Stolid Q4 U.S. growth provides platform for 2015 30 Jan 2015 A 2.6 pct rate of expansion in the quarter and 2.4 pct growth for 2014 hardly represent a boom. But it’s still a stronger story than most developed economies. With pay rising, confidence strong and inflation, interest rates and gasoline prices low, the upside remains promising.
Costco treats shareholders like staff: equitably 30 Jan 2015 The U.S. mega-retailer known for paying workers above the minimum wage is similarly treating its owners with greater deference than rivals do. Rather than buying back stock, Costco is paying a $2.2 bln special dividend. It’s a fresh sign of how all stakeholders can be rewarded.
Why the sky-scraping deal fees over Canary Wharf? 30 Jan 2015 Qatar’s $4 bln swoop on Wharf-owner Songbird didn’t take long. Once big shareholders folded, the defence against the lacklustre offer collapsed. Yet the target’s support team could pocket up to $45 mln. M&A due process certainly doesn’t come cheap.
Russian central bank chooses banks over rouble 30 Jan 2015 A surprise interest rate cut suggests the central bank is more concerned about the economy than the value of the currency. Worries about the banking sector’s solvency could explain the move. The downside: Russia could end up with both high inflation and a deep recession.
Review: What the Great Depression taught the Fed 30 Jan 2015 Ben Bernanke is an expert on the famous crash. But Barry Eichengreen argues in his new book that the Fed boss during the 2008 crunch hadn’t learnt the lessons of the boom preceding the bust. Bernanke’s knowledge helped with crisis management, but it is too early to say how much.
StanChart’s woes stretch far beyond corner office 30 Jan 2015 Worries about bad debts and a sliding share price have raised doubts about Chief Executive Peter Sands’ future. The main challenge for the emerging market lender is to boost returns and retain capital as growth slows. If Sands leaves, his successor will face the same issues.
Qatar stake is vote of confidence in BA-owner IAG 30 Jan 2015 Taking a 10 pct stake worth $1.7 bln makes Qatar Airways the biggest investor in British Airways’ parent company. The immediate strategic benefit is limited: the groups already cooperate and IAG gets no new capital. But a deep-pocketed, long-term backer can be helpful.
Greek deposits fly between a rock and a hard place 30 Jan 2015 One remedy to capital flight would be to give so-called emergency liquidity assistance to Greek banks. But heavy use of ELA could mean big losses if Greece left the euro. The alternative is to copy Cypriot capital controls. That, though, would be politically toxic in Greece.
Google and Amazon glimpse big-spending futures 30 Jan 2015 The search giant reported mediocre Q4 results due to high outlays. The online shopping firm did better but also shelled out hefty sums. Neither can count any longer on economies of scale to boost margins sky-high. They need to make pricey investments just to stay in the game.
Modi market mania faces test in $3.7 bln coal sale 30 Jan 2015 The government is selling a 10 percent stake in the lumbering monopoly to meet its deficit target. A pledge to ramp up domestic production makes it easier to lure buyers. Still, investor enthusiasm for Coal India shares will set the tone for a big pipeline of chunky deals.
ConocoPhillips dividend squeeze tests 2012 split 29 Jan 2015 The $77 bln oil driller is more exposed than larger rivals to lower crude prices after ditching its refinery arm three years ago. That translates into a Q4 loss of $39 mln and big cuts in planned 2015 spending. Dividends will stay high for now, but growth may suffer as a result.
U.S. insider trading cops risk pasting from bench 29 Jan 2015 Prosecutors’ aggressive view of the law has already irked appeals judges, and the Supreme Court may be next. A case on the definition of an illegal tip could give Justice Scalia his long-sought chance to rein in Wall Street watchdogs. Their loss would be a win for clearer rules.
ECB-induced distortions sprout in debt markets 29 Jan 2015 Mario Draghi’s asset-purchase plans are warping bond markets. The most obvious and benign consequence is a drop in yields. But there are also insidious effects. Investors shun anything the ECB won’t buy. And market liquidity will become patchier as the programme progresses.
Rob Cox: Podemos can improve Spanish capitalism 29 Jan 2015 After Syriza’s victory in Greece, investors are fretting that Spain’s “We Can” party could derail reform plans and fiscal discipline. They needn’t worry. The Podemos target is the demon of corruption. Even if the movement has already peaked, it has done the country a service.
Say "ni hao" to Jack Ma’s Amazon-style volatility 29 Jan 2015 Alibaba’s boss, like the U.S. group’s Jeff Bezos, has built online retail dominance. But there are downsides. Unpredictable earnings are Exhibit A. The Chinese group also has fickle regulators. It may not be the last time investors suffer nearly $40 bln of losses in two days.
Ford slowdown is more pit stop than problem 29 Jan 2015 The carmaker’s pre-tax margin slipped to just 4.3 pct in 2014 – and that excludes one-off hits. Revenue declined, too. Such dips are typical, though, when launching new models. Dealing with currency headwinds and autonomous vehicles will present a more enduring challenge.
Deutsche Bank strategy revamp needs to be radical 29 Jan 2015 The German lender beat forecasts in the fourth quarter. But return on equity was just 2.6 pct, and legal and regulatory hits this year add further uncertainty. A looming strategic update will have to set out how the group’s focus on capital markets can turn things round.
Shell refuses to hit panic button 29 Jan 2015 The Anglo-Dutch major, which met its 2014 targets, doesn’t want to overreact to the oil price rout. It has cut three-year capex plans by a modest 14 percent and is maintaining the dividend. Shell has a strong balance sheet, but even it will need a sharper axe if oil stays low.
Alibaba gives crash course on government relations 29 Jan 2015 The e-commerce group’s shares fell after a Chinese regulator lambasted its sales habits. Alibaba must convince investors it was blindsided, and prevent its beef with the watchdog escalating. It’s an insight into how contradictory and value-destructive the Chinese state can be.
Workplace zombies stalk China’s growth 29 Jan 2015 For a country that says employment is its top priority, China’s jobs data is surprisingly unhelpful. Besides the 47 million or so official unemployed, many more are stranded in unproductive or unnecessary posts. That’s bad for growth. Fixing it requires reformist elbow grease.
Facebook investment largesse manageable – for now 28 Jan 2015 Boss Mark Zuckerberg splashed out so much on new projects that his firm’s Q4 operating margin fell by a third. But the social network’s top line grew 49 pct thanks to more users and mobile income. That’s a reasonable dynamic, assuming Zuckerberg is picking the right ventures.
New McDonald’s boss has the right ingredients 28 Jan 2015 Steve Easterbrook may be a veteran of the Golden Arches. But the company’s onetime Europe chief also spent two years running more hip UK chains PizzaExpress and then Wagamama. That’s the experience McDonald’s needs to adapt to changing consumer tastes and revive sales.
Fed keeps head when all about are loosening theirs 28 Jan 2015 The U.S. central bank added a hint of “international” concern to its latest statement. Yet American growth is stronger than in markets where policymakers are easing further. The Fed is still poised to raise rates gradually – as long as overseas events don’t infect its home turf.
Petrobras will test even Brazil’s believers 28 Jan 2015 Long-delayed results by the $50 bln state oil giant failed to include an audit or scandal-related writedowns. The festering problem casts a cloud over national reforms by Finance Minister Joaquim Levy, who impressed the Davos crowd. Petrobras bonds, however, may be worth a look.
Mortgage freeze could hasten Greek bank reform 28 Jan 2015 Before Prime Minister Alexis Tsipras gets any euro zone deal on Greece’s public debt, he could make good on his promise of a permanent mortgage moratorium. That would inflict pain on the country’s banks – but ultimately force them to restructure.
Europe’s tech hits outrun local venture capital 28 Jan 2015 Britain’s Shazam touts a $1 bln valuation and TransferWise has raised $58 mln. Big sums flowing into European tech are great for a sector long starved of capital. But VC there is still dwarfed by the U.S. industry. A narrower gap would benefit entrepreneurs, staff and investors.
Monetary easing is the dominant trend 28 Jan 2015 The vogue in central banks is to reduce the cost of money: at least nine have eased in January. That suits a time of spreading disinflation and poor growth. The Fed, which updates markets today, is sitting tight. So is the BoE. But they may get caught up and delay rate rises.
Fiat shareholders opt for hope over adversity 28 Jan 2015 The automaker hit 2014 earnings targets. But its margins are abysmal, its debt load high and the dividend’s still suspended. There’s some progress, though, even in Europe. The upcoming Ferrari IPO, boss Sergio Marchionne’s reputation and a weak euro are keeping the stock purring.
Currency market still scarred by Swiss trauma 28 Jan 2015 Brutal swings seen just after the Swiss central bank suddenly abandoned its franc cap have faded. But price signals and perplexing moves suggest the extraordinary gyrations left their mark. Singapore’s surprise easing and continued Swiss official musings will add to the jitters.
Qatar’s hostility pays off in Canary Wharf battle 28 Jan 2015 The Gulf state has won over the three other big investors in Songbird, the AIM-listed majority owner of the London financial district. Songbird’s board was caged in: with justification, it sees the $4 bln bid as cheap. But minority investors could suffer by holding out.