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Friday, 28 November 2014

Breakingviews
Aug 2011

View all stories from this issue.

  • Texas governor unlikely small government champion

    19 August 2011

    Rick Perry likes to boast of the jobs created on his watch. Yet while he wants to make the federal government “inconsequential,” he has presided over more new government jobs per head than Washington. If nothing else, it’s a reminder that economics can’t be reduced to soundbites.

  • Abu Dhabi's Aabar sticks out for the wrong reasons

    25 August 2011

    The state-owned investor has carried on spending as others have been told to cut back. But multi-billion dollar bets on Glencore and Malaysia’s RHB are under water. Aabar’s turn of fortune underscores the fund’s lack of a focused strategy.

  • Aging population another headwind for U.S. stocks

    24 August 2011

    Meager economic growth is one thing. But share valuations could also suffer for a decade or more as retiring baby boomers sell off their equities. It’s one more reason for pension funds, younger savers and investors at large to make sure they aren’t expecting too much.

  • America's too big to fail just keep getting bigger

    23 August 2011

    The FDIC’s latest quarterly roundup suggests, in aggregate, that the U.S. banking industry is recovering. But dig into the details, and it’s pretty clear that massive institutions are continuing to thrive at the expense of the small fry. That’s not necessarily healthy.

  • Apple wouldn't be first to weather succession

    26 August 2011

    IBM, Wal-Mart and General Motors show how an obsessive focus on design, customer needs and tight control over supply chains can be ingrained in a company by a visionary creator. But these examples also provide some warning signals about how the post-Steve Jobs era could go wrong.

  • Asia emerges as refuge from global fears

    05 August 2011

    The region’s government bonds have soared amid this week’s panic. Not that investors are buying the theory it has decoupled from the West - Asian stocks are weakening. But with balance sheets that look pristine next to the U.S. and EU, Asian sovereigns are seen as a safe haven.

  • Asian equity sell-off reflects three flavours of fear

    09 August 2011

    While the region’s economies are in good shape, investors fear the impact of a U.S. recession - both on exports, which remain key to growth, and on closely linked capital markets. A third worry is that plunging asset prices could cause a real pullback in credit and investment.

  • Baidu smear campaign can't be brushed aside

    18 August 2011

    Critical reports by Chinese state TV have knocked 9 percent off the dotcom giant’s shares. It may be professional envy rather than political conspiracy. Still, the Communist Party’s relationship with the web is fractious. And Baidu’s ownership structure may be an Achilles’ heel.

  • Balanced budget laws are flawed but not useless

    16 August 2011

    Sarkozy and Merkel like them, and they feature in America, too. But politicians often fudge the numbers, or just change the rules. Nonetheless, in reasonably honest systems such laws slow the build-up of deficits. Perhaps as importantly, they also stigmatize bad behavior.

  • Bank of Moscow's debacle is profitable for some

    02 August 2011

    Russia’s $14 bln banking fiasco has proved costly for both the Russian state and its major shareholder, VTB Bank. But Vitaly Yusufov, the son of former Kremlin official Igor Yusufov, looks set to profit from the imbroglio. That raises questions about the handling of the affair.

  • Barclays' star trader exit won't be the last

    17 August 2011

    The UK bank is parting company with big-shot commodities trader Todd Edgar. Curbs on proprietary trading are one factor, and his contract terms may make it logical to go now. But with revenues in trading under pressure, the underlying trend is shrinkage in any case.

  • Barclays' targets still look a stretch

    02 August 2011

    Falling bad debts helped the UK bank meet forecasts for H1, and underlying return on equity has jumped to 9 pct. But to achieve its 13 pct goal in 2013, Barclays will need strong top-line growth as well. That’s challenging given euro zone woes and regulatory uncertainty.

  • Battered U.S. junk deserves high-yield name again

    16 August 2011

    With markets volatile, typical junk bonds are yielding north of 8 pct. That’s tasty for those starving on the Fed’s zero-rate diet. And default rates look low, refinancing needs limited and the deal flow manageable. Despite investor wariness, today’s junk looks almost nutritious.

  • Berlusconi makes nice sounds but misses the point

    04 August 2011

    The Italian prime minister tried to reassure nervous markets by pledging to implement his cabinet’s fiscal programme and announcing broader reforms. But investors are more worried by his government’s lack of authority than the plan itself.

  • Bernanke should leave any new stimulus to Congress

    24 August 2011

    The anti-deflation rationale for the Fed’s last bout of bond-buying won’t wash this time. Anyway, its effectiveness was questionable. And the U.S. central bank is already in uncomfortably deep. Fiscal action might be equally unhelpful, but at least it’s easier to reverse.

  • Bernanke's inaction, even if temporary, is welcome

    30 August 2011

    Stock investors may have been briefly underwhelmed, but the Fed chairman was right not to promise new easing in his Jackson Hole speech. Aside from its likely ineffectiveness, he faces dissent at the Fed. That’ll make the now extended September meeting a new focus for markets.

  • Big oil faces big unknowns in Libya

    24 August 2011

    With Brent crude at more than $100 per barrel, foreign entities have a strong incentive to restart production as soon as security is ensured. But Libya’s new rulers may want to reshuffle the cards. Even once the fighting stops, oil companies should expect a bumpy ride.

  • Bipartisan dislike of U.S. budget deal a good sign

    01 August 2011

    If a sign of compromise is a frown from both sides, then Congress is close to an equitable agreement. Members of both parties have major gripes about the debt deal cooked up by their leaders. Importantly for markets, the compact would maintain momentum for further fiscal fixes.

  • Bloomberg LP spares no expense on first big deal

    25 August 2011

    The New York mayor’s financial information company is paying $1 bln for legal publisher BNA. At 36 times earnings, no public company could reasonably compete. But the price also reflects Bloomberg’s ardor to expand its influence and build a cushion against Wall Street.

  • BofA blues is bottling up U.S. credit

    24 August 2011

    The Fed still wants to keep credit as easy as it can. But worries, rational or not, over Bank of America’s stability are getting in the way. If credit investors continue to fear for the nation’s largest bank by assets, that will outweigh any policy options Ben Bernanke might try.

  • BofA boss deserves slack on style

    10 August 2011

  • BofA leads banks back into mortgage abyss

    08 August 2011

    Its shares fell 15 pct after the U.S. debt downgrade and AIG’s $10 bln home-loan lawsuit. Other mortgage-heavy banks were hit, but none as bad as BofA. Investors now reckon it’s worth $135 bln less than breakup value. That’s a huge housing hole for CEO Brian Moynihan to escape.

  • BofA shareholders resigned to life on skid row

    23 August 2011

    Fears of a dilutive capital hike may prove overblown. Even so, BofA’s long-running mortgage saga has moved a seemingly endless list of litigants ahead of equity investors in the pecking order. Until the claims are resolved, the stock price looks set to stay in the gutter.

  • BP needs to make unhappy TNK-BP marriage work

    01 September 2011

    There’s no easy way out of BP’s self-created mess in Russia. The oil group may be tempted to stop working with its difficult oligarch partners at TNK-BP. But a divorce would be difficult and costly. BP may be better off making the best of this troubled, yet lucrative, marriage.

  • Buffett's $5 bln endorsement won't end BofA's woes

    26 August 2011

    Winning the Sage of Omaha’s backing is a coup for CEO Brian Moynihan - and the terms aren’t painful. But the deal offers no fix to BofA’s mortgage black hole nor does it immediately boost common capital. Those concerns may prove to be more enduring than Buffett’s thumbs up.

  • Buffett's value quest pushes a board to seek same

    08 August 2011

    A $3.2 bln offer from a Berkshire Hathaway unit prices reinsurer Transatlantic at just 80 pct of book value. But along with a hostile bid from Validus, the target’s directors are now under pressure to do what they should have done before - find the best deal for shareholders.

  • Calculators | Equity Valuation

    01 August 2011

    These interactive calculators help you crunch the numbers behind the views. Each is in ready-to-use Microsoft Excel format, and includes a clear explanation, along with an outline of the assumptions we’ve made.

  • Can non-violent struggle bring down Syria's Assad?

    01 August 2011

    Maybe not if it was purely spontaneous. But, in Syria, the campaign shows it can think strategically and organise effectively. In a style that departs from the typical Breakingviews approach, Hugo Dixon tells the tale through the eyes of a leading activist, Ausama Monajed.

  • Can non-violent struggle bring down Syria's Assad?

    01 August 2011

    Maybe not if it was purely spontaneous. But, in Syria, the campaign shows it can think strategically and organise effectively. In a style that departs from the typical Breakingviews approach, Hugo Dixon tells the tale through the eyes of a leading activist, Ausama Monajed.

  • Can the BRICs save the PIIGS?

    21 September 2011

    Brazil’s limited offer of $10 billion of support is pure posturing. But its idea to channel it through the IMF has merit. But why limit the effort to the BRICS? Other large holders of reserves - such as Japan and Saudi - should also join the club.

  • CBO deficit slash reveals DC financial wonderland

    24 August 2011

    Congress may have done a deal to cut costs, but the new, relatively upbeat 10-year prediction for U.S. finances also relies on some rosy long-term assumptions. Budget experts know next year’s numbers matter most. Washington policymakers need more focus on the here and now.

  • CCB sale underlines BofA's slow road to recovery

    30 August 2011

    Offloading some $8 bln of the Chinese bank’s shares is a double boost to capital. Along with Buffett’s investment and future earnings, it should help put BofA back on track. But none offers a quick fix. Economic and mortgage woes will leave shareholders dangling for some time.

  • Central banks at the limits

    10 August 2011

    QE or not QE? Fears of renewed global recession come as central bankers seem short of options. Money printing carries big risks, and failed currency interventions add to the impression of impotence. The radical solutions are there. But they might be better kept locked away.

  • Cheaper oil may be last best stimulus

    09 August 2011

    Falling crude prices are the silver lining to market woes. While governments lack economic ammo, one estimate says each cent off gas adds $1 bln to US pockets alone. OPEC is unlikely to intervene any time soon, meaning lower fuel costs could be the only economic booster for now.

  • China’s new M&A rules may hurt its Internet stars

    31 August 2011

    A freshened regulatory framework adds clarity to the way China treats stock listings and takeovers. But mainland Internet firms which raise money overseas may have to change if they want to be listed at home, or even to secure their domestic operating licenses.

  • China's bank rules promise safety, not stability

    19 August 2011

    Lenders will end up well padded against bad debts under new plans - a good job, since lots are coming. But the distortions that promote risky lending remain. With capital scarce, banks may also push more loans through China’s worryingly large “shadow” banking system.

  • China's collectible bubble shows Beijing's challenge

    10 August 2011

    Investors are bidding up arts and jewellery because they are worried about inflation and a weak dollar. It may not be too damaging if this kind of bubble bursts. But the mania shows how tighter credit rules have only partly worked, and too much money is still sloshing around.

  • China's diatribe on U.S. debt could backfire

    08 August 2011

    Official media’s sharp criticism may help shift domestic focus to U.S. economic woes and away from China’s train crash. But using the situation to attack Washington’s military policy in Asia won’t work. If anything, the tirade risks inviting U.S. pressure on trade and currency.

  • China's super-railways on track for debt troubles

    15 August 2011

    New super-fast railways would struggle to repay their colossal borrowings even before new safety fears, which will push costs up and demand down. The country benefits, since the perks of fast trains aren’t all financial. Not so investors in banks who fund these trophy projects.

  • China's train crash sets new tests for freedoms

    03 August 2011

    Authorities’ attempt to censor coverage of China’s rail tragedy has backfired. Even official media defied orders or found ways to circumvent the ban. If Beijing now clamps down harder, the impact will be economic as much as social.

  • Citadel shows some moats are still hard to cross

    12 August 2011

    Ken Griffin’s hedge fund is abandoning its foray into investment banking. Internal clashes didn’t help and adding a middle man to a trading business creates conflicts, too. But bulge-bracket firms also held up better than expected. Wall Street turf has some solid defenses.

  • Companies should resist buyback temptation

    23 August 2011

    Share repurchases are creeping back into fashion, and are easier to like when markets are on their knees. But boards have often sanctioned buying programmes that have destroyed value. Share buybacks make more sense in a bear market, but the investment case remains unconvincing.

  • Corzine covenant smacks more of PR than protection

    03 August 2011

    Bondholder activism is a good thing. But investors in MF Global’s $300 mln offering have only $3 mln a year to gain and little to obviously lose if the former Goldman Sachs boss and New Jersey governor heads to Washington. This key-man clause benefits Corzine more than creditors.

  • Credit Agricole won't be last bank to exit Bahrain

    15 August 2011

    The French lender’s decision to shift its regional headquarters to Dubai is a blow for the island state. Banks are looking to cut costs and risk. But this year’s protests and subsequent crackdown did not help Bahrain’s case. Others are likely to follow.

  • Credit ratings love-hate has simple answer

    06 August 2011

    The White House doesn’t like S&P’s downgrade of U.S. debt. European officials don’t welcome critiques of sovereign credit, either. Yet governments also mostly want to hold big raters closer by regulating them. The better idea is to push through nascent efforts to cut them loose.

  • Debt deal suggests ideal successor for Geithner

    02 August 2011

    The U.S Treasury boss may go now that Congress has reached agreement. But the conclusions of last year’s deficit commission, jointly led by Erskine Bowles, are back in focus. Obama snubbed the former Clinton official’s fiscal ideas then - but might see the value of a rethink.

  • Defeat for U.S. public unions sets stage for more

    10 August 2011

    Organized labor picked a fight it couldn’t finish in Wisconsin. It won two battles, but lost a recall vote war for the state Senate. Anti-union Republicans remain in control. The outcome may inspire other cash-strapped states to squeeze the power and wages of their workers.

  • Demand Media takes cake with galling stock buyback

    26 August 2011

    The content farm’s shares have halved since Goldman and Morgan Stanley took it public in January. Now it’s spending a third of the cash it raised to repurchase stock. That contravenes the promised use of proceeds in its prospectus - and does nothing to fix its damaged business.

  • Different duty may call for U.S. Treasury boss

    08 August 2011

    There was little upside for the president to let Tim Geithner go back to New York. Finding a replacement would be a political pain. And with markets nervous, Obama needs someone with crisis experience. But Geithner may have a smaller role in this latest stage of the crisis.

  • Diving bond yields mask investor ambivalence

    25 August 2011

    Fear still trumps greed in the minds of most investors. It allowed the German government to sell 10-year bunds at super-punchy prices on Aug. 24. There may well be enough buyers to push real yields negative. But the investment appetite is far from overwhelming.

  • Don't blame S&P for the madness of markets

    08 August 2011

    The credit rating agency targeted U.S. debt, but it was stocks not Treasuries that got clobbered. The counterintuitive reaction is less bonkers than it seems. An economic slowdown combined with dithering leaders and limited central bank resources is a bad mix for risky assets.

  • Doubts over $29 bln pharmacy deal look overdone

    17 August 2011

    Based on the yawning 26 pct gap between the Express Scripts offer and where Medco shares trade - lower than even before the bid came along - investors are super-spooked about antitrust issues. The market pricing in zero chance of success makes it a cheap option to buy.

  • Downgrade of U.S. debt upgrades risk to raters

    19 August 2011

    Credit rating firms have somehow alienated both parties in Congress. And government investigations of S&P may spur legislative efforts. On partisan lines, these range from tightening Uncle Sam’s grip to removing his helpful imprimatur. Either result could change the rating game.

  • ECB hawks may have to soften as France weakens

    12 August 2011

    French growth has stalled and inflation has dipped. The euro zone’s core looks less strong. The ECB has been alone among major central banks in responding to above-target inflation by raising interest rates, despite crisis in the periphery. It may soon need to make a volte-face.

  • ECB must give bank sickness long-term cure

    21 September 2011

    The European Central Bank is flooding Europe with short-dated funds to ease money market tensions. But banks are still struggling to issue long-term debt, increasing the risks of a dangerous credit crunch. The ECB should ease the strain by setting up a longer-term facility.

  • ECB's bazooka has a limited shelf life

    08 August 2011

    The central bank’s decision to buy Italian and Spanish bonds has calmed investors’ nerves. But the ECB is only buying time until the euro zone governments’ bailout facility is ready to step in. And the repercussions of Friday’s U.S. ratings downgrade could limit future rescues.

  • ECB's dollar-swap safety net should cap bank pain

    17 August 2011

    The central bank has activated a facility that allows EU banks to access dollar funding. An unnamed lender has highlighted the stress in bank funding markets by paying up for seven-day liquidity. But the ECB’s ready supply of dollars should help prevent a Lehman-style crunch.

  • End game in Libya could herald oil slump

    22 August 2011

    The rebel push into Tripoli came sooner than expected. Libyan oil exports should follow suit. The possibility of regional unrest remains. But global growth concerns, and IEA and Saudi moves to make up for the disruption, could turn tight markets into oversupplied ones.

  • EU bank funding backstop may need fine tuning

    23 August 2011

    As euro zone liquidity becomes more strained, the European Central Bank’s ability to cover any gaps with an unlimited supply of euros and dollars is vital. Yet that support can backfire if investors spot which banks are getting help. Lessons from the UK could be helpful here.

  • EU bank funding headed back to emergency room

    05 August 2011

    The 2008 liquidity squeeze triggered a credit crunch and massive bailouts. Though Europe’s banks are in better shape today, turmoil in the euro zone means some lenders can once more only get overnight funding. That leaves the European Central Bank squarely on the hook - again.

  • EU bank shares braced for recession - and worse

    18 August 2011

    The huge sell-off in European bank stocks is partly due to sovereign-related funding fears. But it mainly reflects the hit to earnings that lenders would suffer in another economic downturn. Investors also seem to be pricing in another round of capital injections.

  • EU bank stress tests look soft on funding

    26 August 2011

    The European Banking Authority’s stress test of bank solvency last month included various assumptions about funding costs in adverse markets. But judging by the wholesale rates implied by current bank CDS levels, the EBA test may not have been bearish enough.

  • EU banks' summer funding lull may bring autumn woe

    18 August 2011

    Post-crisis reforms and central bank backstops mean Europe’s lenders are less vulnerable to a short-term funding freeze. But if markets do not reopen in the autumn, or if wholesale borrowing costs remain high, the economic fallout for the euro zone could be nasty

  • Euro bailout fund could survive French downgrade

    15 August 2011

    France’s triple-A rating is the weak link in the soon-to-be-expanded European Financial Stability Facility. A downgrade would almost certainly dent the rescue fund’s top rating, pushing up borrowing costs for bailed-out countries. But this need not be a disaster.

  • Euro zone isn't ready for true euro bonds

    04 August 2011

    Could a common bond solve Europe’s sovereign crisis? The region’s bailout fund is already functioning like a joint debt issuer. But for now the zone lacks the political unity needed for a proper debt union. Euro bonds can’t be a quick fix.

  • Europe should strive for bank funding backstop

    31 August 2011

    The European Banking Authority wants to free up bank funding markets by enhancing the euro zone’s rescue fund. That could prove politically contentious with member states tired of ever-increasing bailout liabilities. But a debilitating credit crunch would be far worse.

  • Europe shouldn't dally on Syrian oil boycott

    17 August 2011

    Proceeds from the country’s oil exports are helping to prop up an increasingly brutal regime. Global markets can withstand the loss of Syria’s supplies. Even if there is a chance that Syria can circumvent sanctions, they remain the best tool available to weaken the regime.

  • Exxon's Russian coup rubs salt in BP's wounds

    31 August 2011

    The U.S. oil group’s Arctic exploration agreement with Rosneft mimics BP’s aborted deal but without the $16 bln share swap. Instead, there’s Russian access to U.S. drilling projects. Assuming no hidden snags, Exxon could become the big winner from BP’s botched Russian strategy.

  • Fed policy creates crunch moment for Chinese yuan

    11 August 2011

    A weaker U.S. dollar raises the cost to China of suppressing its currency - and will further swell its reserves. Pricier commodities could prompt inflation to return. China has resisted a much stronger yuan, but the Fed’s low interest rate pledge may give it little choice.

  • Fed's "QE lite" another dent in dollar's crown

    10 August 2011

    Ultra-low interest rates alone won’t knock the dollar off its perch as the world’s reserve currency. The greenback remains the lingua franca of global commerce and foreign central banks’ holding of choice. But the bleeding from a thousand cuts will eventually end its dominance.

  • Fed's firm compass setting puts it all at sea

    09 August 2011

    The FOMC’s decision to keep rates ultra-low till mid-2013 suggests excessive faith in its forecasting power. Inflation, jobs and growth have already surprised the Fed this year. Locking in a course for two years as a sop to markets only makes it harder to navigate choppy waters.

  • Financial lifeboats starting to get crowded

    11 August 2011

    Safety from sinking stocks has been sought in Treasuries, and even bonds backed by U.S. homes. But other places of refuge like the Swiss franc and gold showed on Thursday how quickly they can be rocked when too many investors pile in. Havens aren’t immune to mania either.

  • Financials investors brace for the worst

    09 August 2011

    They wiped $100 bln off the 20 largest U.S. institutions on Monday. It may be panic selling. But most big banks are back below book value. Shareholders might not believe a 2008-like crash is coming, but the rout suggests they’d rather get out first and ask questions later.

  • Finnish bolshiness follows Berlin's bank coddling

    25 August 2011

    Finland has demanded collateral for its part of Greece’s second bailout. The attitude is divisive, but it highlights the disparity between the treatment of private and public creditors in the July deal. Finland is only asking for what Berlin gave bankers.

  • Finnish favouritism could unravel Greek rescue

    19 August 2011

    Greece’s bailout allows Finland to secure its loans with cash. Now other member states want the same deal, which would undermine the whole exercise. With either the rescue package or euro zone unity at stake, the EU’s biggest players may have to knock some heads together.

  • Fluctuating gas estimates needn't freak investors

    31 August 2011

    Opponents of fracking pounced on a sharply lower government tally of the likely store of gas in one of America’s biggest shale areas. But investors, buffeted by swings in estimates, shouldn’t be too alarmed. Even the ultra-cautious reckoning amounts to 109 years of production.

  • Foreign borrowing undermines China's tightening

    01 August 2011

    Better-than-expected factories data shows China hasn’t over-tightened. Beijing has curbed domestic loans, but Hong Kong banks are lending and offshore bond issuance also surged. The practice adds risk for foreign investors, and hinders China’s efforts to squash inflation.

  • Foster's comeback to SAB bid just a sharpener

    23 August 2011

    The Aussie brewer promised shareholders an A$500 million payout. That was enough to nudge its shares past SAB’s hostile offer, but is less than it can afford. With SAB yet to make a formal bid, Foster’s has left itself plenty of room for something stronger later.

  • Four challenges for a common euro bond

    24 August 2011

    Can a debt union save the euro zone? With overall debt at 85 percent of GDP, the region still has the financial capacity to underwrite peripheral economies. But issuing common bonds requires time and political change. Here are the four obstacles to overcome.

  • France needs resolve to avoid losing triple-A

    11 August 2011

    Debt and the deficit are high, regardless of the cost of euro zone bailouts. France has a tough plan. But extra measures, like reforming local government and removing VAT exemptions, are needed. Regrettably, as in the U.S., there are political obstacles and an election looms.

  • French banks trapped in sovereign crossfire

    10 August 2011

    Four years after BNP Paribas kicked off the crisis, shares in rival SocGen plunged 15 pct and triggered a broader sell-off. Sovereign worries - specifically fear of a French downgrade - are partly to blame. Such concerns can become a negative feedback loop that’s hard to break.

  • Fretting frackers restrain economic opportunities

    12 August 2011

    Critics of the controversial drilling process contend its hazards have been downplayed and the benefits exaggerated. A new U.S. report suggests just the opposite. Yet until safety concerns are tackled, as with New York’s proposed cleanup fund, shale’s potential won’t be realized.

  • German slowdown adds to pressure on euro zone

    16 August 2011

    Weak Q2 GDP confirms fears that the EU’s largest economy has entered a soft patch. That makes it harder for Europe to grow its way out of crisis. The euro zone can’t afford to relax near-term fiscal austerity just yet. But further rate hikes by the ECB must now be on hold.

  • Glencore share price recovery depends on M&A

    25 August 2011

    The commodity trader’s performance sagged slightly between Q1 and Q2. The business is coasting along, and the latest numbers were free of nasty surprises. But without an opportunistic acquisition, a recovery in the shares - still 25 pct below their issue price - will be a slog.

  • Global equity sell-off ignores fundamental value

    08 August 2011

    Stocks have been clobbered by the latest leg of the global economic and financial crisis. But falling share prices are a symptom of fears: they are not, as yet, a cause. Long-term investors unburdened by leverage still have good reasons to hold their nerve.

  • Global fear could force Fed's hand on QE3

    03 August 2011

    Markets are panicking. Safe-haven assets reflect extreme risk aversion, pushing Switzerland and possibly Japan to intervene. Asia fears a weak U.S. and worsening euro zone. Macro worries look overdone; more money printing would be regrettable. But the Fed may feel it has to act.

  • Gold miners no longer leveraged play on the metal

    01 September 2011

    The yellow metal’s price is up 29 pct in 2011, but mining shares are flat. Australia and Peru recently showed how governments grab more when prices rise; costs go up with prices, too. With mining investors also discounting price spikes, the shares aren’t shining for gold bugs.

  • Goldman chips away at fixed cost problem

    26 August 2011

    The bank is trimming base pay for some senior UK bankers. The 2009 shift from bonuses to higher fixed comp was a bit slippery, but the move back rightly reinstates pre-crisis flexibility. Rivals should follow but may struggle unless they, too, foresaw the need in the small print.

  • Google's $12.5bln insurance buy may worry partners

    15 August 2011

    Paying up for Motorola Mobility locks in patents to help ensure Apple and Microsoft can’t stifle Google’s Android mobile operating system. But the search giant’s plans for its new hardware company will be the key concern for regulators and current Android handset makers alike.

  • Greek bank consolidation escapes Catch-22

    29 August 2011

    Cost-cutting mergers between Greek lenders are essential. Trouble is, they double exposure to sovereign debt. Alpha and EFG may have solved the problem by raising 500 mln euros from Qatar. Combining M&A with new private capital makes sense, but other deals may not come so easily.

  • Greek bank M&A shows no mercy on weaker partners

    31 August 2011

    Eurobank EFG is giving less troubled Alpha the lion’s share of the value created by their planned union. The deal leaves Piraeus, the smallest of Greece’s top banks, needing a partner. NBG is the obvious candidate. But Piraeus may, like Eurobank, have to take asymmetric terms.

  • Groupon IPO can now be judged with half the grief

    09 August 2011

    The daily-deal website is abandoning its nonsensical profit measure, ACSOI, which excludes marketing costs. Chalk one up for the SEC, which was scrutinizing the practice. Regulators can’t prevent all bubbles from inflating, but stopping firms from duping investors pricks one.

  • Groupon's gaffes give fair warning to investors

    30 August 2011

    The run-up to the web coupon company’s IPO has been a string of embarrassments. Promised profits disappeared in filings, the chairman put his foot in his mouth and now the CEO has made comments that appear to skirt SEC rules. Forget valuations, this company should be avoided.

  • Groupon's odds of success may wilt with market

    10 August 2011

    The online coupon company’s Q2 sales increased 10-fold from a year ago. Yet its net loss also swelled to over $100 mln as it financed growth with cash owed to merchants. If investors shunning risk close the window for an IPO, it would leave Groupon less financial wiggle room.

  • High volatility the price for still unfixed system

    18 August 2011

    The tail-risk fear of a Lehman sequel in the euro zone has whipsawed stocks, bonds and just about every other market. Gloomy data on the U.S. economy didn’t help on Thursday. While policymakers and fundamentals alike offer no conviction, global volatility is set to stay high.

  • Hitachi and Mitsubishi should seek to seal merger

    04 August 2011

    Consolidation is a dirty word in Japan, where jobs are valued above profits. But Hitachi and Mitsubishi Heavy are sprawling conglomerates which, together, can be more efficient and productive. There will be short-term pain. But corporate Japan must grasp its nettles.

  • How to break Europe's bank-sovereign "doom loop"

    19 August 2011

    The crisis of 2008 is repeating itself in reverse. Instead of saving the banks, European governments are now dragging them down. That threatens another credit crunch. Severing the link between states and lenders is essential to restoring calm. Here’s how it can be done.

  • HP purchase of patent-rich Palm now looks smarter

    16 August 2011

    Google’s $12.5 bln buy of Motorola Mobility and earlier frenzied bidding for Nortel’s patents reveal the riches in the intellectual property of mobile computing. HP snatched Palm’s trove over a year ago for a price that now looks cheap. Yet for HP, cashing in is a challenge.

  • HP says goodbye Compaq, hello IBM

    19 August 2011

    The U.S. tech giant may spin off its PC unit and stop making some mobile devices. It has also offered to buy UK data search software group Autonomy for $10 bln. Leaving the cutthroat hardware market for higher margin software can work, as IBM shows. But it won’t be quick or easy.

  • HP stock sell-off looks like overkill

    19 August 2011

    The tech giant has seen about a quarter of its market value, almost $16 bln, vaporized in two days. Shareholders have fled following another profit warning, a huge and pricey acquisition deal, and a strategic U-turn. That makes for plenty of warts - but HP now looks too cheap.

  • HSBC reassures with $2.4 bln credit card sale

    10 August 2011

    At just twice 2010 earnings, the gain on selling its U.S. cards unit to Capital One isn’t brilliant. The sale will also lower returns and raise the bank’s cost ratio. Still, a clean exit shows CEO Stuart Gulliver is serious about getting back to HSBC’s trade-bank roots.

  • HSBC supertanker will take time to turn around

    01 August 2011

    CEO Stuart Gulliver wants to make the bank more efficient, but emerging market wage inflation means costs are still rising. Factor in new capital rules, and HSBC’s return on equity is also well below target. It’s no surprise the bank is planning to slash another 25,000 jobs.

  • HTML5 buzz weakens the power of mobile apps

    12 August 2011

    Apple and Google-powered smartphones have hundreds of thousands of specialized Web programs, allowing them to lock up the market - and users. A new Web standard is gaining traction, potentially allowing an end-run around walled gardens. But Apple and Google have little to fear.

  • India's botched crackdown may be turning point

    17 August 2011

    Arresting an anti-corruption hunger striker has cost the Singh government political capital. That could jeopardise reforms hanging in the balance, and may worsen supply bottlenecks and inflation. But it could also be a spur to tougher action on graft - another big economic drag.

  • Investment bank cull won't protect survivors' pay

    11 August 2011

    Wholesale banks are cutting thousands of jobs. But business is tailing off faster. The only way to protect bonuses would be to pay out a higher proportion of revenues. With capital under pressure and investors wanting better returns, that would be hard to defend.

  • Investors in Motown see nothing but recession

    04 August 2011

    GM posted its best earnings in years and Ford’s looking solid even with subdued U.S. sales. Both are sitting on piles of cash. Yet shareholders have wiped a combined $49 bln off their value since January amid economic worries. They’re right to be cautious. But it looks overdone.

  • Investors right to shake up S&P parent

    02 August 2011

    An Ontario pension fund and JANA Partners have bought 5 pct of McGraw-Hill and want strategic changes. The $13 bln textbook-to-credit rating group trades at a discount and is already considering its options, but restless investors may force action sooner rather than later.

  • Is Hugo Chavez ahead of the investment curve?

    17 August 2011

    Venezuela plans to move billions of cash reserves from developed nations to BRIC countries, according to media reports. This may reflect politics, or the need to keep creditors sweet. But given U.S. and EU budget and bank woes, Chavez may not be alone seeking alternatives

  • Italy draws banks into dangerous embrace

    03 August 2011

    As investors shy away from sovereign debt, Italy will rely on banks and insurers to help it through the turmoil. The country’s lenders are well-funded and can always borrow more from the European Central Bank. But until Rome restores confidence, banks will only get weaker.

  • Italy overtakes Spain as euro zone's main worry

    02 August 2011

    Yields on Italian bonds are soaring as the political vacuum fuels fears the government won’t be able to implement its fiscal plans. Spain is suffering too. But Madrid is tackling its problems, while Rome is stalling. Given the sheer size of Italy’s debt, that’s a major concern.

  • Italy still vulnerable despite ECB covering fire

    09 August 2011

    The European Central Bank’s bond buying has brought down Italian yields, yet Rome is still in markets’ sights. The government plans to accelerate fiscal measures and labour reform, but real change could take time, and growth may disappoint. Italy cannot afford to delay.

  • Italy's imperfect budget faces bumpy ride

    15 August 2011

    There’s mounting public anger at Rome’s accelerated austerity programme, in particular its tax on high earners. Debt market jitters are likely as the measures are debated in coming weeks. Still, it’s hard to see the package being rejected - though it may well be modified.

  • James Murdoch’s perch gets shakier by the second

    16 August 2011

    First, Rupert says Chase Carey is his under-the-bus replacement. Now, the onetime heir apparent faces fresh allegations about News of the World phone hacking. A News Corp law firm even joined the attack. Being an effective boss in the media empire looks much tougher for James.

  • Japan stems yen's rise but only buys time

    04 August 2011

    Selling the currency saw the central bank push its price down. But with the EU, U.S. and China looking frail, global investors still want yen. Slowly, companies are adjusting to a stronger yen. That’s wise. Intervention can bring some relief but Japan needs deeper reform.

  • Japan's DPJ should choose the least popular leader

    26 August 2011

    The party’s leading candidates to take over as prime minister are competing to avoid the unpopular policies of tax hikes to fund reconstruction and draconian spending cuts. But with debt at 200 pct of GDP and another Moody’s downgrade, it’s time for a grown-up to take charge.

  • Kirin pays high price for being late to the party

    02 August 2011

    The Japanese beer group, which like its domestic rivals has belatedly woken up to global M&A, is paying $2.6 billion for 50.45 pct of Brazil’s Schincariol. The brewer, a distant number two, offers a so-so market position - certainly not one worth more than 100 times net income.

  • Korea's leveraged bets put it at risk of contagion

    12 August 2011

    Seoul’s stock market fell further than the U.S. this month - 16 pct. South Korea relies heavily on European credit and a U.S. recession would threaten its exports. But the popularity of loans and derivatives to bet on stocks makes Seoul susceptible to even more dramatic declines.

  • Kuwait Airways sale may not be a runway success

    02 August 2011

    The state of Kuwait wants to offload a 35 pct stake in its national carrier to a strategic partner. But the airline has been in the red for two decades, the asking price is lofty and bidders risk political pitfalls. Plans for a regional rail link don’t help the business case.

  • Latest rout a reminder recovery will be a slog

    05 August 2011

    Contrary to the chatter, slumping markets aren’t a repeat of 2008. More like a belated recognition that unwinding the rest of the pre-crisis excesses will take years. Politicians may have made the aftermath of 2008 less bad. Now they need to avoid action that makes things worse.

  • Lloyds' battering may have silver lining

    04 August 2011

    Huge one-off charges, higher funding costs and moribund markets made a mess of the UK lender’s first half. But Lloyds is weaning itself off state funding. And its depressed share price may prompt politicians to back away from plans to force the bank to sell more branches.

  • Logical Kraft slim-down aims to fatten world

    04 August 2011

    The Oreos-to-Cheez Whiz conglomerate is splitting into a growth-challenged American grocery business with $16 bln of sales and an oddly named $32 bln “global snacking platform.” This defies the scale case for last year’s purchase of Cadbury, but it makes sense for shareholders.

  • London riots strike another blow to confidence

    08 August 2011

    A third day of violent clashes and looting around the city are being put down to anti-police sentiment, social division, summer boredom and BlackBerry-coordinated unrest. Whatever the causes, the images from the financial capital can only hurt already fragile markets.

  • London's safe-haven status faces another threat

    09 August 2011

    Images of rioting across the capital have been beamed around the world. It’s another factor that could make London less attractive for globally mobile workers and investors. Though the government should not hesitate in its austerity policies, it needs to prove the city is safe.

  • Loss of bankruptcy card would weaken cities' hand

    02 August 2011

    In high-stakes talks with unions and bondholders, the threat to file for protection in U.S. court gives local officials leverage. But states are blocking that option, fearing it spooks markets. For teetering local governments, the alternatives may be costly defaults or bailouts.

  • Man U's mooted IPO valuation in league of its own

    24 August 2011

    The Glazers bought the soccer club for a hefty 16 times EBITDA in 2005. Now a $1 bln Asian IPO could raise the bar again. Man Utd boasts global cachet and wage discipline by soccer’s crazy standards. But it looks like buyers will have to be fans first and investors second.

  • Market crash compounds Russia's lack of appeal

    30 August 2011

    Russia’s stock market has been one of the biggest casualties of the global turmoil, again illustrating its extreme sensitivity to risk. Although investors should be poised for an eventual rebound, the latest crash underscores the diminishing allure of Russian stocks. 

  • Markets could force Fed to empty the chamber

    10 August 2011

  • Merkel and Sarkozy live down to low expectations

    17 August 2011

    The Franco-German summit produced proposals for further euro zone integration. But the demand for balanced budgets was unmatched by any promise of more aid for peripheral states, while the mooted tax on financial transactions misses the point. Investors are rightly sceptical.

  • Mexico needs to open door to its oil wider

    19 August 2011

    Bringing foreign firms into a few wells is a positive, if overdue, development. But more radical action is needed if the country is to make the most of its reserves. Only juicier deals for outsiders and better management of its state monopoly Pemex will revive ailing output.

  • More U.S. mortgage help isn't needed

    01 September 2011

    There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.

  • Mother Nature threatens another mark on markets

    30 August 2011

    Just days after a rare earthquake, Wall Street faces a more serious disturbance from Hurricane Irene. The storm may still fizzle out. But it’s heading for a region with $12 bln of daily output and could cripple finance’s capital at a time when investors are already jumpy.

  • News Corp cash finds the right target: investors

    11 August 2011

    After phone-hacking pay-offs and allegations of payments to UK police, News Corp cash is going in the right direction - dividends and buybacks. News also pledges deal discipline. But governance neglect and Murdoch’s unyielding passion for newspapers still hold the company back.

  • Next wave of patent rulings could ease tech wars

    23 August 2011

    Google, Apple and others are spending billions on invention rights. But they’re really buying legal protection. That’s because federal judges have approved broadly defined patents, exposing firms to infringement claims. The courts need to sync up the law with the real world.

  • No easy fix for Spain's housing market

    22 August 2011

    The government hopes to jump start the housing market by temporarily cutting the VAT rate on purchases as part of a package to shrink the country’s deficit. The move might help a bit. But buyers won’t return until job creation resumes, and banks recognise more property losses.

  • Nomura's Wall Street push will be tough to pull off

    11 August 2011

    The Japanese broker is focusing its investment banking ambitions on the United States while trimming its European headquarters. Nomura reckons it can establish itself by hiring rather than buying. But it’s hard to see it succeeding where so many others have failed.

  • Now investors can focus on just how good Apple is

    25 August 2011

    No CEO is as indelibly linked to a company as Steve Jobs. But his unfortunate health issues have been a distraction for yearsll-seeded orchard. Handing over day-to-day operations is still a blow. After the initial shock, though, investors should see more clearly the powerhouse Jobs built.

  • Obama's new economist faces political headwinds

    30 August 2011

    With U.S. unemployment hovering above 9 pct, Alan Krueger - a Princeton labor market expert - is suited to be the next White House chief economist. But his job creation ideas may not get much of a hearing. With Obama campaigning, political pros will have the president’s ear.

  • Obama's watchdogs call AT&T's $39 bln wager

    31 August 2011

    The No. 2 U.S. mobile company bet it could persuade regulators that buying No. 4 T-Mobile would benefit consumers. The U.S. DOJ senses a weak hand. With the industry a near duopoly, the government’s read looks right. AT&T isn’t folding but looks on the verge of a bad beat.

  • Over-reaction to BP Gulf spill costing U.S. jobs

    16 August 2011

    Oil regulators may have swung from gung-ho to too cautious. Painfully slow drilling approvals mean America could be missing out on 230,000 jobs - and tax revenue, too. Safety matters. But with unemployment and the deficit top national concerns, red tape should be kept in check.

  • Pandora ordeal shows IPO charms can wear off fast

    02 August 2011

    The Danish jeweller’s debut avoided several sins investors link with private-equity IPOs. But 10 months later, Pandora has unleashed all manner of horrors on shareholders. Europe’s shaky new-issues market hardly needed reminding how risky it can be to back newly public outfits.

  • Panic and crisis need different solutions

    05 August 2011

    Markets are panicking amid fears of world recession. That looks overdone for now, and falling commodity prices support growth. So policymakers should keep cool. The euro zone faces systemic crisis but conventional policy would help: Italy and Spain must tighten fiscally - fast.

  • Peabody's $5 bln Aussie buy now looks a stretch

    30 August 2011

    Macarthur has finally succumbed to its U.S. rival and ArcelorMittal. More than a year on, Peabody has its target’s precious steel-making coal and Asian access in its grasp. But in the interim, the global growth outlook has dimmed. Demand will have to hold up to justify the price.

  • Pemex scandal highlights need for restructuring

    01 August 2011

    Long treated as a cash machine by the Mexican government, the national oil group also now appears to have been milked by criminal gangs to the tune of $600 mln just last year. Though imperfect, Latin rivals like Petrobras and Ecopetrol offer models Mexico should emulate.

  • Petrobras' bargain barrels pricier than they look

    03 August 2011

    The boss of the $210 bln Brazilian energy giant reckons its shares are the cheapest way to bet on oil. With production growth expected to leave multinational rivals in the dust, Petrobras shares might seem low-priced. But Brasilia’s grip on the firm justifies a big discount.

  • Plunging markets reflect ugly political paralysis

    04 August 2011

    This, rather than any particular headline, seems to be driving Thursday’s market freak-out. Brinksmanship in Europe and the U.S. makes for great theater, but it has done little to resolve what most troubles the global economy: too much debt and no clear plan to pay it off.

  • Private equity yellow-bellies make sorry return

    23 August 2011

    Cerberus and a partner reneged on an agreed buyout of hotelier Innkeepers, citing a material adverse change after markets burped. It may be just a wimpy negotiating ploy. But investors got burnt by similar tactics in the crisis. This is a good reminder to remain wary.

  • Private sector drag sheds harsh light on stimulus

    23 August 2011

    Because it’s included at cost, government spending increases GDP by definition. But as Washington wrote more checks in 2007-11, private sector output slowed down, suggesting a possible crowding-out effect. When the U.S. economy is sick, bigger government looks like bad medicine.

  • Qatari Greek bank bailout looks like strategic bet

    31 August 2011

    The 500 mln euro investment by little-known Qatari investment vehicle, Paramount, supporting the merger of Alpha and EFG is opportune. But the emirate might also expect to extract strategic dividends from its support of euro zone troubled banks.  

  • Rajoy needs to tell Spain some home truths

    01 August 2011

    The country’s probable next PM shouldn’t wait until after November’s election to level with the Spanish people about the actions needed to avoid getting sucked into the euro zone crisis and to restore competitiveness. Here’s the speech he should give now.

  • RBS's uncertain road ahead gets even bumpier

    05 August 2011

    Though the UK bank met expectations in the first half, its shares are being savaged in the broader market sell-off. The balance sheet clean up is going well, but euro zone exposure is starting to hurt. The bank’s goal of 15 pct return on equity by 2013 is also looking vulnerable.

  • Redstone can delight in only so much Murdochfreude

    05 August 2011

    The 88-year-old chairman of U.S. media groups Viacom and CBS may enjoy watching his arch-rival octogenarian mogul squirm. But although performance and returns have been good at Sumner Redstone’s companies, he still has plenty of costly governance problems of his own to consider.

  • Reform bill could make "incoherent" SEC irrelevant

    04 August 2011

    From Madoff to mortgages, the U.S. regulator has had its misses. But a Republican bid to reshape it seems designed to hinder, not help. There’s room for improvement, but with its duties growing the self-funding watchdog needs more staff, more money and a buffer against Congress.

  • Regulators have the ideal tool to boost banks

    22 August 2011

    Given the bitter fight to impose new rules, it might seem odd to go easy on banks now. But as markets tumble and economies stutter, the sector must be encouraged to lend. Setting the new “counter-cyclical” capital buffer at a low level could be a clever way to get credit flowing

  • Return to gold standard seems less unthinkable

    15 August 2011

    Fiat money has worked well in the 40 years since Richard Nixon ended the peg, but this latest recession must gnaw at believers. If years of ultra-cheap cash give rise to serious inflation or a dollar collapse, the gold standard, however erratic and deflationary, may appeal again.

  • Rick Perry needs to backtrack on Fed charge

    16 August 2011

    The Texas governor and GOP White House candidate, like the U.S. central bank’s Dallas branch, doesn’t much like its money-printing policies of late. But words like “treasonous” cross a line and further dent Fed independence. Perry could struggle if he doesn’t tone it down.

  • Rio shareholders get an extra thank you

    04 August 2011

    The miner needed a $15 bln cash call in the crisis. Now it’s raised its share buyback target by $2 bln to $7 bln. Given slightly disappointing H1 numbers and a global slowdown, that may seem imprudent. But the numbers add up. Rio can afford to repay investors their 2009 favour.

  • Rivals unlikely to crash HP's punchy Autonomy deal

    19 August 2011

    Autonomy would be a nice-to-have for Oracle or IBM. But Hewlett-Packard’s $11.7 bln offer for the UK software group is already rich, and rivals don’t need Autonomy quite so badly. Add in falling markets and the ugly reaction of HP shares, and a bidding war doesn’t compute.

  • Russia needs to kick-start pension reform

    15 August 2011

    A rapidly rising state pension bill will become a crippling burden without serious reforms. The latter is the key not only to addressing deteriorating public finances, but also to developing flimsy capital markets. A pity Russia’s leaders are so shy about the sensitive issue.

  • SAB may yet brew up friendly Foster's takeover

    17 August 2011

    The UK-listed brewer is canny to go hostile with an unchanged $10 billion bid days ahead of its Aussie target’s results. Peace may yet break out. Hostile takeovers are hard Down Under, and Foster’s has no white knight. With a small sweetener, both sides may get what they want.

  • Sell-off tests hedge funds' post-crisis resilience

    16 August 2011

    Hedgies have doubtless suffered in the market rout. But painful lessons learned in 2008 have made them more robust in turbulent conditions. Their funding is more secure, and they’ve borrowed less. Still, it’s far from clear their performance merits the high fees.

  • Slim pickings for Slim in $6.5 bln Telmex tender

    02 August 2011

    The Mexican mogul’s America Movil is buying out the remainder of the country’s shrinking fixed-line carrier at a premium valuation relative to its own. That looks like a bad exchange. Without a solid explanation, it’s easy to see why investors sliced $4 bln off Movil’s value.

  • SocGen back to earth with profit warning shocker

    03 August 2011

    The French bank has admitted it probably won’t make its optimistic 6 bln euro net profit target next year. This may reflect slowing revenue rather than its exposure to euro zone contagion. But with markets already jittery, the warning could hardly have come at a worse time.

  • Solar firm's demise signals gray industry forecast

    16 August 2011

    Onetime investor darling Evergreen Solar, among the first U.S. green energy companies to go public, just went bankrupt, victimized by a global supply glut. Growing Chinese competition and waning European subsidies mean the solar sector will probably get darker before the dawn.

  • South Korean equities offer bargains for optimists

    30 August 2011

    Its stocks dived 21 percent this month as leveraged bets soured. Now they look cheap. Big names such as Samsung Electronics trade below 10 times projected earnings. High debt will keep things volatile, but investors sanguine about global growth may want to revisit Seoul.

  • Spain must seize the moment for more austerity

    18 August 2011

    The markets’ focus has been on Italy and France. Emergency ECB buying of Spanish bonds has helped bring down yields. Spain may not have crippling debt, but it’s plagued by low growth and a high deficit. Fresh austerity measures due this week need to be comprehensive and credible.

  • Spin-off trend isn't just for investment bankers

    31 August 2011

    Companies from HP to Kraft to Conoco are splitting up. It’s tempting to think only Wall Street’s advisory ranks, who helped create these conglomerates in the first place, really benefit from such fads. But a few examples - Marathon Oil and Motorola - suggest investors can, too.

  • Split EU regulators weakened by dubious short ban

    12 August 2011

    Without the cover of European unanimity, countries that imposed short-selling curbs have made it look like they have something real to worry about. Bank shares are still gyrating - hardly evidence of a more stable market. Watchdogs risk suffering a hit to credibility.

  • StanChart investors should not get carried away

    03 August 2011

    The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.

  • Sweet Swiss-German tax deal will be hard to repeat

    11 August 2011

    Bern has agreed to collect tax and penalties from accounts held by tax-dodging Germans. But Swiss bank secrecy remains intact, and lenders will avoid prosecution for past crimes. The revenue hit is also manageable. An investigation by U.S. authorities is unlikely to end so well.

  • Sweeter PR not enough to revitalize M&A deal

    01 August 2011

    U.S. reinsurer Validus may hope that by switching flacks in the heat of battle it can persuade its shareholders to like the bid for $3.2 bln rival Transatlantic they have so far scorned. But messaging doesn’t win deals, numbers do. On that score, Validus isn’t far enough ahead.

  • Syria matters beyond Syria

    01 August 2011

    Unlike in Egypt and Tunisia, protestors are facing tanks. Unlike in Libya, they are barely resorting to violence. If Syria’s nonviolent demonstrators can topple such a repressive regime, many non-democratic governments - including Iran and even China - will feel vulnerable.

  • Take Chinese bank earnings with a pinch of salt

    26 August 2011

    Bad loans are falling, capital buffers look healthy and earnings are shooting ahead - so why have China’s bank valuations fallen so far? Look deeper and there are signs that a slowing economy is hurting, potential problems lurk off the books, and small banks are struggling.

  • Tar sands pipeline environment fears are overdone

    30 August 2011

    Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.

  • Targeting Sun Belt should be on Obama's new list

    17 August 2011

    Swathes of the U.S. South and Southwest have replaced the Rust Belt as the nation’s economic runt. Housing-bust states like California and Nevada now have worse unemployment. The president’s fresh plans to jump-start the economy would do well to aim support at the region.

  • Taxing the rich makes economic sense

    25 August 2011

    Western governments want the rich to contribute more to their austerity drives. Financially, it won’t do much to cut deficits and debts. But after three years of economic tension, it is a crucial part of making new rounds of tightening politically acceptable. Pain must be shared.

  • Temasek's smart CCB trade may have strategic costs

    30 August 2011

    Singapore’s state investment fund is buying shares in China Construction Bank from Bank of America - at a valuation 21 pct below where it dumped the stock last month. That has financial logic. But it may look too clever for Beijing, and hurt Temasek’s access to deals in China.

  • Texas governor creates two-man GOP 2012 race

    15 August 2011

    Rick Perry’s record, Tea Party bona fides and deep pockets make him the prime rival to Republican front runner Mitt Romney, a former private equity boss. Yet flaws in both candidates mean either one would need help from the economy to push Barack Obama out of the White House.

  • Timing of S&P U.S. downgrade couldn't be better

    06 August 2011

    Markets may be wobbly, but interest rates are at historic lows and buyers of U.S. debt plentiful as the world braces for another economic slowdown. There may be some initial turbulence, but it would be worse for Uncle Sam if the rating agency waited until markets acted first.

  • Trichet is right to make Italy sweat

    04 August 2011

    The ECB is turning a deaf ear to the Italian finance minister’s suggestion that it buy the country’s bonds. In a further snub, the central bank resumed its bond-buying programme - for Irish and Portuguese securities. Italy must reform before it asks for help.

  • U.S. banks don't look cheap yet

    10 August 2011

  • U.S. debt-cut panel already poisoned by politics

    11 August 2011

    It hardly matters who sits on the new “super committee” seeking $1.5 trln of savings over 10 years. Wall St. will struggle to convince lawmakers of how important it is to reach a compromise when both parties are eyeing 2012 elections. Credit raters, however, may not wait so long.

  • UBS's 3,500 job cuts point to two big shifts

    23 August 2011

    The Swiss bank’s axe-wielding is part of a secular shift across the investment banking industry, which needs to shed staff to adjust to tough new realities. But UBS also seems to be undergoing a more pronounced transition away from investment banking towards wealth management.

  • UK should avoid handwringing over Autonomy sale

    19 August 2011

    It could have been Britain’s Google, say those who mourn the Cambridge software firm’s sale to HP. Maybe. But Autonomy’s founder has a right to an exit, while public companies have a duty to accept rich takeover bids. Its success is still an inspiration to would-be entrepreneurs.

  • UK should tax the rich more intelligently

    02 August 2011

    Fresh calls for the 50 pct top rate to be abolished ignore political reality. Financially, tax cuts for the poor would do more to stimulate the economy. The real issue is that the tax system is a mess, and a property levy might tax the rich more effectively.

  • UK/Swiss deal good for taxpayers, banks and crooks

    25 August 2011

    Two years ago UK investors with untaxed assets in Swiss bank accounts looked like they would lose their anonymity. Instead, they will now pay almost the full tax rate to the UK, helping it cut its deficit. The Swiss banking model is protected - but dodgy money will remain shielded.

  • Upstart M&A boutiques earn place at fee table

    18 August 2011

    Two newish shops opened by Blair Effron and Frank Quattrone worked on Google’s $12.5 bln deal this week. Along with firms run by Ken Moelis and Joe Perella, this quartet is eating away at the fee pool of big Wall Street banks. Conflicts and cash should keep them nourished.

  • US jobs report reaffirms the pain of a new normal

    05 August 2011

    July’s 117,000 new jobs may have stopped investors from panicking further, but they do little to dispel the gloom about the economy’s prospects. Fears of a double-dip recession look premature. But the data confirm the arduous task ahead of getting Americans back to work.

  • Vodafone's Greek tie-up tests mobile M&A limits

    31 August 2011

    Vodafone is proposing a small Greek wedding. The resulting mobile-market duopoly might be hard for Europe’s competition police to swallow, even given Greece’s exceptional problems. But consolidation means big savings. A go-ahead for Vodafone here could spur larger European deals.

  • Voting equality could bring big payoff for Murdoch

    03 August 2011

    Change is needed at News Corp. Scrapping the dual share structure would signal a fresh start and could create a big slug of value. Reform could also reward the Murdochs handsomely for ceding control. A rejig would dilute today’s non-voters, but even they might end up ahead.

  • Weak U.S. growth could swamp $1 trln deal on cuts

    01 August 2011

    The debt ceiling is set to rise. But Friday’s anemic GDP report casts doubt on the associated deficit reductions. On a simple analysis, if the official 3.25 pct economic growth assumption for 2011-16 falls short by 0.5 percentage point, the expected initial cuts disappear.

  • Why Apple just might be the first $1 trln company

    09 August 2011

    The iPhone maker’s sales have been surging 80 pct a year, and profit faster. While its $342 bln value overtook Exxon’s briefly, it trades on par with the sluggish market - and at half the multiple it fetched in 2006. Relatively, at least, Apple looks worth far more.

  • World must let U.S. win currency war

    16 August 2011

    With the Fed bent on inflating the U.S. economy with cheap dollars, export economies may be tempted to suppress their currencies in response. They must resist. Painful as it seems, stronger currencies are a necessary cost of reviving customer No. 1 and preserving global growth.

  • Worldwide trade has worrying weaknesses

    30 August 2011

    Global trade faces triple vulnerabilities: slowing demand, affordable funding, and protectionism. The first is already happening. Memories of the last crisis should safeguard against the second and third - but there are worrying signs that the lessons haven’t been learned.