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Friday, 28 November 2014

Stocks and Funds

Wells Fargo: first big bank simple enough to fail

26 November 2014

The $1.6 trln lender secured a provisional stamp of approval from regulators for its living will. Less credible plans from 11 other titans suggest size isn’t the issue. Wells ranks fourth in assets and first in market cap. The real problems are complexity and interconnectedness.

Rob Cox

Rob Cox: American banking has its own Tea Party

25 November 2014

Like the anti-establishment wing of the GOP, the Independent Community Bankers of America has emerged as a highly vocal opponent of all things Wall Street, including a Lazard banker’s nomination for a Treasury role. These are the plaintive cries of a dying breed of banker.

An employee poses in a showroom of the fashion retailer Zalando in Berlin October 14, 2014.

Zalando still has much to prove

26 November 2014

Europe’s biggest online fashion retailer says it might eke out an operating profit in 2014. That helped propel shares in the recent 5.3 bln euro IPO. Cost discipline is good but may come at the expense of growth, which Zalando needs to sustain its share rating.

Louis Chenevert, former Chairman and CEO of United Technologies Corporation.

United Technologies endures irrelevant CEO

25 November 2014

Louis Chenevert decamped abruptly from the $100 bln conglomerate without explanation. Unlike with many other corporate shakeups, including Sotheby’s last week, its stock hardly budged. UTC may yet be put on the defensive, but having a dispensable boss is a sign of strength.

Bids and Buyouts

A bartender pours Haywards 5000 strong beer, a product of SABMiller, into a glass at a restaurant in Mumbai August 28, 2013.

SABMiller’s Coca-Cola push is Africa buy signal

27 November 2014

The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.

A man walks past an AVIVA logo outside the company's head office in the city of London

Friends Life deal terms make an auction tricky

25 November 2014

The UK insurer is a bite-sized acquisition for bigger European peers. But both foreign and domestic buyers can see that Aviva has offered Friends a full price that pays away lots of synergy value. And matching Aviva’s premium could be just as tough for consolidators like Phoenix.     

A BT phonebox is seen in front of the British Telecom tower in central London.

Investors can forgive BT going back to the future

26 November 2014

If the former British Telecom buys Telefonica’s UK mobile business, it will regain a unit demerged in 2001. The round-trip is unusual but forgivable. 02’s demerger delivered good returns for BT investors who kept their stock. BT refocused, and its re-entry to UK mobile is timely.

handshake

Private equity shows signs of pre-crisis brio

25 November 2014

Canada’s Onex has bought Swiss packager SIG for up to $4.7 bln in a secondary buyout. It’s one of Europe’s biggest LBOs in five years and deploys pre-crisis levels of leverage. Private equity restlessness and a shortage of big targets created the conditions for a landmark deal.

Money and Markets

Saudi Arabia's Oil Minister Ali al-Naimi talks to journalists before a meeting of OPEC oil ministers at OPEC's headquarters in Vienna November 27, 2014.

OPEC inaction confirms new order for oil

27 November 2014

The oil cartel, led by Saudi Arabia, is either willing to sacrifice profit or unable to agree on production cuts. Either way, lower prices challenge U.S. shale oil producers, but that industry may still thrive. In the OPEC fog, one thing is clear: weaker members will suffer. 

Wads of Swiss franc banknotes are stacked in piles at the GSA Austria (Money Service Austria) company's headquarters in Vienna July 22, 2013.

Betting against Swiss currency cap is high stakes

27 November 2014

Traders are testing the central bank’s franc ceiling and using options to bet the currency will break through. The wager is inspired by euro weakness and a looming referendum on whether the SNB should buy more gold. This is one monetary authority the market is unwise to take on.

Edward Hadas

Edward Hadas: A healthy attitude to deflation

27 November 2014

The strength of downward price momentum has surprised most experts. Central bankers keep trying to fight the tide, as if in denial. It would be better to accept that the demographic forces which create disinflation are too strong to turn. Mild deflation isn’t so bad anyway. 

A part of the EU flag is pictured through a magnifying glass on a special edition of postage stamps, January 21, 2014.

EU bank ring-fencing plans need a reboot

27 November 2014

Splitting European lenders’ market-making from their other activities could cost 21 bln euros, research suggests. Yet global resolution reforms are reducing the need for structural separation. And the proposals, as drafted, could hinder the nascent capital markets union.