EU inflation hump may actually be a jump 28 Nov 2007 The ECB's Trichet says the predicted rise of inflation to near3% will be a hump. But the ECB is reluctant to raise rates because of the credit crunch, overvalued euro and slowing growth. Hoping inflation will just decline after the hump may be too optimistic.
Antitrust could derail BHP-Rio combination 28 Nov 2007 Steelmakers already have complained about the mooted mining megamerger. They d face a tighter iron ore market. But many others from around the world would join the line. At best, look for months of regulatory battles. At worst, a deal could be blocked.
Citi’s $7.5bn capital infusion is not enough 27 Nov 2007 Abu Dhabi s investment helps address the US megabank s current woes, and gets Citi out ahead of a growing pack of banks that need to shore up their capital. But it leaves little wriggle room to deal with new problems, or to pounce on new opportunities.
Kerkorian given a gift wrapped in poison 27 Nov 2007 The takeover defence adopted by Tesoro allowed the wily billionaire to withdraw his tender offer for 16% of the US oil refiner. With refining shares plunging since he kicked the deal off, Tesoro s board gave Kerkorian an out at shareholders expense.
Carbon tariffs would do much more harm than good 27 Nov 2007 Sarkozy s threat to slap carbon tariffs on Chinese goods appeals to environmentalists, since tariffs would allow ecoconscious countries to impose their will on others. They could also help protectionists and may be legal under WTO rules. But the world economy would suffer.
Multi-strategy hedge fund giants are in the sweet spot 27 Nov 2007 Multibillion dollar giant Citadel s funds are up 27% so far this year. The typical hedge fund return is about half that. Citadel and its ilk have track records, heft, reputations and builtin diversification. They re already getting more than their share of new investors money.
YSL-Clarins merger makes sense 27 Nov 2007 PPR is reportedly in talks to inject its YSL perfumes subsidiary into Clarins. The combination would be good for both subscale businesses with good opportunities to cut costs. But PPR should hold out for a 30% stake in an enlarged group.
Virgin sitting on up to £450m Rock profit 27 Nov 2007 That's the paper profit for Virgin implied by the current value of Northern Rock's shares assuming Virgin's takeover goes through on the proposed terms. Not bad given Virgin is only injecting £200m and its smallish Virgin Money business.
Investors ignoring British Energy’s nuclear potential 27 Nov 2007 The UK's nuclear operator should cash in with new nuclear power stations: it's got the sites where they'll be built. Sure, Gordon Brown has yet to give the green light. But poor operational performance at its older reactors shouldn't obscure the fact that British Energy looks oversold.
Citi pays high price to shore up capital 27 Nov 2007 The banking giant is having to pay the Abu Dhabi Investment Authority an 11% coupon to raise $7.5bn. But, at times like this, beggars can't be choosers. Adia, meanwhile, is clearly hoping to repeat the trick of Prince AlWaleed, who made a fortune scooping up Citi stock during its 1991 troubles.
Romania’s currency woes point to emerging strains 26 Nov 2007 The leu has tumbled since the summer, as the global credit crunch begins to be felt. Western money has poured into Romania in recent years. Now vulnerabilities are beginning to be seen. Romania won t be the only emerging market to suffer from the credit crunch.
Rio Tinto defence focuses on value 26 Nov 2007 The mining giant has made a robust case that it's worth more than rival BHP s $150bn allshare bid suggests, while leaving the door open for a tieup. That s the right way for Rio to defend itself though in eschewing conservatism, it risks future disappointment.
Satellite radio merger PR fight turns ridiculous 26 Nov 2007 It s bad enough when Sirius and XM Satellite trumpet that groups such as Women in Farm Economics support a merger. But broadcasting opponents have scored an own goal by sending thousands of dubious emails to regulators.
What is KKR worth? 26 Nov 2007 The private equity firm run by Henry Kravis is on the path to becoming public. Its proposed value, though, is unknown. If KKR wants a successful IPO, it needs to price more conservatively than other recent offerings. A valuation of $9bn looks like the ceiling.
Branson’s box-ticking earns possible Rock jackpot 26 Nov 2007 The Virgin entrepreneur s bid for the stricken UK bank offers something for everyone government, central bank, region, staff and shareholders. That gave him the edge over JC Flowers taxpayerfriendly offer. Branson looks on target for what could be, for him, a lucrative deal.
Credit market fears turn recessionary 26 Nov 2007 Central banks are under pressure to provide enough money cheap enough to keep lending and business activity from collapsing. It won t be easy. It s a painful payback for the Fed s policy of letting bubbles pop themselves. The postbubble mess is proving hard to clean up.
Web 2.0 allows retail investors to make DIY subprime CDOs 26 Nov 2007 The CDO meltdown indirectly hurt a lot of retail investors. But at least they couldn t invest directly in subprime loans. Until now. A fastgrowing web service, Prosper.com, connects hard luck cases with lenders who assemble portfolios of loans. Sound familiar?
Bernabe return could spell end to TI nightmare 26 Nov 2007 In the eight years since Bernabe was kicked out of Telecom Italia after Olivetti s hostile partial takeover, the stock has fallen 60%. TI needs to be run in the interests of all shareholders not just one faction. Bernabe has the track record to make this happen.
Support from bickering shareholders saves Natixis 26 Nov 2007 A E407m hit from the credit crunch in the third quarter is a blow to the French bank, but its troubled US monoline will get $1.5bn from Banques Populaires and Caisse d Epargne. The two shareholders can t agree on much beyond that, leaving Natixis near future in suspense.
Sarkozy could have what it takes to move China 26 Nov 2007 The French president s Chinese hosts seem deaf to entreaties to free the renminbi. The request might be more persuasive if it came with a promise membership in the Group of Seven rich countries. Sarko might want to turn his rhetorical skills to his partners.
HSBC’s SIV move separates men from the boys 26 Nov 2007 The UK bank is pulling $35bn of SIV assets onto its own balance sheet. That s simpler than the proposed superSIV, especially if the assets are sound. Rivals are in a tricky spot. Not following is tantamount to admitting greater troubles in their SIVs, or their balance sheets.
Kelda bid shows infrastructure market still hot 23 Nov 2007 Citigroup and HSBC's proposed £3bn bid values the UK water group at a 29% premium to its regulated assets an even higher multiple than JP Morgan paid for Southern Water last month. Clearly infrastructure funds have yet to be discouraged by the credit crunch. Investors in other UK water stocks will be licking their chops.
UK housing market could be unravelling 23 Nov 2007 The value of new mortgage approvals in October was 27% lower than the monthly average for the previous six months. It s not just a fallout from Northern Rock. Rather, it looks like the credit crunch is hitting home, literally. Rate cuts might not be enough to reverse this trend.
Two extra options for Rock boss to show contrition 22 Nov 2007 Adam Applegarth has, by quitting, demonstrated some remorse for bringing the UK bank to its knees. But he has no reason to stop there, given the size of the Rock s failure. He could also waive the payoff he is entitled to. If that s too much he should at least put it back into the Rock.
England’s football defeat adds to economic gloom 22 Nov 2007 After a disastrous performance against Croatia, England deservedly missed out on qualification for the 2008 European championships. But on top of the humiliation, there is a financial cost. Lower consumer and advertising spend means the British economy will lose out on a £1bn windfall at a time when the high street is already vulnerable.
Banks now centre stage in credit storm 22 Nov 2007 In the last month, the credit default spread index on European financials has widened from 17 to 62 basis points, higher than in August. Now interbank dealing in covered bonds has been suspended. If banks have to pull back to comfort investors, the credit crunch would intensify.
E26bn wind IPO may not be hot air 21 Nov 2007 Iberdrola has set an ambitious price range for the upcoming IPO of Renovables, its wind energy division. But it's not outrageous given how much governments are pushing renewable energy and the barriers to entry inherent in wind farms.
How might Rudd fly to BAA’s rescue? 21 Nov 2007 The mess at Heathrow has improved since the veteran chairman took over. But BAA's finances haven t. The airport operator's credit rating has been junked and a mooted new runway won t come cheap. Here s an imaginary letter Sir Nigel might send to his Spanish boss.
Markets face some scary round numbers 21 Nov 2007 Robots might not mark 1.50, 2, 4 or 100 as special. But such figures are investor signposts. The E1.50 dollar would confirm the message of the $2 pound the US has troubles. A 4% Tbond shows megafear. And $100 oil would prove that speculators can still have the upper hand.
UK government finances squeezed at a bad time 21 Nov 2007 When Gordon Brown was Chancellor of the Exchequer, he largely squandered the revenue that good growth brought in. As Prime Minister, he faces a weakening economy and much slower revenue growth. The government may be forced to cut spending, exacerbating the slowdown.