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Friday, 27 May 2016

BREAKINGVIEWS

Mortgage

U.S. mortgage agency misses Wall Street lesson

26 May 2016

The Federal Home Loan Banks, which fund private-sector banks’ housing lending, now rely on short-term borrowing for over half their debt. That may boost the profitability of their nearly $1 trln of assets. But as the 2008 crisis taught regular banks, it also increases risk.

A woman walks with her shopping bags in central Paris October 13, 2008.

Activist pushes on U.S. retailer's open door

26 May 2016

Hedge fund Barington wants two board seats and costs slashed at struggling Chico’s. It owns just a 1.4 pct stake at the $1.5 bln seller of women’s clothing. The company also is already shaking things up with its own new qualified directors. This investor aggression is overdone.

Headphones in front of Spotify logo, February 18, 2014.

Spotify's next investors may face the music

26 May 2016

The streaming service increased revenue by 80 pct last year to $2.1 bln. More than 80 cents of each dollar pay for songs, however. Even assuming generous growth and operating leverage, Spotify will need to do still more to merit a higher valuation than its latest of $8.5 bln.

Storm clouds gather over Shell's Pulau Bukom oil refinery in Singapore.

Oil sustainably above $50 requires OPEC action

26 May 2016

Prices sneaked above a psychologically important marker. But given temporary geopolitical and climate drivers explain why, oil bulls can’t declare victory yet. Only a major reduction in global oversupply - the preserve of OPEC - can send oil markets much higher.

A general view shows DONG Energy's power station, which provides steam, ash and gypsum as waste products to other companies for their use in Kalundborg, Denmark.

European IPO market regains its senses

26 May 2016

Danish renewable energy utility DONG priced its initial public offering at up to $16 bln, suggesting a forward EBITDA multiple in line with stricken carbon-heavy peers. If it sounds dull, that’s the point. European IPOs are still a buyer’s market, but maybe now a rational one.

People walk past Debenhams department store on Oxford Street, in central London.

Debenhams plucks new CEO from arms of its nemesis

26 May 2016

Amazon is the worst thing that could happen to stodgy old department stores. Yet that’s where Britain’s Debenhams found new boss Sergio Bucher. That makes it one of a handful of UK high-street names headed up by a digital ace. The hire sounds odd, but could be inspired.

A clerk counts Chinese 100 yuan banknotes at a branch of a foreign bank in Beijing January 4, 2016.

China "super-regulator" no match for foreign peers

26 May 2016

The People’s Republic may create a more powerful financial watchdog with the teeth to prevent a repeat of last summer’s policy missteps. The new body would boost policy coordination. But the power of top party leaders and provincial officials means it will still lack real bite.

People shop inside an Apple store in central London March 29, 2006.

Apple may find it harder saying "no" to bad ideas

26 May 2016

An executive at the tech giant reportedly proposed a bid for Time Warner. That seems contrary to founder Steve Jobs’ recipe for success: reject “1,000 ideas” and focus only on the few good ones. But an aging iPhone, a tepid stock price and a cash pile risk making the mediocre tempting.

A receptionist looks out from behind a counter at a Royal Bank of Scotland (RBS) office in Singapore October 9, 2008.

UK regulator gives RBS fresh reason to shrink

26 May 2016

The Bank of England has introduced a new capital requirement for lenders deemed systemically risky in a domestic context. Big banks basically have enough equity to meet it already. But Royal Bank of Scotland’s weighting to the UK means it has most to gain from getting smaller.

Governor of the Bank of England, Mark Carney addresses a press conference to unveil the new design for a new British 20 pound note.

Sterling options market gets the hump over Brexit

26 May 2016

Traders are braced for big sterling swings around the EU referendum and then expect volatility to subside. But true calm may prove elusive whatever happens. Even if Britain votes to stay, there will be enough economic and political uncertainty around to ensure trading is lively.

Spain's Banco Popular's President Angel Ron speaks during the bank's results presentation in Madrid.

Banco Popular flags trials of holding bank equity

26 May 2016

The Spanish bank’s 2.5 bln euro rights issue better protects it against real estate losses, but is still a surprise for shareholders. Pain is also not being shared with equity-like CoCo holders. Dealing with the uncertainty would be easier if returns were more compelling. 

Jack Ma

U.S. probe forces Alibaba in the right direction

26 May 2016

The Chinese e-commerce giant’s accounting is under investigation. Depending on the outcome, Alibaba may have to consolidate its loss-making logistics business. If the scrutiny helps shed light on some of the group’s many blind spots, investors will be better off.

A billboard advertisement of Takata Corp is pictured in Tokyo September 17, 2014.

Takata's funding drive will be a hard sell

26 May 2016

The Japanese auto-parts maker wants financial help to ride out its air-bag recall crisis. A few turnaround investors and industry peers will probably look. But huge unanswered questions about liabilities, prospects, and relations with big carmakers make clinching a deal tricky.

Features

Gina Chon

Lockheed-Boeing rocket JV feels competitive heat

25 May 2016

Elon Musk’s SpaceX just broke the monopoly on military satellite launches enjoyed by the defense contractors’ alliance. Congress may help the pricey venture by allowing it to buy more sanctions-tainted Russian rocket engines. That’d be a strike against efficiency and innovation.

Columns

Rob Cox

Cox: The other European referendum to fret over

24 May 2016

While the world obsesses over Brexit, another perilous plebiscite looms in October. Italy’s leader has dangerously staked the future of his leadership over a constitutional reform vote. Its failure would present huge risks to Europe’s economy and global capital markets.

Edward Chancellor

Chancellor: UK housing crisis isn't supply problem

17 May 2016

British home prices are higher than ever relative to incomes. But nosebleed values aren’t a sign of inadequate supply. It’s all about ultra-low interest rates and foreign capital flows. When Chinese capital flows reverse, the London property bubble will burst.