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.
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.
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.
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.
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.
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.
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.