UK starting to pay for borrowing binge 7 Aug 2006 Debt defaults are up 68% this year. That was enough to get lenders to start moaning. But it is far from a crisis yet. Barclaycard is still earning a decent 13% return. And mortgage lenders aren t holding back. There s room for much worse news.
BP in yet another US blunder 7 Aug 2006 Even if BP's Alaskan pipeline is closed for the rest of the year, it's unlikely to make a huge dent in earnings. But the real damage is the blow to its reputation. This company is starting to look seriously accidentprone.
US discount airlines better poised to handle economic turbulence 7 Aug 2006 Legacy airlines are back in favour. Their stock prices have recently soared while those of the discount carriers have remained grounded. But the relative performance could change as the economy slows and the true strength of the nofrills airlines reemerges.
Silence is golden for new Arcelor Mittal boss 6 Aug 2006 Roland Junck refused to join his Arcelor colleagues in rubbishing Mittal s hostile bid. His reward is the top job at the merged group. But integrating and managing these two very different companies is an enormous challenge. To succeed, he ll need to become more vocal.
Italy shoots down E25bn motorway deal 6 Aug 2006 The Italian government has come up with some pretty flimsy excuses to block the takeover of Autostrade by Spanish group Abertis. This decision smacks of blatant protectionism and if Autostrade and Albertis fight it, they look sure to have EU law on their side.
Paulson pleases on debut 4 Aug 2006 His first major speech as Treasury boss was filled with pledges that pleased everyone from rabid Republicans to diehard Democrats. But it remains to be seen how effective Paulson will be in tackling Chinese protectionism and other US economic challenges.
RBS’s charm offensive snags on soft US performance 4 Aug 2006 It's easy to see why investors have gone cool on the UK bank doing big foreign deals. The Charter One purchase in the US hasn't delivered. Sir Fred Goodwin has foresworn his overseas adventures. That will help, but the US will need to start performing before he is let out again.
Philips takes right step with E7.4bn semi-sale 4 Aug 2006 Selling a majority of its chip unit for a big premium to private equity is smart. It reduces the Dutch group s conglomerate discount. Unfortunately, it doesn't remove it. Further promised disposals will still leave the group as a conglomerate if slightly less sprawling.
Anglo American pleases with $5bn cash return 4 Aug 2006 The miner is returning almost all of the extra profits from exceptionally high metal prices. That s more sensible than paying up for assets. But Anglo still hasn t finished its restructuring. That will have to wait for a new chief executive, expected in 2007.
Peltz wins round in Heinz proxy fight 4 Aug 2006 America's most influential proxy advisor says investors should elect the reformed raider and two of his mates to the ketchup maker's board. The fight's not over yet, but Heinz management must start considering how it can play nicely with Peltz & Co on the board. The fight's not over yet, but Heinz management must now start considering how it can play nicely with Peltz & Co.
Buyout may not be best route for £2bn Signet 4 Aug 2006 KKR and Apax may think the UK jewellery group would do better if it spun off its small British operations and focused on the US. That may be right. But Signet investors might be better off if management were to adopt such a plan, rather than leaving it to buyout firms.
Ford is a better partner for Ghosn 4 Aug 2006 The Nissan/Renault chief is negotiating a possible alliance with General Motors. But rival Ford could be a better partner. It could be more receptive to Ghosn s help. And Ford s struggling luxury car unit would fill a hole in Renault s lineup.
Bernanke caught between a rock and a hard place 4 Aug 2006 Prices are rising and credit is still expanding strongly. Inflation might become ungovernable if rates are left unchanged. Yet a rate hike could prick the housing bubble. A severe bust might bring back the deflation demon which last surfaced after the tech wreck.
ECB language games point to faster rate hikes 4 Aug 2006 The Eurozone Central Bank said it would monitor very closely . The very is significant. It translates into action in October. The ECB has to be especially careful with its words. As a laggard in global tightening, it can t afford to lose its credibility.
UK rate hike might not be the last 3 Aug 2006 The 0.25 percentage point increase caught markets by surprise. But it made good sense. Growth is good and inflation is rising. A global economic slowdown could cool off UK inflation. But the Bank of England may not be willing to wait to find out.
Time Warner milks AOL 3 Aug 2006 By slashing $1bn in costs and making the service free, Time Warner is ending the costly marketing that failed to retain AOL subscribers. Although management claims this will spur growth, it is actually the surest way to maximise AOL's free cash flow.
Barclays’ strong H1 builds case for higher rating 3 Aug 2006 The UK bank s investment businesses had a bumper period. And the group appears to be getting to grips with its UK retail weak spot. With Barclays now reaping half its earnings abroad, there's less pressure to do a deal. The discount to other UK banks looks unjustified.
Google still plagued by click fraud 2 Aug 2006 But the settlement has failed to eliminate fear of click fraud as the biggest potential threat to Google s fastgrowing money machine. The web giant hailed court approval of its $90m click fraud settlement as a major coup last week.
Polygon threatens mutually assured destruction 2 Aug 2006 The hedge fund seems ready to vote down rival Fortress' acquisition of Telent because it won t be cut into the takeover of the Marconi rump. Sure, this would torpedo the value of its 24% stake. But a reputation for being a lose cannon might be worth more.
Miners locked in feeding frenzy 2 Aug 2006 Phelps Dodge is reportedly considering raising its cash offer for Canada s Inco, in an attempt to see off Teck Cominco. Yet Phelps earlier bid could not be justified on costsavings. Putting more cash in the deal would destroy shareholder value further.
Weak auto sales put pressure on Bernanke 2 Aug 2006 The effect of rising interest rates is now visible in the housing and automotive sectors, both big US employers. The Federal Open Markets Committee, meeting next Tuesday, will find it difficult to continue raising rates.
Greenmail makes a comeback in US 2 Aug 2006 Old raiders may be dressing themselves up as hedge fund managers. But now some hedgies are donning the cloaks of oldstyle raiders. Take Daniel Loeb at Third Point. He's getting a lump of stock in an industrial firm bought back for dropping demands for seats on its board.
Toyota overtakes Ford in new milestone 2 Aug 2006 In July, the Japanese auto giant sold more cars than Ford for the first time. Of course, it was a small margin that may not be sustainable. But the trend is in Toyota s favour. Its progress highlights how unrealistic the US auto maker s assumptions about its future are.
Credit Suisse misses chance to get investors onside 2 Aug 2006 The Swiss bank's traders never looked likely to repeat their bumper Q1. Even so, the 36% dip in Q2 revenues looks soft compared with peers. This may hurt Credit Suisse s chances of closing its discount to UBS and opening a premium to Deutsche Bank.
Danone deserves its fat premium 2 Aug 2006 A focus on healthy products and a slimmeddown profile have helped the French food producer deliver industrybeating 9% sales growth. Moreover, Danone is making progress on margins. Even without the promise of a bid, that justifies its 30% premium to the sector.
Cuba libre euphoria may be too late 2 Aug 2006 America's 1.9m Cuban exiles may be hoping to get a slice of the action, should Castro's regime end. But they are a bit late. The Europeans have got there first. And while some emigres might return, the human tide will probably be in the opposite direction.
Vonage’s investors still far too kind 1 Aug 2006 The internet telephony company may have been the worst performing IPO in years, but there s more trouble to come. The unprofitable company is spending more to sign up fewer clients. Its cash could run out before Vonage gets into the black.
Eurozone economy overtakes the US 1 Aug 2006 At least for the rest of 2006, the Old World could grow faster than the US. It s partly cyclical catchup. But it s partly real changes. Some are good more focused European companies and less government drag. But some are bad too much liquidity and a rising trade deficit.
GUS should stand up to defiant bondholders 1 Aug 2006 The UK retail conglomerate has done its best to find a constructive solution with the bondholders trying to disrupt its planned demerger. Most the bondholders have accepted its terms. The holdouts are trying to bully it into handing over some cash. GUS should call their bluff.
Deutsche Bank hit by Q2 equity trading loss 1 Aug 2006 It s not a disaster for the German bank. But it does disclose a higherthanexpected dependence on prop trading. That not only means more of its profits come from low value sources. It s also more exposed to any trading downturn.