressed the “natural” interest rate that maximizes employment at steady inflation. But if central banks peg rates at the new level, cheap money foments financial instability. It’s a problem only governments can solve.

Columns

Edward Hadas

Edward Hadas: Not all banks are alike

30 July 2014

Ideology and intellectual laziness have led politicians and regulators to think of banks solely as profit-maximising institutions which only pretend to care about the future. History, solid analysis and the thriving of state investment banks tell quite a different story.

Rob Cox

Rob Cox: MetLife CEO should revel in his anonymity

29 July 2014

That almost no one knows ol’ so-and-so is good for shareholders. How he handles the mega-insurer’s likely designation as a systemic threat could change that. A Jamie Dimon-style fight would be foolish. Better to speak softly and keep the name Steve Kandarian out of headlines.