SocGen Q&A 31 Jan 2008 When Société Générale announced that a lone trader had cost the French bank almost E5bn, water cooler conversations in the financial world suddenly got more interesting. Pierre Briançon asks and answers everyone s questions.
Should Italy copy Iceland? 31 Jan 2008 Minority investors in Monte dei Paschi might suggest a Banca d Italia trip to Reykjavik. There regulators seem to have put the kibosh on a reckless bank deal. Perhaps the Italians could do the same for MPS s extravagant Antonveneta acquisition. Unfortunately, it s not likely.
Air France’s bid for Alitalia hits turbulence 31 Jan 2008 The French carrier wants to shrink the Milan hub. That s good economics but bad politics, especially if Silvio Berlusconi returns to power. The Italian airline needs E750m this year to stay in the air. The threat of collapse should but may not help the French get their way.
January delivers bad omen for capital markets 31 Jan 2008 The year started with a cascade of pitiful data. The value of cancelled IPOs nearly matched what went to market. Mergers fell to a threeyear low. Securitisation and LBOs collapsed. There s little solace other than repeating It s just one month . And clutching at the Super Bowl.
Google needs to figure out MySpace 31 Jan 2008 The internet group already dominates search, so further market share gains will be difficult. Now Google is having trouble convincing social networkers to click on its ads. It better figure this out before a consumer slowdown hits.
Silicon Valley doesn’t understand books 31 Jan 2008 Numerous companies have unsuccessfully tried to crack the digital book market. Amazon s purchase of Audible is the latest effort. Ebooks are likely to remain the Brazil of digital content a promising future that never quite arrives.
UST looks tempting – even if Altria doesn’t bid 31 Jan 2008 The tobacco patch is buzzing with speculation that snuffmaker UST is in play. A deal with Altria would seem to make perfect sense. But even if a bid fails to materialise, UST still looks like a solid defensive bet.
What’s ahead for hedge funds? 31 Jan 2008 Hedge funds have gone from being niche investment vehicles for the rich and informed to headlinegrabbing fixtures on the investing scene. Richard Beales finds out what the future holds for the increasingly influential hedge fund industry.
Deutsche may pay for succumbing to real estate froth 31 Jan 2008 The bank lent $5.8bn to real estate mogul Harry Macklowe. Now he can't repay the loans so Deutsche is stuck with seven office buildings. Sure, the deal was cut at the top of a frothy market, but the bank should have understood the risks. Deutsche could be facing a big loss.
Any US recession is still mostly in house 31 Jan 2008 Weak fourth quarter growth in the US has heightened talk of imminent recession. But US consumers keep spending. The US pain is still confined to housing and housingrelated finance. Policy that is leaning heavily towards stimulus aims to keep it there.
Watch Super Bowl commercials, not the game 31 Jan 2008 Super Bowl Sunday is the most important day of the year for American football fans and for advertisers. This year's matchup between the Patriots and Giants may draw a record audience. But investors should pay more attention to the commercials.
Reserve silence undercuts Shell’s profit party 31 Jan 2008 The oil giant just reported the largest profit ever by a British or Dutch company. But its decision to delay the release of its oil reserve data evokes memories of the accounting scandal that rocked the company four years ago. It should ease or confirm investors' fears.
Banks’ private equity housekeeping is instructive 31 Jan 2008 Citi and Merrill are reconsidering their commitments. Citi is selling parts of its portfolio. Merrill is planning to bring in thirdparty investors rather than use its own money. Both moves make sense with capital scarce. It also reminds banks not to stray far from their turf.
MBIA takes one step forward, two steps back 31 Jan 2008 The bond insurer moved fast in recent months and raised $1.5bn in new capital. Its competitors missed that opportunity. But MBIA s $2.3bn loss puts it in the same boat as its rivals. Scraping together more capital now will be tough. And it s unclear how much it really needs.
India doesn’t need a sovereign wealth fund 31 Jan 2008 The country is reportedly thinking about creating its own SWF. It isn t alone. Japan, Saudi Arabia and Libya are all tempted to follow the latest investment fashion. But such funds aren t right for everyone. India could and should put its foreign reserves to better use.
City job cuts set to hit UK property returns 30 Jan 2008 The fouryear boom in London commercial property looks to be fully over. One survey shows a sharp drop in demand from potential renters. Another suggests 20,000 job cuts in the City. Investors have already been shying away from the sector. They are likely to start running.
Bernanke’s risk management is fraught with risk 30 Jan 2008 The Fed chief thinks the central bank needs to cut rates fast and decisively when outsized market turmoil threatens to hurt the real economy. But this assumes the Fed will raise rates when the threat recedes. That flies in the face of history and market psychology.
Credit crunch cuts JC Flowers both ways 30 Jan 2008 The buyout boss could hardly gripe when Iceland s Kaupthing walked away from its E3bn deal to buy his Dutch bank NIBC. The ink was hardly dry on the deal finalising his own jilting of Sallie Mae. He beat the US student lender, but seems to have yielded to Icelandic regulators.
Google not immune to a recession 30 Jan 2008 The search engine s profit machine still looks like a onetrick pony. A US economic slowdown would hammer advertising spending. Yahoo s precipitous decline in 2000 provides some clues of how bad things could get.
Should Lloyd Blankfein have made $1.5bn? 30 Jan 2008 That s what the Goldman Sachs boss deserved by the wacky metrics of Lazard s compensation scheme. Chairman Bruce Wasserstein took home $41m 13% of the firm s profits and more is on the way. If he s worth that much to the business, Lazard doesn t deserve its premium rating.
French-Spanish bid for E46bn Iberdrola could make sense 30 Jan 2008 French nuclear powerhouse EDF and Spanish construction company ACS are reported to be thinking about a bid for the Spanish utility. A tieup would create a panEuropean carbonlite energy giant, but there are obstacles to be overcome: financing, price and politics.
Bendy Ben or no-swerve Merv? 30 Jan 2008 The Fed chairman is busy slashing rates to try to avert recession and get the housing market moving. His UK counterpart, Mervyn King, is much more cautious. The countries problems aren t identical, but the tougher British approach looks less risky in the long run.
UBS’s third warning creates more questions than answers 30 Jan 2008 By putting a number SFr4.4bn on its 2007 loss, the Swiss bank has ended one guessing game. But the size of the number has kicked off some others. One is why the loss is about SFr4bn more than analysts expected. Another is how long boss Marcel Ospel can hang on.
King gets second chance to show his mettle 30 Jan 2008 The Bank of England governor has finally been reappointed for another five years. Northern Rock s problems damaged King s credibility, but the Treasury was probably too weak to let him go. Still, King may be too tough on inflation and moral hazard for the government s taste.
European bank regulators look too slow 29 Jan 2008 The news of SocGen s problems didn t get to Washington on time. That failure of communications is typical of a Balkanised regulatory system. As European banks become more international, national supervision seems subscale. A stronger system could prevent a worse crisis.
Wall Street’s murky assets shed some light 29 Jan 2008 Whether toxic or just hard to value, investment banks' level 3 holdings are revealing. Lehman and Morgan Stanley putting commercial property assets in the hardtovalue bin could be worrisome. Goldman Sachs, on the other hand, has already been snapping up distressed mortgages.
M&B pays price for misguided property punt 29 Jan 2008 The UK pub operator has taken a £274m hit equivalent to all last year s earnings on unwinding hedges associated with a failed property joint venture. Chief executive Tim Clarke may have been badly advised, but he is lucky to be hanging on to his job.
US stimulus package may worsen mortgage lender headaches 29 Jan 2008 The fiscal stimulus package before Congress is partly an attempt to prop up the ailing housing sector. But tinkering with the economy often has unintended consequences. The measure could actually hurt mortgage lenders and end up being counterproductive.
Shareholders lose when moguls collide 29 Jan 2008 John Malone and Barry Diller are headed to court over the breakup of IAC. Both have irrational requests. The best outcome for shareholders would be a fair auction, or spinoff, of all the component parts.
French protectionism sinks to the occasion 29 Jan 2008 The prime minister is determined to keep SocGen a great French bank . Foreign rivals aren t likely to fight back. An incountry merger could cost shareholders money and the country jobs, but the patriotic outburst follows Sarkozy s tendencies. That s still no excuse.