New U.S. trustbuster sprays cold brew on AB InBev 31 Jan 2013 William Baer, the DoJ’s antitrust chief, sued to stop the giant brewer’s $20 bln purchase of 50 pct of Modelo. AB InBev had tried to allay competition fears with the deal’s structure. Baer’s surprise move suggests a thirst for tough enforcement - or at least a tough reputation.
U.S. immigration plan slows brain drain at a price 31 Jan 2013 Congress is edging toward letting illegal immigrants stay, while promising greater vigilance. High-tech companies will like measures to retain more foreign-born graduates, while small firms may struggle with new red tape. Fixes are needed, but economically these are a mixed bag.
More Europe can mean less bureaucracy for the UK 31 Jan 2013 In his big speech on Europe, the UK’s prime minister said unnecessary regulation was stifling British competitiveness. But would-be isolationists ignore the reality that separation also raises impediments to growth. Take the much-maligned Schengen border accord, for example.
Ice cream and vodka could endorse the Oaktree way 31 Jan 2013 The U.S. group has helped pioneer a mixture of private-equity and distressed-debt investing in Europe. Hard cash returns aren’t yet huge but now Oaktree may sell big ice cream and spirits companies, and float an estate agency. That would help affirm the hybrid approach.
Record crude not enough to fuel oil giants’ profit 31 Jan 2013 ConocoPhillips and Occidental both reported 2012 core profit down more than 15 pct from 2011. That’s despite a record price for Brent crude of $112 a barrel during the year. High production costs are a worry for investors and suggest the floor under oil prices is rising.
Uncle Sam should pay heed to troubled niece 31 Jan 2013 A fiscal debacle in Illinois has resulted in harsh consequences. The Land of Lincoln was forced to withdraw a $500 mln bond issue after investors got spooked about the state’s credit. It’s a reminder why America can’t get too complacent about its cheap debt or long-term problems.
Deutsche Bank yet to convince with its renewal 31 Jan 2013 Germany’s biggest bank has boosted capital by refining risk models rather than raising equity. It’s an unusually aggressive approach, and comes alongside a large restructuring. But “New” Deutsche is far from fully formed. Litigation, operational and regulatory risks weigh.
Shell shows the flip side of shale nirvana 31 Jan 2013 Full-year results show the oil major broadly on track to meet medium-term production targets and grow cash flows. But its North American business remains a drag, as the lack of export capacity holds down prices. Shell is a relative loser from the much-hyped shale revolution.
Japan helps Nomura put a bad year behind it 31 Jan 2013 Scandals and resignations didn’t prevent the investment bank from delivering a 33 pct jump in underlying pre-tax profit in the last quarter. A recovering Japan helped. A scaled-back Nomura is starting to look consistently profitable. Now it needs to boost its return on equity.
Facebook’s heavy investment is worth it 31 Jan 2013 The social network’s costs rocketed about 80 pct last quarter. That’s twice as much as the top line grew. But there’s good reason to give Facebook the benefit of the doubt. All-important mobile ad revenue doubled in 90 days. The potential profit justifies the outlays.
Iraq bourse braces for milestone $1.3 billion IPO 31 Jan 2013 Iraq’s first listing since the U.S.-led invasion is fully subscribed. That’s a surprise given the full valuation, and the size of the offer which will double the market value of the bourse. Whatever the mix of investors, the issue will bring welcome diversity to the exchange.
Telecoms debt issue signals Greek renaissance 31 Jan 2013 Greece’s biggest telecoms company has sold 700 million euros of bonds - the first such move since 2011. The cash will help OTE reduce debt and fund investment in new technology. It may also be a tentative sign that business in the Aegean is regaining some semblance of normality.
Chrysler’s bumper 2012 confirms Fiat’s stinginess 30 Jan 2013 The Detroit automaker beat its own profit forecast by 13 pct and should do even better this year. Chrysler has its problems. But it could now be worth up to $12 billion. That’s double the Italian majority owner’s recent offer for a small slug of a union trust’s 41.5 pct holding.
SEC could use a few tips from workplace watchdog 30 Jan 2013 The EEOC filed far fewer claims last year than in 2011 but won record penalties. That’s a testament to basing enforcement on solid cases with broad impact. The securities regulator boasts of quantity but seems to be neglecting quality. That’s not as effective a deterrent.
Europe burns down Liikanen’s bank ring-fence 30 Jan 2013 Germany will make its banks split off proprietary trading. But, like France, it has ignored the proposal of the Bank of Finland’s governor to ring-fence other types of client-driven activity. That gives European banks a leg-up, but taxpayers remain exposed to major trading goofs.
Eni shares blame for Saipem fiasco 30 Jan 2013 A shock profit warning from Eni’s 43 pct-owned oil services unit is the latest sign that the Italian oil major wasn’t keeping proper tabs on an important business. Eni doesn’t control Saipem outright, but consolidates its results. It should exercise more than distant oversight.
Goldman can’t do much for Russia’s lustre 30 Jan 2013 Moscow has hired the U.S. bank to boost its image among investors. But perception isn’t the problem. Reality is. The Putin government thrives on widespread corruption and the absence of a rule of law. Unless it wants to try regime change, Goldman’s efforts are doomed.
Surprisingly weak U.S. GDP has silver linings 30 Jan 2013 A 0.1 pct Q4 fall defied expectations of a rise. Even so, less government spending accounted for much of the contraction while private consumption and income improved. Shrunken inventories, probably linked to the fiscal fears, also should reverse. There’s little cause for alarm.
Ethical economy: Taxes and human nature 30 Jan 2013 Complex tax codes are supposed to promote justice and efficiency, but they fail, largely because people are too tempted to take unfair advantage of these elaborate systems. It’s time to admit failure and move to ultra-simple taxes. Use spending to express the government’s will.
Bank of Italy didn’t push hard enough on MPS 30 Jan 2013 Italy’s central bank knew Monte dei Paschi had bitten off more risk than it could chew. But although it stepped up supervision, it failed initially to delve deep enough into the lender’s dealings. The BoI’s defence doesn’t fully exonerate its then-governor Mario Draghi.
A UK triple dip? It’s just one big slowdown 30 Jan 2013 By any realistic definition, the UK isn’t on the edge of its third recession since 2008. GDP has just been stable and low. The stagnation will end eventually, but the structural problems behind it will endure, making the future feel depressingly like - yet more recession.
Protectionism won’t end rainy days for SolarWorld 30 Jan 2013 The German photovoltaic product maker is fighting for its life. The company has shunned radical restructuring and is instead campaigning for anti-dumping duties against Chinese competitors. Protectionism, however, would do it more harm than good.
Singapore’s demographic engineering on right track 30 Jan 2013 Using immigrants to boost an ageing population by 30 percent is worth a try. The alternative is slowing GDP growth, and a decline in property prices. Voters will be nervous, but the usual fears of overcrowding and loss of national identity are probably overblown.
Myanmar needs private growth more than public debt 30 Jan 2013 Now it has a Paris Club debt relief agreement, aid agencies will flock to lend to Myanmar’s government, as will global banks. Myanmar should avoid taking too much easy money; private sector growth through domestic savings and property rights matters more than infrastructure.
Chesapeake CEO exit puts energy bad boys on notice 30 Jan 2013 Aubrey McClendon’s abuse of shareholders has finally cost him his job. Defenders claimed he was vital to the gas driller’s future. But the oil company’s stock is already rallying. Fellow Wild West chiefs like SandRidge’s Tom Ward and Hess’s John Hess now look on borrowed time.
Amazon undeservedly absorbs Apple optimism 30 Jan 2013 The online retailer’s profit rose a bit in Q4, but the 1.9 pct operating margin remains as slim as the justification for Amazon’s valuation of 165 times expected earnings. Apple’s 32 pct margin fetches it only a multiple of 10. The discrepancy is now even harder to compute.
Wall Street minnow gets whale-size bonus 29 Jan 2013 Jefferies is paying CEO Richard Handler $19 mln for 2012, a 36 pct increase. That matches the firm’s share price gain last year. But it’s also a whopping 6 pct of earnings - excluding an even bigger retention deal. The same multiple would net JPMorgan boss Jamie Dimon $1.2 bln.
Homebuilder IPO may add to recovery exuberance 29 Jan 2013 The monthly leap in U.S. home prices and a big quarter from builder D.R. Horton underscore buoyant attitudes about the housing market. Developer Tri Pointe could be capitalizing with a richly valued share sale. Investors should beware getting swept up in premature euphoria.
Cut-price Canada crude makes producers look cheap 29 Jan 2013 At $64 a barrel, the nation’s oil is the cheapest on the planet. A lack of pipelines, exacerbated by delays to Keystone XL and a drought along the Mississippi, is the cause. But the sell-off in shares of the likes of Canadian Natural Resources looks overdone.
RBS shares bake in Libor’s known unknowns 29 Jan 2013 The UK bank is off 6 pct amid fears of criminal liability for Libor-fixing. The worst-case scenario - a U.S. indictment - is less likely than prosecution in another jurisdiction or a big fine. But the risk of sizeable fallout from a nasty American surprise justifies the jitters.