Black Friday will leave many stores feeling blue 28 Nov 2014 The day kicks off what will be a robust U.S. shopping season. Lower gas prices are putting about $180 mln a day in consumer pockets. More Americans are employed and under less pressure to pay down debt. But zombie retailers suffering from online competition won’t find a cure.
An energetic financial innovation worth nurturing 28 Nov 2014 New York’s $1 bln Green Bank, led by former Wall Streeter Richard Kauffman, is partnering with the private sector to fund clean energy projects. Through securitization it may help investors fund small-scale ventures. The full mark of its success will be its gradual disappearance.
Review: The shirk ethic – a user’s guide 28 Nov 2014 Work can be seen as a blessing or a curse. In “Empty Labor,” Roland Paulsen examines people who take mostly the latter view, asking how and why they shirk, and whether it’s always a bad thing. His study of idleness on the job is enlightening, amusing and sad.
Market too bearish on European oil services 28 Nov 2014 Petrofac has fared especially badly, falling 30 pct in a week. Sub-$75 oil is rattling explorers’ and producers’ nerves. As projects are shelved, oil service companies are being hurt. Share ratings reflect the pain and much depends on oil prices. But some stocks now look cheap.
Ethiopia’s bond plan will test hunt for yield 28 Nov 2014 The Horn of Africa nation plans to issue a debut dollar bond, of reportedly $1 bln. The demand for such frontier market debt, which is at the risky and illiquid end of the sovereign bond spectrum, will show just how adventurous investors have grown in their quest for returns.
Euro zone lassitude likely to endure 28 Nov 2014 The sharp oil price decline effectively crushes any hope of an inflation revival, even if the ECB eases, yet again. Fiscal caution, sluggish banks and mild reforms will restrain job creation in key economies. The prognosis is very slow progress with a high chance of crisis.
Cheap oil worsens Asian debtors’ lowflation woes 28 Nov 2014 Sliding energy prices could make already-low Asian inflation vanish. That’s bad news for heavily indebted economies like China, South Korea, Thailand, Malaysia and Singapore. If prices and wages don’t rise, borrowers will curb spending. Slowing GDP growth could stumble.
OPEC inaction confirms new order for oil 27 Nov 2014 The oil cartel, led by Saudi Arabia, is either willing to sacrifice profit or unable to agree on production cuts. Either way, lower prices challenge U.S. shale oil producers, but that industry may still thrive. In the OPEC fog, one thing is clear: weaker members will suffer.
Edward Hadas: A healthy attitude to deflation 27 Nov 2014 The strength of downward price momentum has surprised most experts. Central bankers keep trying to fight the tide, as if in denial. It would be better to accept that the demographic forces which create disinflation are too strong to turn. Mild deflation isn’t so bad anyway.
Betting against Swiss currency cap is high stakes 27 Nov 2014 Traders are testing the central bank’s franc ceiling and using options to bet the currency will break through. The wager is inspired by euro weakness and a looming referendum on whether the SNB should buy more gold. This is one monetary authority the market is unwise to take on.
EU bank ring-fencing plans need a reboot 27 Nov 2014 Splitting European lenders’ market-making from their other activities could cost 21 bln euros, research suggests. Yet global resolution reforms are reducing the need for structural separation. And the proposals, as drafted, could hinder the nascent capital markets union.
UK has to decide if Scotland is too big to fail 27 Nov 2014 A state-appointed British commission says income tax-raising should be devolved to Edinburgh, along with some powers to borrow. That raises the tricky question of whether London will underwrite Scottish debt. If so, there’s moral hazard; if not, it pushes Scots towards secession.
SABMiller’s Coca-Cola push is Africa buy signal 27 Nov 2014 The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.
Faulty air bags puncture Takata financial cushion 27 Nov 2014 The Japanese group has set aside $660 mln to replace car parts linked to at least five deaths. Regulatory demands for a US-wide recall could double the bill. Lawsuits and fines will mean more pain. Takata’s survival may depend on the support of its customers – or the government.
Bank misdeeds show lack of "should we" 26 Nov 2014 A Citi analyst settlement and a probe into an HSBC hedge fund leak aren’t about grey areas. The alleged transgressions break clear rules. As in a recent experiment reported by Nature, they betray bankers’ tendency to eschew what they should do for what they can get away with.
Wells Fargo: first big bank simple enough to fail 26 Nov 2014 The $1.6 trln lender secured a provisional stamp of approval from regulators for its living will. Less credible plans from 11 other titans suggest size isn’t the issue. Wells ranks fourth in assets and first in market cap. The real problems are complexity and interconnectedness.
Juncker’s stimulus ambition far exceeds capability 26 Nov 2014 The EC president is pushing a 315 bln euro infrastructure project, using a sliver of taxpayer-funded equity. Europe’s economy needs the stimulus, but this one relies on old money and financial engineering. Investing the funds as quickly as the region needs will prove a challenge.
Investors can forgive BT going back to the future 26 Nov 2014 If the former British Telecom buys Telefonica’s UK mobile business, it will regain a unit demerged in 2001. The round-trip is unusual but forgivable. 02’s demerger delivered good returns for BT investors who kept their stock. BT refocused, and its re-entry to UK mobile is timely.
Remember the UK housing bubble? 26 Nov 2014 Not long ago an overheating housing market was seen by many as the big UK danger. Now mortgage approvals are dropping and house inflation is easing – even though mortgages are getting cheaper. Tighter home-loan regulation is a factor. Workers’ low earnings are the main restraint.
Zalando still has much to prove 26 Nov 2014 Europe’s biggest online fashion retailer says it might eke out an operating profit in 2014. That helped propel shares in the recent 5.3 bln euro IPO. Cost discipline is good but may come at the expense of growth, which Zalando needs to sustain its share rating.
Samsung IPO offers ringside seat for restructuring 26 Nov 2014 The South Korean conglomerate’s de facto holding company is an odd mix. Cheil Industries operates theme parks but most of its value is in a stake in an insurer. For those seeking exposure to Samsung’s wider shake-up, the $1.4 bln IPO is a way to get close to its heir apparent.
India in depth: Time to follow China on rates 26 Nov 2014 Global disinflation is creating room for the Reserve Bank to follow its counterpart in Beijing and cut borrowing costs. Unlike the People’s Republic, India doesn’t need to worry about triggering overinvestment. Monetary easing now would have few risks, and several benefits.
Rob Cox: American banking has its own Tea Party 25 Nov 2014 Like the anti-establishment wing of the GOP, the Independent Community Bankers of America has emerged as a highly vocal opponent of all things Wall Street, including a Lazard banker’s nomination for a Treasury role. These are the plaintive cries of a dying breed of banker.
Friends Life deal terms make an auction tricky 25 Nov 2014 The UK insurer is a bite-sized acquisition for bigger European peers. But both foreign and domestic buyers can see that Aviva has offered Friends a full price that pays away lots of synergy value. And matching Aviva’s premium could be just as tough for consolidators like Phoenix.
United Technologies endures irrelevant CEO 25 Nov 2014 Louis Chenevert decamped abruptly from the $100 bln conglomerate without explanation. Unlike with many other corporate shakeups, including Sotheby’s last week, its stock hardly budged. UTC may yet be put on the defensive, but having a dispensable boss is a sign of strength.
Santander takes first step to better governance 25 Nov 2014 The new chair of Spain’s biggest bank has replaced her chief executive and appointed three new board members. The CEO shift suggests Ana Botin is moving on from her father’s era. And a more independent board makes it more likely Santander can address its strategic challenges.
Private equity shows signs of pre-crisis brio 25 Nov 2014 Canada’s Onex has bought Swiss packager SIG for up to $4.7 bln in a secondary buyout. It’s one of Europe’s biggest LBOs in five years and deploys pre-crisis levels of leverage. Private equity restlessness and a shortage of big targets created the conditions for a landmark deal.
Carney’s bonus cap workaround itself needs a cap 25 Nov 2014 A legal defeat on EU bonus caps has the UK calling for global rules to claw back bankers’ fixed pay too. The BoE governor’s idea to pay part of salaries in deferred bonds would achieve that. But there are limits: cut pay too far - or delay it too long – and London might suffer.
Kingfisher CEO exits on a helpful low 25 Nov 2014 Shares in the UK do-it-yourself retailer have slid on the impact of currency and exposure to the weak French economy. It’s probably not what outgoing chief Ian Cheshire wanted. But as Tesco has shown, it can be helpful to a successor to start with already lowered expectations.
China’s offshore empires go from help to headache 25 Nov 2014 Authorities have launched an assault on evasion, extracting $137 mln in taxes from a multinational company. Anonymous offshore havens and convoluted ownership chains make enforcement complex. Without them, innovative Chinese companies like Alibaba and Tencent might not exist.