Goldman keeps regulators and rivals on pins 31 Jan 2011 Investors have fixated on the bank's newly heightened disclosure of its proprietary trading earnings. But U.S. regulators entrusted with broader systemic safety are more excited about the fresh balance sheet information Goldman will soon reveal, setting a standard for rivals.
CDS market shows U.S. risk-free status slipping 31 Jan 2011 Betting on Treasury yields rising is one thing; trading the chance of default is another. U.S. credit default swap volumes have spiked in recent weeks. The CDS game is still hardly mainstream. But unsustainable borrowing is tarnishing the debt market's once pristine benchmark.
Alpha generously rescues wounded Massey 31 Jan 2011 For a firm hobbled by the worst mining accident in decades, Massey has pulled off a coup with a $7.1 bln sale to its rival. The companies fit well together and should be strong in the redhot market for steelmaking coal. But the synergies don't fully justify Alpha's fat premium.
Exxon Q4 shows $400 bln gorilla can still sprint 31 Jan 2011 The world's most valuable company hiked production at a pace that puts many smaller rivals to shame, amplifying the benefit from richer oil prices. And a quarter of its profit uptick came from chemicals a business that positions Exxon well for growth in developing countries.
30-year loans could be euro crisis game-changer 31 Jan 2011 Very longterm loans for Greece and Ireland could significantly ease pressure on Europe's indebted countries, particularly if combined with lower interest rates. This is still only an idea but it is significant that it is being pushed by Axel Weber, the Bundesbank boss.
Angel investor valuations fly off to heaven 31 Jan 2011 The decreasing need for cash by Internet startups has left the venture capital industry out in the cold. The Russian founder of Facebook investor DST now plans to fund dozens of startups sight unseen. It shows just how far power has shifted to digital entrepreneurs.
GOP not scared to toy with U.S. debt limit 31 Jan 2011 Both parties now seem to agree that not raising America's debt ceiling would be a disaster. But brinkmanship looks likely as Republicans hold out for cuts far deeper than Democrats will easily accept. Pushed far enough, the tactic could still rattle Treasury markets.
Big Oil’s big spending shouldn’t freak investors 31 Jan 2011 At first blush, the industry's lavish capital spending plans for 2011 smack of desperation for scarce resources. The U.S. giants will burn through $60 bln more than in the 2008 peak despite yielding tepid cash flow. But patient investors can anticipate higher returns to come.
Europe needs more than a big fat Greek debt rejig 31 Jan 2011 Europe seems ready at last to tackle excessive Greek and Irish debt. But the crisis isn't over. Buybacks, and an extension of loan maturity, will lighten the burden although Greece may need more relief. The Portuguese case also needs to be tackled swiftly.
Caja Madrid will be tough sell for investors 31 Jan 2011 Spain's largest savings bank is planning an IPO to comply with new rules. It needs to raise at least 2 bln euros, but real estate exposure and corporate governance make for a tricky investment case. To attract interest, Caja Madrid will have to offer a discount to listed peers.
TNK-BP owners’ Rosneft ire seems like a ploy 31 Jan 2011 A court case launched by the oil firm's oligarch coowners is ostensibly aimed at scuppering BP's Rosneft deal or forcing TNKBP's inclusion, but neither outcome is likely. The real aim is to pressure BP to make the concessions that would fuel TNKBP's international expansion.
Spanish airports privatisation won’t be easy 31 Jan 2011 The Spanish government plans to raise 14 billion euros by selling off part of its lottery and airports. The lottery sale looks easy. But the privatisation of the world's largest airport group requires serious restructuring, and much higher tariffs.
Blankfein’s pay hike looks hard to defend 31 Jan 2011 The Goldman Sachs board tripled the CEO's salary to $2 mln and is paying him and his top lieutenants a $12.6 mln 2010 bonus. But Goldman's earnings, return on equity and reputation all fell last year. Breakingviews pens an imaginary letter to the board from an irate shareholder.
Vodafone wins first round in Essar war 31 Jan 2011 The UK group's partner in its Indian venture is downplaying a plan to inject its stake into an illiquid shell a move which could have artificially inflated its value. Though the saga could have more twists, Vodafone will probably eventually pay $5 bln to buy Essar out.
Bid rejections give reason not to like Sara Lee 28 Jan 2011 The U.S. food giant spurned takeover offers of at least $12 bln to instead spin off its meat business. The decision, along with a $1.9 bln special dividend, may just be a negotiating ploy. But there isn't compelling evidence that a split will deliver more value than a sale.
Bond markets a friend to buyout barons 28 Jan 2011 European buyout firms are changing the way they do deals. Acquisitions of Swissport and the Priory will be financed solely through bonds. Such deals highlight the shift towards a publiclytraded leveraged finance market, like in the U.S. But bond investors shouldn't run too fast.
La Caixa’s listing a boost to Spanish banking 28 Jan 2011 The Spanish savings bank will float its banking business in a complex operation with its listed holding company, Criteria. It will be a hard act to follow by weaker institutions. The new bank is strong enough to lead consolidation. But looking abroad would make more sense.
Euro zone crisis may be close to resolution 28 Jan 2011 There's optimism at Davos that a comprehensive deal is possible within weeks, probably with peripheral nations accepting budget balancing debt brakes in return for more help from rich nations. If so, even Greece would have a fighting chance of getting out of the woods.
LinkedIn rides in on Facebook’s hype 28 Jan 2011 With Web 2.0 shares in hot demand, the professional networking site with 90 mln users is trying to capitalize with an IPO. It's profitable, for now, and growing quickly. But LinkedIn's model looks a bit more Monster.com than Facebook. Hungry investors may overlook the difference.
Amazon again promises jam tomorrow 28 Jan 2011 The online retailer delivered yet more sharp sales growth 36 percent in the fourth quarter. Early 2011 should bring a similar performance. Unfortunately, Amazon's revenue gains don't come free. The company has done well by shareholders, but they're still clamoring for more.
U.S. growth firing a few cylinders short 28 Jan 2011 The 3.2 pct advance estimate for Q4 GDP growth looks healthy enough. But there are underlying quirks that raise questions, and big revisions are likely. The economic engine is running, but after all the fiscal and monetary lubrication it's odd that it isn't accelerating faster.
BankUnited brings right kind of bailout bonanza 28 Jan 2011 The Florida bank that failed during the crisis was sanitized by the industryfunded FDIC and sold to private investors, who just booked a $1.8 bln gain with an IPO. It wouldn't quite work for megabanks, but it's still an example of capitalism working well with sound regulation.
Economy will test future Egyptian government 28 Jan 2011 A change of the political guard won't trigger a major financial crisis if the country can quickly establish a new government. But the exodus of foreign funds should remind Egypt's leaders new or old that only economic reforms will help them retain investors' confidence.
China tightening squeezes wrong target 28 Jan 2011 Moves to lock up loose money have hit smaller banks disproportionately hard. They have had to take funding from their bigger rivals at skyhigh rates. That is unlikely to stop banks from making loans, but it could squeeze SME borrowers and make weak lenders weaker still.
China property tax lets buyers off too lightly 28 Jan 2011 A levy on real estate investors in Shanghai and Chongqing is on the right track. It could discourage speculation and redistribute wealth. But the proposed 1 percent won't strain buyers used to 20 percent price gains. Something harsher say a 5 percent tax may do the trick.
Ford’s shareholders take heads out of sand 28 Jan 2011 They wiped more than 10 pct off the automaker's $65 bln market cap. Ford warned last summer that profit would drop. Had investors listened, they wouldn't have hyped the shares to begin with and they shouldn't now overdo the gloom. Ford's longerterm turnaround looks on track.
Dimon’s Davos offensive is premature 27 Jan 2011 The JPMorgan chief led a chorus of peers at the World Economic Forum warning of excess regulation. They are entitled to a voice in debating the costs and benefits of financial reform. But as long as taxpayers underwrite the system, it's counterproductive to whine about new rules.
Netflix makes it hard to run full speed with bulls 27 Jan 2011 The Internet video company keeps defying media honchos questioning its business model and short sellers piling into the shares. Now with 20 mln subscribers and growth still surging, Netflix looks solid. But less disclosure and the CEO's rant against doubters are worrying signs.
Exxon’s Rosneft deal mimics BP without strings 27 Jan 2011 The U.S. oil major's Black Sea development pact is a smaller version of BP's deal, with a crucial difference: there's no share swap. The reason? Exxon isn't desperate.
Crisis panel shows history best at bubble-spotting 27 Jan 2011 The bipartisan U.S. Financial Crisis Inquiry Commission ended up with three different conclusions. None is wrong. But if it's that hard to agree on the root causes of a crash in hindsight, then spotting and safely deflating one while it rages remains an even greater challenge.