Second chances drying up on Wall Street 5 Aug 2008 Failure may be the best teacher, but willingness to grant second chances is a cyclical phenomenon in finance. Poor returns across the hedge fund spectrum left the ground infertile for a new fund led by tarnished Merrill star Dow Kim.
Bertelsmann retreats in humiliation from Sony BMG 5 Aug 2008 Exactly four years after forming the disastrous music joint venture, the German media group is selling its 50% stake to partner Sony for just $900m. That will bring Bertelsmann out of debt, but the unimpressive valuation should alarm some more richly valued rivals.
UK taxpayers buy into Northern Rock again 5 Aug 2008 They started out on the hook for £27bn of loans to rescue the mortgage lender. Now the government wants to swap £3bn of debt for Rock equity. The bank is late to the balance sheet restoration party. Luckily its shareholders are a rather captive and passive bunch.
StanChart shows benefits of decoupling 5 Aug 2008 The decoupling of its fortunes from those of its peers, that is. The UK bank delivered a sparkling first half by avoiding the subprime forays and funding gaffes that sank others. StanChart s emerging markets bring their own risks, but investors seem relaxed.
The Games might benefit from more globalisation 4 Aug 2008 A US basketball star s decision to play for Russia in Beijing is getting flak in the US. But the Olympics are too tied to the old nationalist mindset. Free trade works in professional sports as in most crossborder businesses. The Olympics could join in: Welcome Team McDonald s.
UBS chalks up small legal victories 4 Aug 2008 The Swiss bank persuaded a UK court to stop a startup firm from poaching staff or clients and a US judge to eject a hedge fund s claims against it. But UBS faces more serious lawsuits elsewhere and is likely to lose more than it wins. At least now it has a lawyer in charge.
Cayne’s excuses don’t add up 4 Aug 2008 The former Bear Stearns boss told Fortune he nearly died last September and said a conspiracy had contributed to the firm s collapse. But he also said he hadn t reined in leverage and was at a loss as early as last summer. Stepping down sooner might have made a difference.
Kuwait–Japan: symbiosis in the making 4 Aug 2008 After getting burnt in the West, the Gulf state s sovereign fund is set to treble its Japanese investments. Commodityscarce Japan is a natural hedge for Kuwait. Conversely, the Gulf would also be a natural destination for some of Japan s own $1tr of foreign reserves.
Centrica’s hand looks weak in British Energy deal 4 Aug 2008 The owner of British Gas might covet a merger with the UK s main nuclear power operator. But it can t pay cash and a paper bid isn't likely to succeed. The trouble is, a backseat role in EDF s rebuffed approach to British Energy doesn t offer a solution to Centrica s problems.
Australia points the world in a new direction 4 Aug 2008 After doubling against the US dollar, the Australian currency is now plummeting. The prospect of lower rates Down Under is the spark, but the bigger picture is a slowing global economy, which threatens to end a sevenyear commodity boom. Australia won t be the only loser.
HSBC should seize the chance to do some deals 4 Aug 2008 The UK s biggest bank did much as expected in the first half. It remains exposed to subprime through Household, the US lender. But its capital and liquidity positions are better than those of many peers. Now HSBC should follow rival Santander and snap up some bargains.
Japan’s policymakers may be repeating old errors 4 Aug 2008 The prime minister s call for a stimulus package carries ominous echoes of Japan s 1990s public spending. Rising imported commodity costs have pushed the country towards recession, so reducing them would help. That calls for higher interest rates, not fiscal stimulus.
Fortis tries to begin the healing 4 Aug 2008 The BelgoDutch group sounds more pessimistic and realistic about credit and business under its new interim CEO. Fortis is also finally hinting of a writedown on the pricy ABN Amro deal. The results still seem blah, but to fix a problem, you first have to admit there is one.
Nuclear fiasco shows up flaws in UK energy policy 4 Aug 2008 The collapse of the deal between EDF and British Energy is a symptom of a deeper malaise. UK energy policy is becoming increasingly dysfunctional. That s primarily because the country has drifted into a publicprivate entanglement which hampers longterm policy making.
Central bankers go their separate ways 4 Aug 2008 The US, eurozone and UK have almost identical inflation and growth rates. The overnight interest rates, though, are very different. And if anything, the US should have the highest rate, but it actually has the lowest. Blame the Fed s devilmaycare approach to inflation.
Boom-time adventures could haunt big names 1 Aug 2008 Carlyle s dabbling in a couple of hedge fund areas didn t pan out. It may take a reputational hit. But at least it didn t drag too many investors into its experiments. Cerberus, once a distressed investing shop, went deep into private equity and could end up paying for it.
GM’s $15.5bn quarterly loss isn’t the worst of it 1 Aug 2008 The carmaker s US operations are in freefall, liquidity is worsening, and writedowns seem unending. Worse, GM has shown less willingness than Ford to face reality and focus on small cars. Until it does, investors should give its plans to raise capital the cold shoulder.
Stock exchange wars will cause casualties 1 Aug 2008 The London Stock Exchange has cut trading costs. It was partly a preemptive strike against Turquoise, due to launch on August 15. Other exchanges are already snapping at the LSE s heels. As competition hots up, there s unlikely to be enough business for everyone to survive.
Satnav maker could face slowdown 1 Aug 2008 Garmin, the navigation device maker, has the satisfaction of seeing its gear spread near and far. Yet competition from cell phone handsets is pressuring margins and threatens obsolescence. The history of Palm may offer a hint about Garmin s fate.
British Energy price demands are unrealistic 1 Aug 2008 The UK nuclear group rejected EDF s £12bn bid as being too low after last minute pressure from shareholders. A higher price relies on heroic assumptions about oil prices and the reliability of British Energy s ageing reactors. It s hard to see EDF returning with a higher offer.