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Saturday, 18 April 2015

BREAKINGVIEWS

A Bloomberg terminal displays news while traders work on the floor of the New York Stock Exchange, May 16, 2013.

Bloomberg outage highlights another bank weakness

17 April 2015

The financial network’s global downtime may have been a problem only for the very rich – and a boon for City pubs. But it prompted the Bank of England to remind banks it’s there as a lender of last resort, raising questions about traders’ heavy reliance on a few fallible systems.

The sign at the entrance to a General Electric Co. facility

GE's higher sum may reflect most of the parts

17 April 2015

With the financial arm being jettisoned, the focus starting with Friday’s Q1 results is squarely on the industrial businesses. Valuing the pieces similarly to rivals, $276 bln GE carries a smaller but conspicuous conglomerate discount. Don’t expect it to shrink much more.

A general view shows Swiss biotech group Actelion Headquarters in Allschwil near Basel, April 23, 2011.

Actelion's pay spat reflects tech myopia

17 April 2015

A Citigroup analyst has questioned Actelion’s exclusion of stock options from its chosen earnings measure. The Swiss biotech firm may be an outlier in Europe, but custom-made earnings are common in U.S. tech and biotech companies where valuation is more art than science.

Indian currency of different denominations are seen in this picture illustration taken in Mumbai

Tax shockers ramp up India investor risk premium

17 April 2015

The country wants $6.4 billion in what it says are unpaid taxes from foreign funds. Private equity firms could be the next target. The frequent adjustments to tax policy raise a red flag. Investors will have to demand higher returns to insure against future fickleness.

Stephen A. Schwarzman, Chairman and Chief Executive Officer of The Blackstone Group, looks on during an interview with Maria Bartiromo, on her Fox Business Network show; "Opening Bell with Maria Bartiromo" in New York February 27, 2014.

Blackstone brandishes its long-term bona fides

16 April 2015

Nearly eight years after going public, the buyout shop is taking a victory lap. Its shares finally trade noticeably above the IPO price, and Q1 results suggest Blackstone’s model is working. Even so, owners of the firm’s equity may prove more fickle than investors in its funds.

Goldman Sachs sign

Goldman's improved returns come at higher risk

16 April 2015

The bank left behind years of ho-hum profit with an estimate-beating $2.75 bln in the first quarter. The firm kept costs down, but trading accounted for much of the boost. That raises the issue of whether such earnings are sustainable – and how shareholders should value them.

Bernanke, Fed, Federal Reserve

Bernanke musters maximum revolving-door dignity

16 April 2015

The Fed boss turned blogger will advise $25 bln hedge fund Citadel. Critics may object, and the move won’t help the U.S. central bank’s image of being above the fray. But former public servants deserve to work for pay. At least Bernanke waited over a year and didn’t join a bank.

Volkswagen's CEO Martin Winterkorn (C) and Ferdinand Piech, chairman of the supervisory board (R) attend a media preview day at the Frankfurt Motor Show (IAA).

Truce gives VW time to prepare for post-Piech era

17 April 2015

Volkswagen’s chairman has lost a power tussle at Europe’s biggest carmaker. But boardroom support for CEO Martin Winterkorn is only a stopgap. Finding a successor for the ageing and erratic Ferdinand Piech and simplifying an overly complex empire are the real challenges. 

Spanish banks will be pushed into more deals

17 April 2015

Sabadell may be shopping abroad, but there’s more M&A to be done in Spain. A toxic brew of weak credit growth, low interest rates and too many bank branches is storing up trouble. Tiddlers like Liberbank look vulnerable. Bigger combinations can’t be ruled out.

A boy herds sheep by a nearly dried up pond at a village in Shaoyang county, Hunan province, July 28, 2013. REUTERS/Stringer

Grand plan could make China’s water work

17 April 2015

China wants more than 90 pct of urban water to be drinkable by 2020. Given that two-thirds of ground water is filthy, that’s bold. But the plan is well-crafted. Plugging infrastructure holes, reforming prices and punishing polluters can make supplies cleaner and more productive.

Etsy CEO Chad Dickerson participates in the Washington Ideas Forum, in Washington October 29, 2014.

Etsy's craftiness thwarted on Wall Street

16 April 2015

The online retailer of handcrafted goods priced its IPO at $16 a share, valuing it at about $1.8 bln. The stock almost doubled after trading started, leaving a lot of money on the sewing table. Even Goldman and Morgan Stanley can’t always get the measure of a bespoke bauble.

Traders work at the trading post that trades Citigroup stock on the floor of the New York Stock Exchange, October 16, 2012.

Citi finally flirts with financial respectability

16 April 2015

CEO Mike Corbat now runs one of the leanest banks in the industry, helping the lender’s $4.8 bln first-quarter showing beat expectations. Citi is starting to look undervalued. But return on equity needs to be more than mediocre to justify a sustained rally. That will take time.

A worker passes a sign for Bank Street in the Canary Wharf financial district in London October 21, 2010.

Banks show they can do something right

16 April 2015

Bank accounts and electronic money improve personal financial security. So the global finance industry can take a well deserved pat on the back for a 700 million increase in the number of people with accounts. But new data shows the United States has some problems. 

Videos

Features

Edward Chancellor

Review: Some of what is wrong with economics

17 April 2015

Meghnad Desai mocks his fellow economists for not seeing trouble ahead during the early 2000s credit bubble. The retired professor wisely calls for more study of history and a less narrow perspective, but he is still too conventional. He ignores the crucial financial cycle.

George Hay

British housing fetish has a bad global whiff

17 April 2015

Ruling Conservatives want to help more Britons buy their own dwellings. In global terms, UK home ownership isn’t especially high, but decreasing rentals is a foolish political objective. Making it one – especially with measures that just stoke demand – is irresponsible.    

Columns

Edward Hadas

Edward Hadas: Don't moan about secular stagnation

15 April 2015

The idea that economic growth has shifted stubbornly downwards has gained currency. But flawed measurements and demographic shifts undermine the diagnosis. In any case it’s better to address specific problems than to predict doom.

Hugo Dixon

Hugo Dixon: Squaring the UK’s non-dom tax circle

13 April 2015

Current rules give some rich people an unwarranted tax break. But Labour’s plan to reform the system for those living in Britain with “non-domiciled” tax status could deprive the country of valuable talent. New levies on non-doms’ UK residences would bring a fair compromise.