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Wednesday, 22 October 2014

Stocks and Funds

ABB switches into rehabilitation mode

22 October 2014

After a series of nasty surprises, the Swiss engineering giant’s recovery is charging up. ABB has made progress in fixing its stricken power systems unit, while strong orders highlight operational strengths. But slipping profitability and a wobbly macro outlook remain concerns.

Shelves full of cigarettes are pictured at a CVS store in the Manhattan borough of New York.

CVS smokes policy could trip antitrust alarms

21 October 2014

The U.S. pharmacy chain’s benefits arm may charge customers extra for using drugstores that, unlike CVS, sell cigarettes. That’s reminiscent of anti-competitive tying that got Microsoft in trouble. The cases differ, but concerns about market power make the company worth watching.

Daniel S. Loeb, founder of Third Point LLC

Amgen boss makes a prime breakup target

21 October 2014

Former Morgan Stanley banker Robert Bradway runs the $109 bln biotech being eyed by activist Dan Loeb. Splitting into a cash cow and a growth arm comes up often in the industry but rarely happens. In Amgen’s case, its drug focus and the CEO’s background give the idea a chance.

McDonald's product is pictured in a restaurant in Washington

Coke and McDonald's serve unhappy investor combo

21 October 2014

The U.S. consumer giants’ weak results risk becoming chronic as customers eat healthier or trade up to posher fare. Problems overseas, fierce competition and toppy markets mean neither stock looks like a bargain. Cutting more fat looks the best way to keep shareholders satisfied.

Bids and Buyouts

A statue of a bull is seen next to a Spanish flag hung on a fence.

Ferrovial is back in conquistador mode

22 October 2014

The Spanish group is chasing deals worth 1.8 bln euros in three countries including Australia. The spree echoes its 2006 pursuit of airport operator BAA, which nearly dragged it down. But these acquisitions look less risky. Thanks to savvy sales, Ferrovial has cash to spend.

A Denver Broncos player wears Reebok boots before competing against the Dallas Cowboys in their NFL football game in Denver October 4, 2009.

Adidas can't afford to be sentimental about Reebok

20 October 2014

The German sports group is reportedly set to receive a $2.2 bln offer for the unit. Having overpaid for Reebok in 2006, Adidas has since turned it round and may be loath to sell. But Reebok has little strategic use. Fiduciary duty demands a cold appraisal of its financial value.

REUTERS/Aly Song

Two useful AbbVie inversions to pay for failed one

20 October 2014

Turning tail on the $54 bln Shire deal exposes the U.S. drugmaker’s folly chasing a lower tax bill. Investors facing a $1.6 bln break fee should push for other AbbVie flips: boss Richard Gonzalez’s compensation and the company’s governance in the form of an independent chairman.

A farmer dispenses feed to his herd in his cowshed in Seranvillers Forenville near Cambrai, northern France, January 25, 2013.

Nutreco’s $3 bln buyout shows value of food chain

20 October 2014

The Dutch fish and animal-feed giant is about to be gobbled up in a $3.4 bln friendly deal. The buyer is SHV, the family outfit behind the Makro cash-and-carry chain. With no synergies, this deal is better seen as a long-term bet on growing global demand for protein.

Money and Markets

Germany’s economic miracle is past its peak

22 October 2014

Germans are flirting with a recession that may usher in a new era of feeble growth in Europe’s largest economy. Many reasons for past performance are fading away, and misguided policies add extra burdens. Angela Merkel can still change tack before it’s too late.

An umbrella and a security helmet is seen on a main road at the Mong Kok shopping district in Hong Kong October 6, 2014.

Hong Kong protests' silver lining for umbrella IPO

22 October 2014

Pro-democracy demonstrators are clouding luxury sales in the Chinese territory. Yet the movement’s symbol has cast a light on Jicheng Umbrella’s upcoming listing. International brolly sales are on the up. After the smoke clears, however, the main worry is rising labour costs.

An employee of the Industrial and Commercial Bank of China Ltd (ICBC) counts money at one of the bank's branches at the Shanghai Free Trade Zone in Pudong district, in Shanghai September 24, 2014.

China's capital defences have sprung a major leak

22 October 2014

Strict controls should shield China from flighty foreign capital. In practice, investors have snuck in at least $725 billion of short-term money since 2008. That makes the economy vulnerable to outflows. Central bankers are saddled with preventing a trickle becoming a flood.

Rob Cox

Rob Cox: Fragility bigger worry than volatility

21 October 2014

Recent rollercoaster markets are a symptom of a more concerning malady. They reflect the shock accompanying recognition that widely accepted assumptions about everything from monetary policy to geopolitics, and even the state of global health, are dangerously flimsy.