Barclays’ $1.6bn SIV rescue calms nerves 31 Aug 2007 By persuading junior noteholders to bear the credit risk, Barclays has managed to rescue the Cairn vehicle at minimal cost to itself. But it isn t out of the woods yet. No one knows what marktomarket exposures it may be hiding. And like other banks, it s keeping schtum.
NBC takes on Apple, ignores pirates 31 Aug 2007 The media conglomerate thinks Apple sells videos cheaply, with few controls to push hardware sales. So NBC won t renew its iTunes contract. This looks like brinksmanship. If content providers push too hard, there s a chance video piracy will be the winner.
EU on right track with takeover reciprocity plan 31 Aug 2007 A proposal to demand reciprocity you can t take over ours unless we can take over yours looks like a reasonable compromise. The Commission is torn between a shaky belief in free trade and a definite fear of EU energy company takeovers by hostile foreigners.
Musical chairs at ratings agencies won’t solve problem 31 Aug 2007 McGrawHill replaced the president of Standard & Poor s amid mounting criticism of the firm s ratings of mortgagebacked securities. The real problem is the conflict of interest between issuers and agencies and the lack of competition in the business.
Carrefour property deal not all it seems 31 Aug 2007 The French supermarket s plans to spin off a chunk of its real estate is a flashy way of doing very little at least in economic terms. By setting up a listed property company, Carrefour can mark its property to market. But such financial engineering can work both ways.
Bush should resist housing bailouts 31 Aug 2007 President Bush s plan for the US government to prop up some stretched subprime mortgage borrowers is fraught with moral hazard. At least it is on a small scale, so far. The problem is that it could be the thin end of a dangerous wedge.
Worried about markets? 1998 offers some comfort 30 Aug 2007 Disaster beckoned, with a Russian default and stocks tumbling. But it was over in a few months, without even a broker rating downgrade. If history repeats itself, investment banks should still manage a 21% profit margin, says S&P. But it could be worse this time.
Suez turns to a future without Gaz de France 30 Aug 2007 The FrenchBelgian utility s firsthalf results help show the politically inspired merger with GdF isn t necessary. Nicolas Sarkozy wants Suez to trim down. Suez wants the government to bulk up GdF. Unless one side blinks, the merger is dead.
The $100m bling skull marks art cycle’s turn 30 Aug 2007 That may sound like a lot of money for Damien Hirst s platinumanddiamond creation. But it s not really a jewel of a price. No one wanted to pay more than the sticker price. And Hirst paid $24m for the raw materials. Maybe he should stick to pickled sharks.
Fed chairman may find it difficult to please anyone 30 Aug 2007 Ben Bernanke speaks on Friday. New GDP data haven t cleared up the balance between the danger of inflation and threats to growth. Meanwhile, he must reassure ultrajittery financial markets without committing to bailing them out. It could be a tough moment.
Japan backs away from tightening 30 Aug 2007 Bank of Japan board member Atsushi Mizuno said that the central bank could raise the overnight interest rate, even if the US Fed cuts. But retail sales tumbled in July, deflation still stalks, and growth is weaker. Japan may have missed its best chance to get rates up.
EMI joins headless media crowd 30 Aug 2007 The UK music group is the latest media company after Emap and Virgin Media to axe its chief executive, without lining up a replacement. In a sale, cutting ties with a failed past can be useful. Yet the longer a firm is without a captain the more its value is likely to fall.
Nasdaq may find it hard to sell LSE stake in one go 30 Aug 2007 The US exchange s decision to offload a 31% holding in its London archrival seems to have attracted a longlist of potential buyers. Yet, it might not be that easy. Nasdaq wouldn t want to sell to a likely rival and it's not clear the stake is beneficial to anyone else.
Oral sex could double Merck blockbuster 30 Aug 2007 A new study shows the drug group s vaccine against a sexuallytransmitted virus linked to cervical cancer also prevents head and neck cancer This means both sexes should receive the treatment. Oddly enough, it could also tone down the political heat surrounding the vaccine.
UK house market might yet catch US disease 29 Aug 2007 Inadequate UK construction and wild US securitisation explain some of the difference. But British prices may still be too high to last. Both house prices and mortgage interest rates have increased more in the UK, but it's the US which has the housing crisis.
Altria should keep its international arm 29 Aug 2007 The timing of Altria's spinoff looks odd. The fear of crippling lawsuits that once threatened the company's survival has mostly subsided. Moreover, tobacco is a shrinking business in the US but booming overseas and it s not clear the deal will unlock much value anyway.
Ken Lewis: more savvy than market saviour 29 Aug 2007 The Bank of America chief is being lauded for halting a market meltdown by investing $2bn in Countrywide. That s a bit of a stretch. But it is a canny deal. Even the price at which BoA switches into stock seems up for renegotiation if the mortgage lender s woes worsen.
Bollore’s record at Havas won’t tempt Aegis 29 Aug 2007 The chairman of the French ad group Havas has vowed to continue his fight for board seats at its UK rival. He s upped his stake to 29.86%. Besides the obvious conflicts of interest, Bollore s claims are undermined by the underperformance of Havas shares since he took over.
Turkey’s new president should turn to growth 29 Aug 2007 Turkey has a payments deficit and too much debt, but with five years of quiet growth it could become an economic star. The election of Abdullah Gul seems to end Turkey s political crisis, but its economic situation is still a bit fragile.
Cheyne woes show credit crunch far from over 29 Aug 2007 The London hedge fund manager s latest problems with one of its listed credit funds may be due to bad luck rather than poor judgement. But it s still deeply troubling. Cheyne hopes for an orderly windup, but if it s forced into a firesale, the damage could be spread wide.
Are US corporate balance sheets really strong? 28 Aug 2007 According to company accounts, S&P 500 companies have cut leveraged almost in half since 2002. Investors take comfort from the caution. Maybe they shouldn t. If financial assets are valued at replacement cost, leverage still looks high. Weak markets could cause big problems.
Emap could add value by ordered sell-off 28 Aug 2007 The £2.5bn UK media group is attracting lots of trade buyers for its diverse operations. The challenge is getting the most out of breakup. One trick might be to save the best the B2B division for last. A pureplay company in this hot area could command a higher multiple.
Brokerage stocks may have further to fall 28 Aug 2007 Wall Street s top five firms might look cheap they have lost a combined $74bn in value since hitting their highs earlier this year. But what if markets don t improve? To match their lows in previous crises, most brokerage stocks have to plummet by another fifth or more.
US homes point to more pain 28 Aug 2007 Home sales in the US fell only slightly in July. But the stock of unsold homes soared, suggesting further house price falls ahead. Falling US house prices could hit financial markets soon. Later, when US households feel poorer, it could threaten economic growth.
Investors can support Thai democracy 28 Aug 2007 In emerging markets, following the people s will often leads to ruinous economic populism. But ousted Thai leader Thaksin was an exception. The December 23 election could end in a victory for his policies. That would be good for investors, as long as the military accept it.
Stakes rise for hedge funds to cash out 28 Aug 2007 Many funds, already hurt by volatility, are set for a poor August. That makes it sound as if they ve missed the chance to sell stakes. But while impressing public markets has become harder, a private sale or purchase of a hedge fund stake can still stack up.
Kazakhstan is no Venezuela 28 Aug 2007 The country is upset by delays and ballooning costs at its Kashagan oil field. But it is not about to throw its foreign partners out. The Kazaks will probably push its partners to give it a greater slice of the project s early profits to make up for the delays. The Kazakhs will probably push their partners to give them a greater slice of the project s early profits to make up for the delays.
German state banks are moral hazard central 27 Aug 2007 SachsenLB was set up in 1992 to finance Saxony. However only 16% of its risk assets were based in the former East German state. State sponsored banks are useful only in their core businesses. Outside those, their guarantees make them moral hazard incarnate.
Too much money chases too little wheat 27 Aug 2007 Record wheat prices and a 27year inventory low reflect rapid world growth and loose money. Emerging market consumers want to eat too. Rising commodity prices are a key component of worldwide inflation. Ignoring them in price indices is delusory.
Asian tech groups rush into tired brands 27 Aug 2007 Taiwanese computer group Acer will buy US rival Gateway and preempt an effort by Chinese foe Lenovo to buy Packard Bell. Acer has high hopes. But as Lenovo s purchase of IBM s PC division shows, it s difficult to extract value from an old computer brand.