Germans head towards reluctant rail privatisation 31 Jul 2007 After months of hesitation, the Merkel government has decided to go ahead with Deutsche Bahn s partial privatisation. But the plan so far looks halfhearted. If unions and politicians prevail, the company won t attract much interest from serious investors.
Worried about credit? Invest in the creditors 31 Jul 2007 For the last decade, the world s savers have made life easy for debtors and financial speculators everywhere. But that could be changing. Borrowers are scrambling, but cashrich Asian countries should avoid any financial squeeze. Japan and Korea could be safe havens.
Oil prices may be set to tumble 31 Jul 2007 At $78 a barrel, oil is so expensive even Opec says it s overvalued. But speculators continue to bid it up, despite record supply. Hurricane fears seem to be fuelling the speculation. But if the weather stays as calm as last year, oil prices could slip away.
Rising volatility is a two-edged sword for Wall Street 31 Jul 2007 The VIX index of S&P 500 volatility rose by over a third in July. That s a bonanza for banks, which can charge more for options. But it could lead to losses on options they ve already sold. And flailing markets force them to change their hedges, which can be expensive.
Murdoch’s Dow decisions will determine his legacy 31 Jul 2007 Key Bancroft family members were right to accept Murdoch s offer. The family had proved unable to manage Dow Jones effectively. Murdoch can use his resources to grow the company. But his own legacy may be largely determined by how he does that.
Could a healthcare deal remove GM’s bankruptcy risk? 31 Jul 2007 Despite its recent run of success, Detroit s top car maker still looks like a longterm case for insolvency. But that could change. A healthcare deal with the UAW could eliminate the hole in GM s balance sheet. But it still wouldn t justify its current $18bn market value.
Putin gets the better of another oligarch 31 Jul 2007 Mikhail Gutseriev has chosen to retire from Russneft rather than get the Yukos treatment. His stake goes to Kremlinfriendly Deripaska. Putin is determined to put the country s huge resources in friendly hands, whatever it takes. Russia is still far from the rule of law.
German banks caught between 1960 and 2007 31 Jul 2007 WestLB and IKB have both lost their chief executives in the last week. The common theme: newstyle risks imposed on a traditional culture. IKB s story is almost poignant. It went overseas to please the ratings agencies. And it trusted the agencies judgement on subprime paper.
Sir Alan Sugar takes well-timed curtain call 31 Jul 2007 "The Apprentice" may be a hit, but Sugar s Amstrad empire isn t. He is selling it to James Murdoch s BSkyB for 10% of its stock market peak. Amstrad's new owner is a younger, more dynamic breed of entrepreneur. Maybe it s time "The Apprentice" had a new guy in the boss's seat.
Starbucks needs bigger jolt than price hike 30 Jul 2007 The coffee chain is taking advantage of its premium brand to pass along higher prices to its customers. But while a price hike is a good strategic move, the company may need a much bigger jolt to perk up its sluggish stock price.
Cummins guns its engine 30 Jul 2007 In the midst of last week s bloodbath, shares of enginemaker Cummins surged nearly 6% on knockout results and an upbeat earnings outlook. While the credit crunch and subprime mess still haunt equity markets, bulls can take comfort that the old economy is still chugging along.
ABN makes better fist of auction’s second round 30 Jul 2007 In recommending neither of the revised offers, the Dutch bank is putting on a better show of giving its competing suitors equal treatment. ABN s supervisory board is using its stronger grip. But with some wriggle room left to favour Barclays, investors should be on their guard.
Abe defeat could lessen yen carry trade’s appeal 30 Jul 2007 After a crushing electoral setback, Japan s prime minister will be less able to restrain the central bank. Rate hikes could come faster. There are other possible interpretations. But investors are looking for reasons to close short yen positions. Political doubts provide one.
Rain hits UK as liquidity flood recedes 30 Jul 2007 Last week s inundations will push up food price inflation. It s highly visible, but isn t likely to influence the Bank of England. After all, the UK financial mopup could already be working. An apparent slowdown in the housing market will give the bank food for thought.
ICI deal looks within reach for Akzo Nobel 30 Jul 2007 The UK paint company may have rejected a raised 650p offer from its Dutch rival, valuing the group at £7.7bn. But it has agreed to talks. That seems sensible. Markets are choppy and ICI is dependent on the US housing market. The window for a big cash deal may be closing.
Bausch buyout may leave investors in tears 30 Jul 2007 The eye care company has agreed to a $3.7bn allcash bid from Warburg Pincus, despite a higher cash and stock bid from Advanced Medical. Warburg s offer may be safer. But had Bausch run the process differently, its investors might have secured a richer deal.
Roche’s hostile bid for Ventana may be smart 30 Jul 2007 The Swiss group s decision to go hostile with a $2.6bn offer for Ventana appears odd. It has itself been hounded by an unwanted suitor. And Roche isn t promising cost cuts, so its return may be miserly. It may also have to pay more. But the deal could be canny nonetheless.
Starbucks needs bigger jolt than price hike 27 Jul 2007 The coffee chain is taking advantage of its premium brand to pass along higher prices to its customers. But while a price hike is a good strategic move, the company may need a much bigger jolt to perk up its sluggish stock price.
TXU bid battle might be Franklin’s Alamo 27 Jul 2007 The US mutual fund has good reason for opposing the Texas utility's $45bn buyout by KKR and TPG. But thwarting the deal will be hard. The shareholder base is fragmented. And with the markets in trouble, the buyers might already be gagging on the deal.
Osmond should spell out plans for Resolution 27 Jul 2007 The entrepreneur may well have some ideas to create more value for Resolution than its £8.6bn nilpremium merger with Friends Provident. But Osmond needs to say what these are especially since it isn t obvious he wants to take over Resolution or could even afford to.
Did Brian Hunter manipulate the energy markets? 27 Jul 2007 Regulators, waving damning electronic messages saying he wanted the natural gas market smashed , believe he did. But the government s case is far from airtight. The evidence suggests that he was just one of many traders playing a manipulative game.
Reuters/Thomson tie-up looks on track 27 Jul 2007 The financial information giants have each issued strong results ahead of teaming up. Reuters sales are growing slightly faster at 6.4%. Regulators still need to clear the deal. Approval in the US for the merger of two Chicago exchanges, without forced disposals, is a boost.
Are Scylla and Charybdis moving closer? 27 Jul 2007 The US economy sails between Scylla, the rocks of recession, and the Charybdis of inflation. GDP figures show Charybdis the greater threat. Thus stocks and bond yields should rise. However, the space between the rocks may be getting ever narrower.
Six predictions for private equity 27 Jul 2007 With the LBO bubble bursting, the future world of private equity is likely to be very different from the heady conditions of recent years. Oozing liquidity, quick flips of assets, ever larger megafunds and the flotation of LBO houses themselves are all likely to come to an end.
Sainsbury’s should bite the Qataris’ hands off 27 Jul 2007 Facing a £12bn bid from Delta Two, the UK retailer's board has two things to consider: is a bid is high enough? And is it deliverable? The offer ticks the first box. And while deliverability isn t quite so clear cut, it could be unwise to let this bid fizzle out. Facing a £12bn bid from Delta Two, the UK retailer's board has two things to consider: is it high enough? And is it deliverable?
Apple’s blowout results shed little light on iPhone 26 Jul 2007 The technology group s results were again a bit of theatre. Its performance was routinely exceptional, yet future results were talked down. But the curtain on the most anticipated part of the show how the iPhone is affecting Apple won t raise until next quarter.
Geronzi’s comeback has gone too far 26 Jul 2007 Draghi, the Bank of Italy governor, and Profumo, the Unicredit boss, surely made a mistake by letting the convicted banker chair Mediobanca. They mustn't compound the error by letting Geronzi consolidate his power particularly now he has been charged in connection with Parmalat.
Credit crisis forces banks to make Hobson’s choice 26 Jul 2007 Spare a thought for a big bank s risk manager. Credit woes have imperilled loans to CLOs and hedge funds. So he s eager to cut them back. But he s also got buyout bridge loans piling up on his books. And the primary buyers for those are you guessed it CLOs and hedge funds.
Big Oil has a big slip 26 Jul 2007 ExxonMobil reported its first profit decline in 3 years, missing estimates. Special items and divestures were partly to blame. But declining production presents the biggest worry. The question is whether it s a blip or a sign of headaches to come.
Fortis vote may be test of hedge fund activism 26 Jul 2007 But it s not clear hedge funds will take the opportunity. Whether they do so may show how many are really willing to make their mark. The bank's vote on a E13bn rights issue should interest the hedge funds. The ABN bid has weighed on its shares. The deal could be blocked.