Berlusconi redux wouldn’t be good economic news 5 Feb 2008 Silvio Berlusconi is favoured to regain his old job as Prime Minister. His record last time was mixed some reforms, too little budgetary restraint and not much for struggling industry. More action is needed now. Unfortunately, his campaign promises point in the wrong direction.
US primary choices became too limited, too early 5 Feb 2008 For Iowans, the Presidential choice was like shopping at Bloomingdale's eight Republican candidates and eight Democrats. Now most have dropped out. The 90% of voters still to participate, mostly in today s primaries, face the Soviet GUM of limited choice.
BP’s Hayward needs an axe, not scissors 5 Feb 2008 The company s earnings were soso compared with rivals. Its cost base remains high and current austerity measures aren t putting the energy giant back on track. BP s CEO should take a page from Exxon s book and start chopping, not snipping, at its bloated workforce.
Moody’s considers new bolts for stable doors 5 Feb 2008 The rating agency is asking whether it should differentiate structured finance ratings from its more traditional assessments. It s an idea whose time should have come years ago. Still, better late than never and there are a few options beyond the five ideas offered by Moody s.
Some clarity descends on US political landscape 5 Feb 2008 The race is still tight, but Super Tuesday returns suggest a thrust to the center, with McCain widening his lead and Clinton keeping Obama marginally at bay. Soon the candidates can start articulating policy detail. No bad thing given the parlous state of the economy.
$50tr credit default swap market awaits crash-testing 5 Feb 2008 The overthecounter market for credit protection has weathered a few squalls. Banks trading infrastructure has improved, too. But exponential growth has been accompanied by a scarcity of company defaults. If a real bankruptcy storm builds, there s still room for worry.
Microsoft-Yahoo should get antitrust green light 4 Feb 2008 Expect US and EU regulators to take a tough look but clear the $45bn proposed acquisition. Regulators have long portrayed Microsoft as a bully. But now it looks more like a saviour, trying to preserve competition and keep Google from becoming the new Microsoft.
What’s the best outcome for Google? 4 Feb 2008 The search giant is trying to frustrate Microsoft's $45bn Yahoo bid in an effort to preserve the status quo: two wimpy rivals. But forcing Microsoft to pay more and choke on integrating Yahoo wouldn t be a bad outcome either.
Global equities could have further to fall 4 Feb 2008 Analysts are playing catchup, marking down their corporate earnings forecasts weekly. That owes much to the possibility of a US recession something that hasn t historically been kind to global earnings. That doesn t bode well for stock prices, even after a 15% selloff.
Spanish real estate woes could trap cajas 4 Feb 2008 The savings banks have been allowed to expand lending aggressively in Spain, but not raise much equity. As real estate falls back, they look more exposed than the big and internationally diversified commercial banks. Big losses are possible in this politically favoured sector.
Troubled Spanish real estate firm tempts Dubai 4 Feb 2008 Colonial boomed along with the Spanish market. But now the overgeared company and its overgeared shareholders face a repayment squeeze. Enter Dubai. The sovereign wealth fund has enough money and patience to make a go of Colonial. But it might find easier pickings elsewhere.
UBS makes heavy weather of capital increase 4 Feb 2008 The Swiss bank and its Singapore rescuer GIC aren t taking any chances getting their $9bn deal past shareholders. GIC has said it may sweeten its terms. That may look an overreaction, given the deal s minimal opposition. But UBS will look inept unless it wins by a wide margin.
Bush is on target for another deficit record 4 Feb 2008 The Bush administration s proposed $410bn deficits for 2008 and 2009 are not records. However, the budget assumes benign growth and inflation and an improbably frugal Congress. By September 2009, it s likely Bush will have easily beaten his own budget deficit record.
Former Yugoslav countries grow better on their own 4 Feb 2008 Serbia s narrow vote for the proWestern candidate on Sunday resulted partly from its decent economic performance. Macedonia and Croatia have also done OK and Slovenia is a star. The laggards are Bosnia and Kosovo, where aid and outside interference have played a pernicious role.
Wary banks undercut Bernanke’s credit push 4 Feb 2008 The US Fed chairman has pumped cash into Wall Street. But banks have cut back on real estate and commercial lending nonetheless. It makes sense for them to raise standards and charge more interest. But their dwindling risk appetite bodes ill for attempts to boost the economy.
Merrill’s mining sacrifice reveals price of weakness 4 Feb 2008 The US bank was sacked as adviser to Brazil s Vale for not helping to fund a possible bid for Xstrata. Caution in tough times is admirable. But turning away business has its own costs in league tables and client relationships. The pain of subprime losses is spreading.
Jerry Yang replies to Steve Ballmer 4 Feb 2008 Ok, not really. But if the Yahoo founder and chief executive were to respond to Microsoft s $45bn hostile bid, this is what he might say.
Microsoft makes Google look smart over AOL 4 Feb 2008 It sure didn t mean to. But the price tag Microsoft has put on Yahoo vindicates its archenemy s decision to value the Time Warner internet portal at a chunky $20bn a couple years ago. Take a look at the arithmetic.
Punch stages opportunistic swoop on M&B 4 Feb 2008 There s plenty of logic to a deal between the two pub groups. And with M&B s management discredited by its disastrous property punt, Punch s timing is opportune. But financially, things are more complex. M&B shouldn t accept the first offer on the table.
UK economy sinks from stardom to stagflation 4 Feb 2008 Gordon Brown s old songs of praise no longer seem appropriate for the UK economy as it sinks towards stagflation. The Bank of England might like to rescue growth and the housing market but inflation seems set to soar.
Egg on many faces as UK credit tightens 4 Feb 2008 Citigroup s UK internet bank has shown how not to cut off customers. Rivals should not follow its example. Banks have quadrupled credit card lending in a decade. They should retreat judiciously. Reputation, client relations and the economy are all at risk.
Microsoft needs to search for more than size 1 Feb 2008 Microsoft s and Yahoo s ad businesses are reeling from competition with Google. Combine them, and the two might prop each other up. The challenge is to avoid creating a lumbering business stuck in a larger conglomerate quagmire.
Lehman scores coup with biggest-ever dawn raid 1 Feb 2008 The US investment bank snaffled up a $14bn stake in Rio Tinto overnight in a swoop that involved 200 insiders without a word leaking out. After heavy investment but little apparent return so far, Lehman's lagging franchises in Europe and Asia should get a boost from the manoevre.
China in driving seat after $14bn Rio raid 1 Feb 2008 Chinalco s audacious move, in tandem with US miner Alcoa, gives it a 9% stake in the UK miner. It s not enough to skewer rival BHP s bid yet. But it dramatically changes the rules of the game. The $270bn tieup now has a Chinese kingmaker.
China is right to loosen the leash on its retail investors 1 Feb 2008 Its move to allow its citizens to invest in US equities via domestic mutual funds is a good first step. It will give investors better options than piling into the volatile Shanghai market. But with US markets reeling and the yuan inching up, it probably won t open the floodgates.
Yahoo should negotiate the best price for itself 1 Feb 2008 Microsoft's $44.6bn offer is sweet but Yahoo's dawdling management and board would further compound their poor recent stewardship by folding without a fight. While the headline numbers look nutty, once stripped of its cash and Asian investments, Yahoo looks more reasonable.
Fear and loathing and lost wages 1 Feb 2008 The American Securitisation Forum s hordes gather in Las Vegas this week. The subprime mortgage and CDO debacle has left them bruised. But it s not all bad other securitisation markets are still open for business.
British Airways looks undervalued 1 Feb 2008 Investors have soured on BA, fearing the UK flag carrier faced turbulence from fuel prices, increased competition at its Heathrow hub and a feared recessioninduced demand drop. But its results look excellent. BA enjoys strengths which should help it ride out any tumult.
Chinalco should be scrutinised like a SWF 1 Feb 2008 If the Chinese holding company behind the $14bn share raid on Rio Tinto was a sovereign wealth fund, it would top the BV SWF Risk index. It lacks transparency, takes controlling stakes in the semistrategic mining industry and is bankrolled by the Chinese government. Not good.
Exxon well-positioned to exploit energy price tumble 1 Feb 2008 The Texan titan raked in a record $40.6bn in profit last year. But unlike its competitors, Exxon has been stockpiling cash. Though it s a notorious bargainhunter, Exxon s $34bn in dry powder will come in handy if tumbling energy prices open acquisition opportunities.