Has Buffett finally called a bottom for something? 23 Jan 2008 Well, maybe. Berkshire Hathaway s 3% stake in Swiss Re, bought on the open market, looks like a vote of confidence in the stock. But as usual with Buffett, other investors shouldn t take too much comfort. With a separate reinsurance deal, the wily investor has other angles too.
UK faces slowdown and needs a big economic shift 23 Jan 2008 The UK economy is no longer nice NonInflationary and Consistently Expansionary so says BoE s King. But was it really nice before? Finance, debt and a house price boom created high growth and huge imbalances. The UK should spend less, King says. It should also make more.
BofA stumbles into Citi’s territory 22 Jan 2008 True, the Charlottebased bank s CDO losses aren t as big. But these and its LaSalle acquisition have whacked its capital base. America s largest bank even had to rely on a couple of oneoff funnies to turn any profit. Worse, it once had much better insurance against such pain.
Italian crisis just might inspire needed shake-up 22 Jan 2008 Sure, a collapse of prime minister Romano Prodi s coalition could lead to more of the same chaotic government and slow reform. But it might bring a new generation into power. With the economy slowing and budget problems likely to return, investors are hoping for bigger changes.
Oil has much more room to fall 22 Jan 2008 Fears of recession have cooled the redhot oil market. But there is still a lot of froth left in it. Demand is slowing and supply continues to grow. If enough traders change their bullish tune, the oil price could take a sharp fall.
SocGen should come forward with its write-offs 22 Jan 2008 The French bank has about E5bn worth of exposure to CDOs. It has only marked that down by E230m so far, and hasn t said more. If it follows the US pattern, the total loss could be ten times higher. Some idea of what is coming would calm investors nerves.
Fed joins Bush in using up ammunition 22 Jan 2008 The Fed's 0.75% rate cut smacks of panic. Along with Bush's proposed fiscal stimulus, it takes care of much of the recessionfighting ammunition available. It may bolster US housing and debt markets. If it fails, there's not much left. And it risks an explosion of inflation.
Ebay’s new boss will have lots to work with 22 Jan 2008 Ebay CEO Meg Whitman looks set to step down. This seems like the right time. She turned the auctioneer into an internet giant with good businesses, but she made some mistakes too. A new chief will soothe edgy shareholders. Spinning off Skype and Paypal could be a good first step.
Recession may be good news for US retail stocks 22 Jan 2008 The outlook for US consumers is anything but rosy. Yet retail stocks have rallied amidst the recent carnage. It's not as odd as it may seem.History shows that the best time to buy retail stocks is just before a recession. Waiting for better news means missing out.
Routine Apple results spook investors 22 Jan 2008 The tech company as usual beat cautious estimates and said next quarter will be tougher. Seasoned Apple watchers should have expected nothing less. But troubled markets and Apple s high multiple are all the justification investors needed to pull back.
UK football goes the way of Wall St 22 Jan 2008 It s a classic tale of football, leverage and sovereign funds. Liverpool s US owners have fallen out with fans and are struggling with refinancing. Dubai International Capital would like to buy a trophy and is offering Hicks and Gillett an easy get out card they should take it.
Stocks look cheap – could get cheaper 22 Jan 2008 Following the latest selloff in global equity markets, stocks look cheap on most measures if you believe earnings estimates. But that s impossible with so much uncertainty over the US economy and rate cuts. Meanwhile, falling markets could drag the real economy down further.
WestLB facelift leaves Moody’s cold 22 Jan 2008 Subprime and trading losses weakened the German bank s capital. Its owners have pledged to provide E2bn. But Moody s has downgraded some of the debt by five notches. That s bad news for the public sector shareholders, who have been tarting WestLB up for sale.
Regulators should bar bond insurers from structured finance 22 Jan 2008 Forcing them to focus on muni bond business is better than bailing them out. It would make underwriters and ratings agencies take more blame for their loss estimates on structured products. And it would allow investors to get a better handle on the insurers true prospects.
Hedge fund code no guarantee of self-preservation 22 Jan 2008 The UK hedge fund voluntary code is a sensible attempt to address some of the big issues that have got the industry in trouble in the past. But hedge funds today face very different challenges against which these rules may prove a chocolate fireguard.
Wolseley suffers as construction troubles spread 21 Jan 2008 The UK group only gets about a quarter of its revenue from new US construction. That business has been suffering badly, dragging the share price down. Other markets are now slowing. That s bad news for current profits. And a test for this acquisitive company s business model.
Deleveraging hits UK mortgage market 21 Jan 2008 The receding global tide of liquidity is leaving many markets beached. Take UK mortgages. Securitisations have all but vanished, leaving lenders potentially some £30bn short. They want government help. They could get it, since house prices are politically sensitive.
World Bank turns to China for economic guidance 21 Jan 2008 China has just become a contributor to the bank, which borrows from the rich to lend to the poor. An obscure Chinese academic, Lin Yifu, will be the new chief economist. It s a sign of the institution s weak position it needs China more than China needs it.
UK mimics SIVs and Enron 21 Jan 2008 One might have thought off balance sheet debt would have a bad name following its role in financial crises including the current one. But, oh no. The UK government s Northern Rock rescue involves a mega £30bn off balance sheet vehicle. That s just smoke and mirrors.
Brussels unlikely to block Northern Rock bailout 21 Jan 2008 The new UK plan to keep the damaged bank afloat seems to flout EU rules on state aid. However, determined governments, particularly large ones, have often bent the rules. But with a key treaty to be ratified, now isn t the time for Brussels to pick a fight with Gordon Brown.
Dong cancellation shows European IPO market still shut 21 Jan 2008 The E2bn Danish energy privatisation was billed as a solid defensive stock able to withstand market turmoil. But with European markets down up to 10% this year, the turmoil has proved too great. If this deal can t get away, it s hard to see what can.
Ping An attempts to buck global trend 21 Jan 2008 Western markets are faltering, but China s secondlargest insurer plans to raise a $20bn warchest. The company s shareholders may not be happy, but there is an opportunity. Cashrich companies from the East can swoop like sovereign funds on weakened Western targets.
Equities sink as growth wanes and debt threatens 21 Jan 2008 Shares tumbled on Monday, with European markets down by 5%. Investors have finally taken on board the likelihood of a US recession. The weakness is likely to persist. Two big supports of the bull market share buybacks and cheap leverage for buyers are all but gone.
Vale shouldn’t rush into Xstrata deal 21 Jan 2008 The Brazilian miner may find a willing bride in its £31bn rival. But a deal at current levels could be expensive. Since BHP Billiton made its megabid for Rio Tinto, other miners are rightly scouting for options but Vale should wait for the dust to clear.
Latest Northern Rock bailout probably unjustified 20 Jan 2008 What was supposed to be temporary government life support is now to become a mediumterm crutch. No wonder the shares have rebounded sharply. Elements of the package provide some protection for taxpayers. But it far from clear that they are sufficient.
Why isn’t every bank like Goldman? 18 Jan 2008 Ironically, it’s because they tried to copy Wall Street’s most successful firm. The banks most scarred by the subprime debacle - like Citi, Merrill and UBS - were infected by what could be called “Goldman envy”. Those that emerged unscathed were relatively immune to the disease.
GE’s conglomerate strategy bucks market woes 18 Jan 2008 General Electric's robust results vindicate boss Jeff Immelt's reshuffling of the conglomerate's portfolio. Its financial arm will continue to suffer, but its tripleA credit rating and fat global infrastructure order book leave it much better off than its peers.
Scottish Equitable adds to UK commercial property woes 18 Jan 2008 The UK investment group is to halt redemptions from its £2bn real estate fund for up to a year after it almost ran out of ready cash. Scottish Equitable hopes this will buy time to sell assets. But with fear clearly spreading among investors, others may have the same idea.
Bonuses fly while banks sink 18 Jan 2008 Compensation at Wall Street s five biggest investment banks rose 9% to $66bn last year impressive considering the banks market caps shrunk by a $50bn. The average banker pocketed $350,000 for wiping out an average $274,000 of shareholder value. Nice work if you can get it.
Wind looks like big winner in renewable energy 18 Jan 2008 The EU is launching an ambitious plan to boost nocarbon nonnuclear energy. But solar remains uncompetitive, hydro has peaked and biomass is environmentally questionable. That leaves wind as the renewable of choice. With favourable regulation, it isn t even too expensive.