Low price could help Tata turn Jaguar around 26 Mar 2008 The Indian conglomerate is paying about $2.3bn (E1.47bn) for the UK car brands, less than half what they cost Ford two decades ago. Ford is also funding pension costs and will continue to supply engines. But Tata still faces a challenge restoring Jaguar s roar.
US federal spending, not consumers, stoking trade woes 26 Mar 2008 Incipient recession is widening the US budget deficit. It should exceed $500bn for the year to September 2008, compared to a declining traderelated current account deficit of $739bn in 2007. Soon, fiscal profligacy will more than account for US trade woes.
Investors are exaggerating Tele Atlas, Navteq risks 26 Mar 2008 The two digital mapmakers are trading at big discounts to their proposed takeover prices because both face tough antitrust scrutiny. But regulators will probably clear TomTom and Nokia to complete the deals.
Motorola split won’t solve handset ills 26 Mar 2008 The tech company will spin off its troubled handset group. A sumoftheparts implies the unit is a drag on the value of Motorola's other businesses, so the stock could pop. But spinning off the handset unit won t cure its main problem the failure to design a new hit product.
Central banks flounder as credit crunch worsens 26 Mar 2008 Interbank interest rates are rising again, despite the best efforts of the Fed, ECB and BoE. The central banks have not been able to get liquidity back into a frightened financial system. While they battle, the prospects for the financial sector and growth are deteriorating.
FSA changes don’t go far enough 26 Mar 2008 The City regulator s mea culpa over Northern Rock is almost alarmingly honest. But the recommendations for change don t fully address whether management failings went to the top. And the FSA can t ask the biggest question why UK regulation is divided in three.
Sarko’s UK visit will be pleasant, but useless 26 Mar 2008 The French president, eager to boost his muchbattered image, will tell the Brits whatever is required to make his visit a PR success. But his conception of politics as the art of corporate meddling will find fewer takers in the UK than it does in Italy or Spain.
Weak dollar is not all bad for Europe Inc. 26 Mar 2008 European economies haven t suffered equally from the sinking dollar. Germany has been resilient, but is beginning to feel the pain. Yet for Europe Inc., a cheap greenback should also be an opportunity to invest in the US.
Deutsche Bank fluffs another chance to come clean 26 Mar 2008 The German bank has disclosed positions in troubled assets. It s a step towards the transparency that CEO Ackermann claims to espouse, but a small one. Deutsche hasn t revealed the marks used on liquid assets, and shows a huge E88bn of opaque Level Three assets.
Russian pressure threatens neighbours’ market zeal 25 Mar 2008 Medvedev's sabrerattling about Nato echoes Putin's policies for the near abroad. Political pressure, and the example of Russia's oilfuelled economic success, may undermine neighbours' commitment to free markets. Russian contempt for property rights could prove contagious.
BoE should buy mortgage-backed securities 25 Mar 2008 Buyers for UK MBS have all but disappeared, pushing prices down to ludicrously low levels. The central bank wants to stay a referee, not a player. But in a credit crunch, intervention looks like the best way to keep this match going. Besides, the BoE would probably make a packet.
The Bank of England hazards morals to avert collapse 25 Mar 2008 The UK central bank may soon overcome some of its repugnance at moral hazard. It is getting ready to follow its eurozone and US peers in accepting lower quality collateral in liquidity operations. That would put public money at greater risk, but the alternative looks worse.
Will the Fed’s $75bn lubrication work? 25 Mar 2008 Traders are betting it will unblock the seizedup market for treasury repurchase agreements. But banks scrambling for liquidity before quarterend could easily mop that up. If they expect more losses, their defensive capitalhoarding could bring back market turmoil.
Renault speeds ahead with budget cars 25 Mar 2008 After low cost airlines and supermarkets, Europe s next trend could be nofrills cars. Renault has taken the lead. But the success of its Logan now looks vulnerable to labour unrest and stiff competition.
Glass Lewis turns blunderbuss on Morgan Stanley’s board 25 Mar 2008 The proxy advisory firm is recommending that shareholders vote against five directors who served on the Wall Street firm s audit committee. It s fair game to hold the board to account for last year s losses. But purging half of them risks destabilising the business.
VTB has good news, bad news for bankers 25 Mar 2008 The good news is it s one of the only investment banks with plans to grow, by investing $500m over two years. The bad news for bankers facing the axe is VTB is Russian. That probably means only those who can navigate the Kremlin and know the meaning of sliyaniye need apply.
BP’s luck may be up in Russia 25 Mar 2008 The oil major has so far navigated the treacherous waters of Russian politics better than rivals Shell and Exxon. But Russian authorities have been making hostile moves. It could be nothing, but with 20% of BP s oil production coming from Russia, losses there would hurt badly.
New Bear deal adds risk for JPMorgan shareholders 25 Mar 2008 The original terms gave them a modest buffer against losses at the Wall Street firm. The renegotiated price reduces that, and puts JPM investors on the hook if markets worsen. For now, shareholders seem willing to take that risk in return for Bear s remaining suite of businesses.
Sharp private equity value write-ups can sour fast 25 Mar 2008 Some of HCA s investors are marking up their stakes in the hospital operator. A small increase in ebitda has translated into a big paper gain due to the magic of leverage. But rising bad debt and government health care reforms could turn this virtuous circle vicious.
KMT win is no economic bonanza for Taiwan 24 Mar 2008 Taiwan s Taiex stock index rose 4% on March 24, on hopes that Ma Yingjeou s election win for the Kuomintang would bring closer ties with China. However China already represents 39% of Taiwan s exports and it is difficult to see how the DPP s economic record can be much improved.
Dimon locks Bear in tighter, but looks panicked 24 Mar 2008 JPMorgan s new deal gives Bear shareholders a bit more, but still a fraction of what their shares were worth two weeks ago. Crucially, it locks in the purchase even more tightly. But staff defections and possible errors in the original deal have tarnished Dimon s halo.
Credit Suisse proves plenty of danger remains 20 Mar 2008 Just when it was starting to look safe to go back into financial waters, Credit Suisse discloses the presence of rogue traders, restates results and issues a profit warning. It s a stark reminder of the depths that could yet be plumbed and the many sharks still lurking.
Wall Street’s Hall of Shame welcomes new members 20 Mar 2008 The club which includes such luminaries as Jay Cooke, Michael Milken and Charles Barney now counts Jimmy Cayne and the Bear Stearns board among its new inductees. Unfortunately, despite the lessons of history, membership is still expanding.
Bear management lapses are lesson for investors 20 Mar 2008 Savvy investors back managers, not just businesses. Yet Bear Stearns bosses notably Jimmy Cayne were detached for months before the investment bank folded. They even did nothing after a mini run on the bank last summer. Burnt investors should know better next time.
Iceland’s woes not a one-way bet 20 Mar 2008 Traders have sent CDS spreads on the country's banks out to record levels, and the krona is highly volatile. But Iceland and its banks are far from defenceless and speculators hoping for an easy profit could be disappointed.
Chinese stock crash may not be over 20 Mar 2008 Lucky for Beijing, the near40% plunge in Chinese shares since October neatly coincided with the subprime mess, allowing it to deflect blame. But the government s response to rising inflation could yet take a chunk out of Chinese corporate earnings and valuations.
Dubai-Colonial drama may not be quite over 20 Mar 2008 Talks have broken down between Dubai s sovereign wealth fund ICD and the creditor banks of Colonial, the Spanish construction group that is teetering on the brink of bankruptcy. This may not be the end of the party but Dubai will have to make more concessions.
British Airways won’t give up on Iberia 19 Mar 2008 British Airways has upped its stake in the Spanish airline to 13.1% and says it might buy more. But unlike Air France with Alitalia, the UK carrier probably won t bid before Iberia has restructured. It is mainly keeping its options open.
Making money down Mexico way 19 Mar 2008 Mexico has been one of the few safe havens from plunging stock prices and the collapsing dollar. It's also a relatively cheap destination for cashstrapped American holidaymakers. That bodes well for Mexico's listed airports and their savvy shareholders.
Miners play risky game of Chinese chicken 19 Mar 2008 Rio Tinto and BHP Billiton are antagonising their biggest customer by cranking up iron ore prices. In the short term, it's a rational way to increase profits. But the result may be even fiercer Chinese opposition to a merger. That would be bad for shareholders on both sides.