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Wednesday, 10 February 2016

BREAKINGVIEWS

Rosneft Chief Executive Igor Sechin attends an energy club summit of the St. Petersburg International Economic Forum 2015 (SPIEF 2015) in St. Petersburg, Russia, June 19, 2015.

Russia and OPEC inch towards grand oil bargain

10 February 2016

Russia’s Igor Sechin has hinted that the Kremlin is willing to cut an oil deal with OPEC. The head of Rosneft believes 1 million barrels per day of cuts shared with the cartel could revive prices. For struggling members like Venezuela it might be just in the nick of time.

John Cryan

Deutsche Bank show of virility would lack punch

10 February 2016

The German lender’s shares have jumped after reports it could buy back debt amid a wider market rout. The actual amount CEO John Cryan could raise is limited. As with ex-boss Josef Ackermann’s attempt to reject ECB liquidity in 2012, the boast is what counts.

 MV Maersk Mc-Kinney Moller

Maersk hasn’t yet reached its low water mark

10 February 2016

Cheap oil and collapsing freight rates hit the Danish conglomerate even harder than expected. A $2.6 bln writedown on oil assets and a dismal year-end sent 2015 net profit down 82 pct. A bleak outlook suggests Maersk’s dividend, and its valuation, may be unsustainable.

An employee of La Montre Hermes works on a leather watchstrap

Luxury slowdown dirties Hermes’ hems

10 February 2016

The maker of 10,000-euro handbags warned it may miss its sales target this year. Hermes has some of the best revenue growth of the large luxury labels, and a stock market rating to match. With rival LVMH strengthening and the sector’s high-end softening, its lead may narrow. 

A casino financier counts money in Angeles city, Philippines, May 25, 2015.

Two U.S. scandals evoke Galbraith's bezzle

09 February 2016

Bad practices led to CEO departures at Blackstone-backed mall owner Brixmor and HR software unicorn Zenefits. It’s a useful reminder of a Depression-era observation that good times mask bad behavior, but hard times expose it. These examples may be just a taste of what’s to come.

REUTERS/Edgard Garrido

New Pemex boss is emblematic of company's curse

09 February 2016

Jose Antonio Gonzalez is a Harvard-educated economist who knows cost cutting and pensions. Making him CEO, rather than an industry veteran, points to the nature of the Mexican giant’s deep-seated woes. Because it’s more than just an oil company, it’s also less than one.

Unicredit bank Chief Executive Federico Ghizzoni is pictured during an interview at the Ambrosetti workshop in Cernobbio, next to Como, September 7, 2012.

UniCredit heads into market storm - in leaky canoe

09 February 2016

The Italian bank beat 2015 net profit forecasts, and boss Federico Ghizzoni is making progress on a plan to cut costs and boost revenue. Yet UniCredit still looks undercapitalised. It’s a bad time to be a bank, let alone one whose strategy rests on suddenly less-clear growth.

Men work on the roof of a luxury apartment building in Berlin

German real estate M&A fiasco leaves no winners

10 February 2016

The failure of Vonovia’s hostile bid for Deutsche Wohnen spares investors a long legal battle. The bidder comes away empty handed with at least 42 mln euros of costs. Wohnen’s defence involved a pricey acquisition. It’s time for German real estate to become boring again. 

A traffic sign stands in front of the construction site for the ECB

German CDS imply bank doom loop is unbroken

10 February 2016

Market turbulence has led investors to snap up safe German bonds, yet the cost of insuring against a Teutonic default is up. Blame a rout in Deutsche Bank shares. Until Europe’s banking union is complete, governments are the ultimate backstop if big lenders get into trouble.

House Budget Committee member Marsha Blackburn (R-TN) holds a copy of U.S. President Barack Obama's FY2014 budget proposal on Capitol Hill in Washington April 10, 2013.

Wall Street risks becoming Uncle Sam's piggy bank

09 February 2016

The White House’s 2017 budget includes another fee on $50 bln plus institutions. That follows Congress’s decision to tap banks and the Federal Reserve to pay for highway spending. Big Finance’s political capital is shrinking, making it harder to fend off future fiscal raids.

Electrical power pylons of high-tension electricity power lines are seen next to the EDF power plant in Bouchain, near Valenciennes, July 29, 2013.

Financial prospects flicker on $11 bln power deal

09 February 2016

Canadian utility Fortis would need some $230 million a year in cost savings or other gains to justify the $1.7 bln premium it’s paying for U.S.-based ITC. The strategic sense in the acquisition doesn’t include obvious synergies. That makes a return for Fortis investors look dim.

A worker stocks shelves at a temporary store in Queens, New York, November 13, 2012.

Fairway's failings spoil fancy supermarket sector

09 February 2016

The New York area chain warned it may go bust just three years after its IPO. While smaller than rivals like Whole Foods, Fairway’s losses and over-ambitious expansion serve as a reminder of the industry’s challenges. It can’t help Albertsons’ plans for a big stock market debut.

Michael Bloomberg on Capitol Hill in Washington, March 15, 2011.

Mike Bloomberg's billions may not buy White House

09 February 2016

An independent run by the media mogul and former mayor would be well-capitalized by his own personal fortune. Solid financial backing has not, however, been a good indicator of success for Jeb Bush, Hillary Clinton and others. This race is dulling the power of money in politics.

Videos

A man walks up a spiral staircase at the Museum of Contemporary Art in Chicago, Illinois, September 3, 2014. REUTERS/Jim Young

Predictions 2016: Stairway to Heaven, Highway to Hell

Read our predictions for the year ahead here

Columns

Edward Chancellor

Chancellor: Heed the threats to globalization

09 February 2016

As the woes of emerging markets increase, 1930s-style protectionism and exchange controls are back on the agenda. A warning from the Bank for International Settlements of an “epoch-defining seismic rupture” in the financial system may be more than just hyperbole.

Features

Dominic Elliott

Credit Suisse chips away at bonus deferral fetish

08 February 2016

The Swiss bank is cutting the level of annual bonuses it defers. After the 2008 crisis, regulators delayed variable compensation to improve accountability, leaving lenders with higher fixed costs and grumpy staff. Trouble is, ditching deferrals entirely doesn’t look practical.

John Foley

Bad finance: the dangerous drug of EPS accretion

08 February 2016

AstraZeneca’s chief executive says he’s done with deals, unless they are accretive to earnings right away. That could rule out some good acquisitions, and rule in some terrible ones. Judging transactions by their effect on earnings per share is common, and a most unhealthy habit.