Stocks and Funds
UK bank shares rallied after the regulator published requirements for equity-to-assets of up to 4.95 pct, but not until 2019. The BoE’s move to peg gross leverage to risk-weighted thresholds should prevent arbitrage, but fails the simplicity test. It is also a work in progress.
Latest earnings suggest the once-fizzy beer company is becoming ordinary. AB InBev’s valuation reflects its history of M&A-fuelled growth. More big deals may come. But even if future revenue growth is flatter, its dividend ambitions will support the share price.
France’s largest listed bank rebounded from a U.S. mega-fine with an 11 pct rise in Q3 profit. A big drop in volatility helped everything but trading. Now, though, volatility is up and the upcoming temporary dollar-clearing ban for U.S. sanctions breaches may cause more pain.
Auditor-related technicalities have grounded one of the largest European share issues this year. The Aena airports sale will probably go ahead in early 2015. But the IPO process will be easier to re-rail if the government makes its commitment unequivocal.
Bids and Buyouts
The largest U.S. theater group is considering a sale. Rival AMC is flush after being acquired by China’s Wanda in September 2012 and relisting in late 2013. For Regal, keeping up may cost more than 47 pct owner Philip Anschutz is willing to spend. It needs its own AMC sequel.
Uppity investors have rattled once unthinkable cages, including $100 bln companies. Now, the family-controlled owner of the New York Knicks and Rangers may carve itself up following shareholder pressure. If such fiefdoms are vulnerable, boards will have fewer places to hide.
The hottest name in sports cars is joining the spinoff bandwagon. Fiat Chrysler will sell 10 pct of Ferrari and hand the rest to investors. Fiat shares zoomed up. Yet the split is largely symbolic. Ferrari needs to stay linked to Fiat, and the cash proceeds will be limited.
A sweetener looks needed to seal a $25 bln merger of CIMB with two smaller rivals. Yet a slump in CIMB’s shares limits its ability to improve the terms. Cutting a side deal with a state pension fund or a difficult Gulf investor increasingly looks like a plausible workaround.
Money and Markets
In recent days, Barclays, Citi, Credit Suisse, Deutsche and RBS have socked away big sums for legal expenses, much of it related to forex rate manipulation. That suggests many U.S. and UK regulators are working together on a rare single settlement. It’d be good for all concerned.
Lawrence Cunningham’s “Berkshire Beyond Buffett” argues the Oracle of Omaha has built a corporate culture that will ensure success after his departure. The book does a good job of cataloging Buffett’s portfolio. But it doesn’t make a strong enough case for investors to follow.
Exxon, Chevron and Conoco reported solid earnings and remained optimistic despite falling prices. Shale drilling, for example, is profitable at current rates. But investment cuts won’t hit other projects for a few years, making price rises unlikely. Investors may get antsy.
The ECB chief might fantasise about taking big decisions with a one-vote margin, as the Bank of Japan leader just did. But realpolitik requires a goodly majority. The euro zone’s inevitable compromises complicate Draghi’s fight against stubbornly low inflation.