Month: September 2007

It’s almost time to buy Japan

19 Sep 2007

Thanks to credit worries, signs of a slowing economy and the prime minister s resignation, Japanese stocks are lagging their global peers. At current levels, valuations in Tokyo are starting to look attractive. But Japan isn't quite a screaming buy just yet.

EU steps back from energy big bang

19 Sep 2007

The European Commission has softened its original plan to jolt open energy markets. It won t try to break up players like EdF and E.on. That was too tough to manage politically. Instead, the Commission is aiming its regulation overhaul at nonEU companies such as Gazprom.

Freescale may be private equity bellwether

19 Sep 2007

The private equity bubble of the 80s sputtered when financing deals became difficult. A wave of subsequent defaults caused real pain. LBOs have now ground to a halt. Falling debt prices in chip maker Freescale could be a sign of another step down.

Central bankers need to be performers

18 Sep 2007

As Ben Bernanke prepares for Tuesday s Fed meeting and the aftermath, he may wish he had more of his predecessor s stage flair. Mervyn King could have used more PR pizzazz too in dealing with Northern Rock. With policy tools limited, central bankers need charisma.

Northern Rock debacle exposes UK regulatory flaws

18 Sep 2007

The lender s highrisk strategy was no secret. But the FSA, its regulator, merely watched. The Bank of England intervened too late. The Treasury let a little crisis grow into a national panic. The UK s experiment with a complex tripartite system seems to have failed.

Google’s $30m moonshot prize is a winner

18 Sep 2007

Sponsoring a prize is a good way to encourage anything from basic research to exploration. Google s offer of up to $30m for anyone who can send a robot to the moon is both quirky and inspirational. It s also good business.

Inflation points down for pound and UK economy

18 Sep 2007

Inflation has dropped swiftly. The Bank of England may take advantage by cutting interest rates to help alleviate the credit crunch. That could undercut the pound, whose fall might deter capital flows into the UK, reduce growth and stir up some inflation again.

Lehman Q3 fails to live down to market fears

18 Sep 2007

The investment bank took a beating from its mortgage book and its heady support for LBO deals. But overall, results were hardly disastrous. Investors can thank reduced expectations, Lehman s diversification into other businesses and a markedly lower tax rate.

Northern Rock investors laughing all the way to the bank

18 Sep 2007

Assuming the government guarantee to depositors averts the run, the Rock now offers real upside to investors prepared to sit out the storm. On Monday, a breakup or firesale of the UK mortgage bank looked a near certainty, with shareholders in danger of being all but wiped out.

Facebook misses out on valuable opportunity

18 Sep 2007

The company just announced its new project a $10m venture fund aimed at fostering the growth of premium applications for the site. But its backers appear to be making off with most of the upside. Facebook shouldn t give up the chance to profit from its precious assets.

UK guarantee to Northern Rock sets bad precedent

18 Sep 2007

The guarantee should stop the run on the stricken mortgage bank and a domino effect on other institutions. But foolish behaviour hasn t been adequately punished. In exchange for the guarantee, the state should have nationalised it.

Does Ben know something we don’t know?

18 Sep 2007

The FOMC s 0.50% cut wasn t justified by market turmoil. With the dollar weak and commodity prices soaring, it risks reigniting inflation. That suggests Ben Bernanke thinks the economy is really weak. In which case, this Bernanke put will only work shortterm.

Banks bailing on buyouts shouldn’t push their luck

17 Sep 2007

Banks have tried to wriggle out of providing debt for two modestsize leveraged buyouts in the past week. They may succeed. Sponsors can afford to let small fry go. But they ll put up a real fight if banks try to use the same tactics on buyout shops big deals.

Does bank ownership loom for Wall Street?

17 Sep 2007

The five standalone US brokerages have long shunned the idea. But the liquidity crunch may give them cause to reconsider the benefits. Banks enjoy flexible accounting, cheaper funding, and access to the Fed window. And longterm lending might be coming back into vogue, too.

Credit crunch doesn’t handicap Street’s top duffers

17 Sep 2007

The summer's credit meltdown claimed many victims, but it didn't seem to hurt Wall Street s biggest swingers performance on the fairway. Even while the markets were out of control, they managed to excel when trading pinstripes for plaid pants.

Greenspan profits from failure

17 Sep 2007

According to his memoirs, the former Fed chief was too busy being oracular to notice the US mortgage market bubble. That omission will cost the US economy dearly. But Greenspan now gets headlines and book sales for predicting house price falls.

Finally, the UK housing boom comes to an end

17 Sep 2007

It ended even before Northern Rock s collapse. But prices are set to fall as mortgage terms get tougher for poor and rich alike. The unwinding could be painful. The last time around in 1989 real house prices dropped by 35% over seven years.

Sarkozy is wrong to attack the ECB

17 Sep 2007

The French president is once again putting the blame for his country s poor economic performance on the ECB and European authorities. But he should concentrate on what he could do to reform the economy at home. The euro isn t responsible for France s lacklustre growth. The French president is once again putting the blame for his country s poor economic performance on the European Central Bank. But he should concentrate on what he could do to reform the economy at home. The euro isn t responsible for France s lacklustre growth.

Brussels’ antitrust wheels work very slowly

17 Sep 2007

The European Commission feels emboldened by its court victory over Microsoft. But it took years of hard work and isn t totally cleancut. Microsoft will face deeper challenges from rivals like Google than regulators.

EU Microsoft ruling troubling for tech giants

17 Sep 2007

An appeals court has upheld the European Commission s finding that Microsoft acted as an abusive monopolist. Commissioner Kroes says success is measured by market share. This ruling gives her a green light in Intel, Qualcomm and Rambus probes.

Nothing loonie about Canada’s safe harbour

17 Sep 2007

The currency s inexorable rise shows Canada s economy is not to be sneered at. While poorer than the US, it doesn t suffer the imbalances. Canada has also become central to US oil security. Safe haven seekers should buy loonies, not dollars.

Infrastructure leverage boom may haunt investors

17 Sep 2007

Investments in assets like toll roads and bridges are said to be safe because of the stability of their cash flows. But easy debt markets fuelled leverageladen deals and have left them little room for a hiccup in growth. This could spell trouble.

Buyout boffins may start resembling venture capitalists

14 Sep 2007

That is, if the credit crunch limits the size of LBOs from now on. Buyout shops reap more revenue per partner because they do bigger deals. That means bigger funds and more fees. Venture funds do smaller deals. But buyout barons may find it increasingly hard to hunt behemoths.

Internet traffic growth slowing worldwide

14 Sep 2007

Remember the late 90s slogan, internet traffic is doubling every 100 days ? The true growth was 100% annually, and the telecom bubble blew. Now, some think video could cause internet traffic to grow 500% annually. Trouble is, it may be growing at just 50% a year and slowing.

Blackstone sees challenges. But BoA is bullish.

14 Sep 2007

Blackstone won t be doing mega deals anytime soon, says a BoA analyst who met with Tony James. It is looking at PIPEs and minority stakes. That can only be a bad sign for the newly public private equity firm. Bizarrely, the sell side analyst doesn t think so.

Northern Rock crisis leaves it vulnerable to takeover

14 Sep 2007

The UK bank s central bank bailout may get it over its liquidity problems for now. But longer term, it may need a wellcapitalised buyer. That poses two questions who and at what price. The answer to neither looks clear while credit markets remain in crisis.

Leveraged loan market shows signs of life

14 Sep 2007

The repricing of some of KKR s debt for Alliance Boots shows how banks and borrowers can share the pain when investors go on strike. While that shifted a tiny bit of Boots' £9bn debt mountain, the outlook is still glum. Funding new deals may yet get more expensive.

BofE fails to prevent run on Northern Rock

14 Sep 2007

The Bank's agreement to act as a lender of last resort hasn't stopped queues at bank branches and depositors rushing to take out their cash. The Bank has failed to communicate adequately. These extraordinary scenes may only stop if somebody puts Northern Rock out of its misery.

Vivendi’s play for Oger Telecom shows strategic muddle

14 Sep 2007

Investors will be rightly alarmed. Vivendi has underperformed the CAC40 in the last five years. It s time it settled on a single strategy. The French mediaandtelecom group is considering buying a stake in the Dubai telecom operator. That suggests it will remain a conglomerate. The French mediaandtelecom group is considering buying a stake in the Dubai telecom operator. That suggests it will remain a conglomerate. Investors should be concerned. Vivendi has underperformed the CAC40 in the last three years. It s time it settled on a single strategy.

Goldman’s hedge fund problems look surmountable

13 Sep 2007

Goldman Sachs asset management unit is reeling from losses at its flagship hedge fund, Global Alpha. It doesn t look good. But apart from embarrassment over its predicament, Alpha s woes don t seem to be an immediate threat to the company s business.