Rousseff challenger now owns two Clinton slogans 29 Aug 2014 Brazil is in recession, making “the economy, stupid” loom large for October’s presidential poll. The sudden rise of Marina Silva’s star makes “change vs. more of the same” a powerful theme, too. Rousseff’s chickens are coming home to roost just in time to threaten her re-election.
TV broadcasters missing big picture in Aereo fight 29 Aug 2014 CBS, Disney and others oppose the Barry Diller-backed streaming startup’s rebirth as a cable firm. But conceding could put online services and, say, Time Warner Cable on equal legal footing and create more competition for content. That’s a win for viewers and networks alike.
Agenda for Tesco CEO: price cuts, board and UK 29 Aug 2014 There’s a jumbo profit alert, a hacked-back dividend and lower capex. The new chief exec is also bringing forward his start date. Dave Lewis needs to reduce prices, rebuild the board, and launch a strategic review of the international business.
ECB keeps hoping in ABS field of dreams 29 Aug 2014 Mario Draghi expects investors to come if he builds a market that he admits barely exists. Purchases of asset-backed securities might help growth and boost inflation. Yet the obstacles are substantial, and regulation is a thorn. Government aid would help.
Falling euro squeezes Swiss, Swedish central banks 29 Aug 2014 A lower currency helps the ECB fight disinflation. It’s a curse for Swiss and Swedish central banks, which are running out of traditional ways to stop an unwanted appreciation in their currencies. They may end up having to follow the euro zone into less charted policy waters.
Review: A pained call for radical financial reform 29 Aug 2014 Financial Times writer Martin Wolf’s new book is partly a cogent review of what went wrong in the 2008 crisis. But the message economists and policymakers should focus on, especially from a centrist intellectual, is that the best ideas for the future are far from the mainstream.
Global poverty needs a post-industrial definition 29 Aug 2014 Criticism is mounting against the $1-a-day threshold, a legacy of industrial-age thinking that equated penury with calorie deficiency. That’s too narrow. Being unable to afford education, medication or old-age security counts as deprivation. So does exclusion from modern jobs.
Emerging market watchdogs could dent car industry 29 Aug 2014 Rapid growth gives local regulators in developing markets extra influence. India has fined car companies $421 million and opened the market for spare parts wider than in the West. If Chinese regulators decide to take the same approach, carmakers’ earnings will suffer.
Square swipes a hollow-looking $6 bln valuation 28 Aug 2014 That’s what the payments company may be worth after its latest fundraising. It’s big, but a deflated figure, considering Square’s former hype, the small amount raised, and tech rivals’ ease securing higher valuations. Blame increasing competition for Square’s comparative malaise.
Washington misses trick with rating agency reform 28 Aug 2014 The SEC has finally approved new rules for judging the riskiness of asset-backed bonds. Some are modestly helpful. But measures like imposing unsolicited ratings on deals would offer more robust changes – and may foster much-needed competition for Fitch, Moody’s and S&P.
Vivendi boosts shareholder credentials in GVT sale 28 Aug 2014 The French media group says it favours Telefonica’s $10 bln bid for its Brazilian mobile unit. Telefonica could pay more, but it’s good that Vivendi has chosen the surest exit for shareholders. As for rival bidder Telecom Italia, it now faces an uncertain future.
Telefonica may have to inch higher for GVT 28 Aug 2014 The Spanish telecom group has given Vivendi a soft deadline to accept a new 7.5 bln euro cash-and-stock offer for Brazilian subsidiary GVT. Telecom Italia’s bid is only 7 bln euros, has less cash and is more conditional. Still, Vivendi could yet wring more out of this auction.
Risky AA just got riskier 28 Aug 2014 The chief exec and CFO are quitting the breakdown firm two months after the IPO. It may not be a post-float car crash: the market seems to like the show of decisiveness by the chairman, now de facto CEO. But the timing is troubling, as is AA’s rejection of conventional governance.
Edward Hadas: Central bankers’ reward for failure 28 Aug 2014 The supervisors who gathered last weekend in Wyoming were seen as saviours, or as possible destroyers, of a fragile financial system. That elevated status is an undeserved prize. As Keynes noted, economists are more like dentists. But central bankers lack the dentist’s toolkit.
Bland Lagarde will escape the Bretton Woods curse 28 Aug 2014 The IMF chief is under investigation for signing off on a 403 million euro payout to a French tycoon. Her predecessor DSK and former World Bank boss Wolfowitz were both ousted for misconduct. Christine Lagarde, though, has few enemies. Being dull may prove her saving grace.
Qantas maps out smoother flight path for investors 28 Aug 2014 The Flying Kangaroo has capped a torrid year with a record loss. But CEO Alan Joyce is cutting costs, writing down the value of Qantas’ fleet, and separating its international unit. Debt is down, while capacity growth in the industry is slowing. No wonder the shares are rising.
Fonterra’s China deal eases memories of spilt milk 28 Aug 2014 Buying a stake in baby food group Beingmate at a 25 percent premium is brave for the New Zealand dairy co-op, whose ex-partner Sanlu sold tainted milk in 2008. Focusing the tie-up on products made outside China is wise. But rising scrutiny of foreign companies ups the stakes.
Burger King U.S. backlash may prevent Canadian one 27 Aug 2014 A planned HQ north of the border after the $11 bln purchase of Tim Hortons has ignited a tax furor. A shortage of substance makes this look like a PR own goal. But it may be less bad for the deal than a media focus on changes at Hortons, which could provoke scrutiny in Ottawa.
Snapchat’s valuation soars on tech-land pixie dust 27 Aug 2014 The disappearing-photo business has turned 100 mln users, chat-service demand and the $20 mln sale of a tiny equity stake into a $10 bln price tag. Trouble is, the company lacks revenue – and none is in sight. It’s another example of technology dreams trumping real economics.
One man may single-handedly revive U.S. bank M&A 27 Aug 2014 Wall Street consigliere Rodge Cohen was given a rare nod from both sides on CIT’s acquisition of OneWest. It suggests Sullivan & Cromwell’s chairman broke through with reluctant regulators. The deal could help restart bank merger plans that have been on hold since the crisis.
Tesco should cut its dividend 27 Aug 2014 Shareholders ultimately lose out when too-high payouts prevent companies from responding well to problems. Right now, Tesco needs all the financial flexibility it can muster. With a new CEO coming, the UK grocer has a window of opportunity it would be wise to climb through.
Germany not yet moved by euro zone reshuffle 27 Aug 2014 France has a more credible government, Italy is moving towards reform and the ECB’s Draghi wants looser fiscal policies. So far, Berlin isn’t impressed. But a new EU Commission takes over soon, leaving more room for talks on growth-friendly policies – which will benefit Germany.
Time nudges Pfizer and Astra a bit further apart 27 Aug 2014 The U.S. pharma group is now allowed to renew its overtures to its UK peer. AstraZeneca has performed OK since May. That will support Astra’s recent view that any bid should be worth at least $123 bln. But Pfizer now has other options for tax-driven M&A.
Aggressive M&A puts focus on Thai tycoon’s empire 27 Aug 2014 Charoen Sirivadhanabhakdi is eyeing more deals on top of the $3.3 bln his drinks-to-property group has spent this year. Investors have given a poor reception to his recent transformative acquisitions. A pick ‘n’ mix approach to public markets may explain some of the doubts.
China freer press might reboot markets 27 Aug 2014 President Xi Jinping wants a press that’s ”strong, influential and credible”. The last one is the hardest to achieve but the most important. There’s good evidence that greater transparency helps to develop healthy markets for services and finance.
Why can Burger King, but not Wendy’s, own Hortons? 26 Aug 2014 In 2005, Bill Ackman, now BK’s No. 2 shareholder, pressured rival Wendy’s to spin off the Canadian doughnut chain - arguing it was undervalued, the synergies “minimal” and management insufficiently incentivized. Funny how a robust dose of financial engineering changes minds.
Buffett and tax outrage both diversions in BK deal 26 Aug 2014 The Sage of Omaha is lending Burger King money, at a lucrative 9 percent, but his imprint tells stock investors nothing. And contrary to social media hysteria, a new parent company in Canada isn’t going to fleece the U.S. taxman. The $11 bln purchase of Tim Hortons is just an LBO.
BofA rent-a-watchdog no substitute for real thing 26 Aug 2014 Like Citi and JPMorgan, the bank will pay a monitor to police its $16.7 bln deal with Uncle Sam. Such private overseers may ensure compliance. But as PwC has shown, their allegiances are open to question. Regulators would better serve the public doing the job themselves.
U.S. telecoms destined to be too slow to succeed 26 Aug 2014 Regulators are getting what they wanted: price wars instead of mergers. Both Sprint and T-Mobile US just offered fresh discounts after their deal talks collapsed. It’ll take the government caring more about network quality before industry consolidation will be reconsidered.
Draghi leaves Germany in austerity team of one 26 Aug 2014 The ECB president is now calling for looser fiscal policies, with hints that he will follow up with monetary relief. The change of heart is a rational response to euro zone stagnation and persistent low inflation. All that’s needed now is to bring Angela Merkel along.