Goldman’s new conflict rules raise bigger question 30 Sep 2014 Bankers there face fresh limits on investing in stocks, bonds and hedge funds. Goldman knows how easy it is to cross a line when treading close to it. Why Wall Street dealmakers can own individual securities at all is the real mystery that speaks to a culture loath to change.
Rob Cox: Flurry of ski M&A aims to control weather 30 Sep 2014 CEOs and corporate financiers revel in the power of the deal. One company, Vail Resorts, is taking the idea to extremes. By acquiring clusters of snowy U.S. retreats in different climates and selling “Epic” season passes, it is trying to smooth bumps caused by Mother Nature.
Bankrupt toll road leaves taxpayer sitting pretty 30 Sep 2014 Private investors in a 157-mile Indiana toll road are set to be wiped out in bankruptcy court – but only after they sunk millions into new lanes and tolling technology. It’s a rare example of a boom-era deal successfully transferring risk from the public to the private sector.
Governments are real targets in Apple’s tax case 30 Sep 2014 The European Commission thinks that the iPhone maker has received preferential treatment from the Irish government. Both Apple and Dublin beg to differ. At least Brussels has put member governments on notice that tax leniency could amount to state aid.
Sometimes business can’t avoid talking politics 30 Sep 2014 A British lawmaker reckons business should stay out of the debate over UK membership of the EU. Staying above politics may usually be the mark of a good board. But it would be negligent to ignore any material impact on owners and workers from a one-issue referendum.
FX benchmark reform plan can only go so far 30 Sep 2014 A Financial Stability Board report on reforming FX benchmarks strikes a decent balance between the needs of users and those of banks. But in the end, it’s up to the latter to clamp down on illicit activity – and up to governments to make sure there is an interest in doing so.
PayPal forced to rev after eBay’s belated U-turn 30 Sep 2014 The $70 bln online auction company has for years resisted setting free its payments business. Apple and Alibaba created more urgency than Carl Icahn and other investors could. EBay squandered a big early advantage, but independence may yet give PayPal a chance to play catch-up.
Scrapper Renzi lives up to his reputation at last 30 Sep 2014 Italian prime minister and “scrapper” of Roman politics Matteo Renzi has angered his own camp with his labour reform plans. If his Jobs Act passes, it will boost growth and help the ECB maintain loose monetary policy in the meantime. But many tough fights lie ahead.
Welfare cuts betray UK’s lingering weakness 30 Sep 2014 George Osborne says the economy is stellar yet benefit cuts are needed. The picture is worse than the finance minister admits. As Britain’s deficit stays high, debt soars and weak wages persist, the government faces more harsh choices. The UK is far from paying its way.
UK retail fails to weather the patently obvious 30 Sep 2014 Clothes shop Next says Britain has had an unseasonably warm September. Who knew? Shares across the sector took fright at the ramifications for earnings. Investors may be venting other fears, maybe of a price war. Still, the reaction reveals a bizarrely inefficient market.
Repel Bramson’s Electra boarding party 30 Sep 2014 The New York raider wants seats on the board of the London-listed private equity trust. He also reckons he can double Electra’s value. But if Edward Bramson really can whistle up an extra 1 bln stg, he can afford to pay a premium for full control.
China house prices on brink of pessimism spiral 30 Sep 2014 As prices fall in most big cities, developers and banks are trying to lure buyers back to the market. But cheaper mortgages and less red tape are no match for sagging real price expectations. Short of giving cash to buyers, it is hard to arrest negative thinking once it sets in.
Ford honks horn loudly for global investors 30 Sep 2014 The U.S. automaker’s shares tumbled 7.5 pct after it warned that turmoil in Latin America and Russia would hit 2014 profit. Recalls hurt, too, but even that potential cost was flagged by GM. Ford exposes the complacency that has settled into markets about geopolitics and beyond.
Wal-Mart’s Instagram moment lacks certain filter 29 Sep 2014 The retail colossus appointed photo app co-founder Kevin Systrom to its board. He brings fresh eyes to a company lurching into the modern age. Infusing Wal-Mart’s online efforts with tech chic will be tough, though. And Silicon Valley’s governance style isn’t a welcome addition.
Chanos may inspire hedgies to go long silence 29 Sep 2014 The short-seller renowned for spotting Enron early is being sued for slander by casino mogul Steve Wynn. The line between betting against, or for, a company and besmirching or advocating too much is a fine one. Investments can and should sometimes speak for themselves.
Encana’s pirouette demands greater fanfare 29 Sep 2014 The Canadian driller’s $7 bln acquisition of Athlon Energy cements a commitment to move from gas to shale oil. It’s paying a full price, especially after the recent fall in crude to $94 a barrel. If Encana can get the transition right, though, its valuation will deserve a lift.
Rouble slide puts central bank in a bind 29 Sep 2014 The Russian currency’s fall will make runaway inflation worse and force monetary authorities to act. It will help the central bank resist political calls to loosen policy to fight the sanctions-induced slump. But it could deal the economy another nasty blow.
AIG owners’ bailout suit has law and gall on side 29 Sep 2014 Claims Uncle Sam cheated the insurer’s ex-CEO and others while also saving them may actually succeed at trial. Extracting terms like an 80 pct equity stake in exchange for rescuing AIG was legally questionable. Proving damages will be tricky, but never underestimate chutzpah.
SoftBank and Shrek may lack on-screen chemistry 29 Sep 2014 The Japanese conglomerate may offer $3.4 bln for movie studio DreamWorks Animation. Softbank’s giant balance sheet can easily absorb the hit-and-miss earnings of film production. But with each big acquisition, it becomes less clear how the group’s parts fit together.
Commodity bear market looks entrenched 29 Sep 2014 A rising dollar, the prospect of U.S. rate rises, and moderating Chinese growth are casting long shadows over the asset class. The threats to the bear case are strong supply-side responses, or successful economic stimulation by the ECB. Neither looks very likely.
Andreessen would probably pass on Rocket Internet 29 Sep 2014 The U.S. venture capitalist is worried about cash-burning startups that grow accustomed to easy fundraising and high valuations. Berlin-based Rocket, the tech company incubator set to go public with a 6.7 bln euro market cap, exhibits some of the warning signs.
Vindication is bitter for Royal Mail privatisation 29 Sep 2014 The froth is off. Forget the 87 pct pop: a year after its frenzied IPO, shares in the UK postal service hover 20 pct above its float price. That feels about right. The snag for the state and its bankers is that it will be fiendishly difficult to shift the unsold stake.
Hugo Dixon: UK faces unpalatable election choice 29 Sep 2014 The Labour opposition has a somewhat anti-business agenda, while the Conservatives want to hold a referendum on Britain’s EU membership. Next May’s election contest isn’t quite a choice between the devil and the deep blue sea, but it’s not a good one.
Hong Kong shreds hopes for orderly disorder 29 Sep 2014 Thousands of protestors have taken to the streets, at times clashing violently with police. Markets remain open, and the financial sector hasn’t been targeted directly. But the loss of control over a carefully planned disobedience movement has damaging long-term implications.
Rock star Modi needs more business-friendly riff 29 Sep 2014 The Indian prime minister used a sold-out Madison Square Garden gig to make an emotional sales pitch. While Indian-Americans may want to take up Narendra Modi’s offer to invest freely in their ancestral land, the country’s business-unfriendly reputation remains a big obstacle.
Bid rebuff pours pressure on Treasury Wine 29 Sep 2014 The Australian owner of Penfolds ended talks with private equity bidders saying a $3.1 bln offer undervalues the company. A 11 pct share price drop suggests investors aren’t totally convinced. There may be room for buyers to return if the still-new CEO can’t turn things around.
Bill Gross and Janus Capital made for each other 26 Sep 2014 Both are formerly hot fund managers looking for a fresh start. Investors are exuberant about the possibilities of Gross recapturing some old glory under Janus, the Roman god of new beginnings. It is more likely a case of past performance not being indicative of future results.
Gross exit offers soft reset on Pimco governance 26 Sep 2014 With the investment firm’s domineering ego out the door, owner Allianz can now push for team-based structures less dependent on single individuals. The temptation to resist is an urge to tighten the grip from Munich over a subsidiary that naturally benefits from autonomy.
Yahoo may squeeze out a third activist helping 26 Sep 2014 Starboard’s Jeff Smith is following where Dan Loeb and Carl Icahn have trod before him. Ideas about buying AOL and spinning off Alibaba and Yahoo Japan tax-free aren’t exactly new. Yahoo’s discount valuation, however, might nevertheless benefit from the attention.
Harvard’s new fund boss needs a California lesson 26 Sep 2014 Stephen Blyth is taking over the university’s $36 bln endowment at a time when its investment strategy is faltering. Its 2014 performance was even bested by Ivy rival Yale. Calpers’ decision to ditch fee-heavy hedge funds may give Blyth a useful roadmap for reviving returns.