UK housing market between rock and a hard place 31 Dec 2009 The 2009 spurt in house prices looks to be waning as cashrich buyers see fewer bargains. If rates stay low in 2010, the weak economy will not support increased lending. If rates rise, arrears could jump, prompting forced selling. Don't bank on London being immune, either.
Equities face too many headwinds for smooth 2010 31 Dec 2009 Most stock market strategists predict a modest rise in share prices in 2010. After a rollercoaster 2009, a gentle upward swell would be welcome. But don't count on it. A tepid recovery, stimulus withdrawal and higher bond yields could all make for a turbulent year.
Heineken cleans up on Globe mess 30 Dec 2009 Brewers aren't known for aggressive financial wizardry. But Heineken has made a tidy profit buying the distressed debt of a highly leveraged UK pub vehicle and seizing control. And the benefits to Heineken weren't purely financial.
Dividends look good after stocks’ no-return decade 30 Dec 2009 Never before have investors in US equities ended a decade emptyhanded. Since 2000 the S&P 500 handed them a 0.8 pct average annual loss. Even in the grim 1930s the return was positive. Buybacks confuse the comparison, but the value of cash to shareholders has never been clearer.
US forges risky new weapon for mortgage battle 29 Dec 2009 Despite the latest CaseShiller numbers, many reckon house prices are set for more declines next year as government supports wind down. Treasury's gift of almost unlimited support to Fannie and Freddie could offset that. But it would be costly, with no guarantee of success.
Financial-centre crown no longer coveted 29 Dec 2009 A few years ago, bankers were the UK government's best friends and New Yorkers worried that London might surpass New York as the world's top financial centre. After the crisis, it's more of a hatelove relationship. The task for finance: generate jobs and taxes without risk.
Healthcare reform could worsen US deficit 29 Dec 2009 Uncle Sam s creditors in Beijing and elsewhere have repeatedly questioned the budgetary impact of healthcare reform. Skepticism is merited. The justpassed Senate bill employs some Enronesque bookkeeping tricks to improve the fiscal picture.
State budget holes pose big risk to US recovery 28 Dec 2009 The states must balance their budgets but made the easy cuts last year. In 2010, the fiscal gap is almost twice as large as the last recession s peak, and federal stimulus funds run out next December. State budgets economic drag on the recovery will be correspondingly severe.
Crisis may not be over for banking small fry 28 Dec 2009 America s community banks have been lauded by President Obama and legislators because they avoided many of the excesses of their bigger rivals. But with high exposure to commercial real estate, small banks may find 2010 more challenging and small businesses may feel the pinch.
Banks should have many shares to offer in 2010 24 Dec 2009 The crisis has been excellent for one part of the investment banking business equity capital markets. Share issues from troubled banks made 2009 a good year, and deleveraging should keep the flow strong. Better still, U.S. and European IPO markets might come back to life.
How to beat the life out of your savings 24 Dec 2009 We need life assurance as protection against disaster. But life offices are little better than the mattress as a home for savings, and as some Aviva policyholders are discovering, can be worse. Moral: don't buy a savings product from a life company.
Glencore cash-call raises awkward Xstrata question 23 Dec 2009 When Xstrata raised $6 bln in January, Glencore, the miner's top shareholder, couldn't afford to subscribe. So it sold Xstrata a mine, with the option to buy it back a year later. Now the commodity trader is raising capital, have Xstrata's other shareholders been used as a bank?
Financial innovation is hard to kill 23 Dec 2009 The credit crisis gave innovation a bad name. But, despite the vogue for simplicity, innovation is already back. And 2010 promises to be a good year for the rocket scientists. Innovation can help solve problems, but investors should be wary of aggressive structures.
Chinese carmakers take ground with Saab and Volvo 23 Dec 2009 BAIC's $200 mln deal for Saab technology looks tiny. But it could save the Chinese car group years of development and generate substantial revenue. Geely's $2bn interest in lossmaking Volvo is more of a gamble. Still, both moves show the competitive threat of China's automakers.
Democrats will lose US House in 2010 23 Dec 2009 The president's party usually suffers in midterm congressional elections. To that timetested dynamic now add voter angst about high unemployment, big deficits and controversial legislation. The result: Democrats lose their Senate supermajority and hand the House back to the GOP.
Steep yield curve could throw investors for a loop 23 Dec 2009 The difference between yields on short and longterm U.S. government bonds is at a record high as investors bet on an inflationgenerating economic snapback. But what happens if that doesn t materialize? There are painful precedents.
Walking away will gain cachet 23 Dec 2009 Why bother? That's the question more underwater Americans are asking themselves about their mortgages. Trapped in the abyss of negative equity, more will decide to quit paying. As they should.
Chinese banks need right kind of securitisation 22 Dec 2009 Beijing is trying to crack down on the wrong sort of offbalance sheet action parking loans without offloading potential losses. That practice lets banks write new loans, but makes the system riskier. Such pseudosecuritisation undercuts the good case for the real thing.
European bankers’ M&A hopes may be premature 22 Dec 2009 Investment bankers are preparing for the end of a twoyear drought in corporate activity in Europe. They hope that rising markets, easier financing and CEO confidence will drive a deal revival. But there are just as many reasons to believe that bosses will stay cautious in 2010.
US stimulus producing weak, distorted recovery 22 Dec 2009 The economy grew by just a 2.2 pct annual rate in the third quarter, all accounted for by inventories, government and cash for clunkers. Past recoveries from such steep downturns ran at 5 pctplus growth. Economic distortions and crowding out may be extracting their toll.
Dubai learns harsh truth about financial centres 22 Dec 2009 The emirate's effort to build a standalone international stock exchange has failed. Dubai's larger domestic bourse will now buy Nasdaq Dubai in what looks like a prelude to a full operational merger, and a tieup with Abu Dhabi. One strong player is better than three weak rivals.
Copenhagen fiasco shouldn’t justify inaction 21 Dec 2009 The UNsponsored climate change summit that ended in unmitigated failure last week has shown the limits of an overambitious approach. But it leaves room for national action, regional deals and targeted pressure on refuseniks. The U.S., Europe and China must pick up the pieces.
AAA investors running out of options 21 Dec 2009 Yet another toprated class of debt is on the hit list now that S&P may downgrade covered bonds. Soon there will be little AAA debt left outside the world of government and quasigovernment debt. That means less diversification and lower returns for investors fixated on safety.
Spanish TV consolidation gets off to rocky start 21 Dec 2009 Media group Prisa is selling assets to Telecinco for 500 million euros in cash and an 18 percent stake in the Mediasetcontrolled vendor. Consolidation is welcome and the deal makes strategic sense. But the structure is fiddly and hardly makes a dent in Prisa's debt burden.
U.S. healthcare bill won’t fix big inefficiencies 21 Dec 2009 The Senate version, now probably in nearfinal form, will bring health coverage to more people and usefully calls for things like insurance exchanges. However, it worsens the crosssubsidies built into the US healthcare system and risks adding yet more cost.
Christmas comes early for BAA 21 Dec 2009 The UK Competition Commission had ordered the airport group, controlled by Spain's Ferrovial, to sell three airports. But a court has decided the decision was tainted. BAA may still have to, or want to, sell more airports. But it will certainly have a better negotiating position.
LSE’s Turquoise rescue looks too cosy by half 21 Dec 2009 The big investment banks have found that running a stock exchange is harder than it looks, so they are effectively giving away their startup platform to London's bourse. The LSE's dominant UK market share will jump by 10 percent. The competition authorities should take a look.
Buy backs not big buys for cash-rich Nestle 21 Dec 2009 The world's largest food group is in the rare position of handing back cash to shareholders. A sale of its stake in eyecare firm Alcon next month could raise a further $28 billion. Nestle should stick to plan, extend its buyback programme and be wary of big acquisitions.
China’s sovereign fund may bet more on resources 21 Dec 2009 CIC is to have its coffers restocked possibly with as much as $200 billion. China's domestic financial sector is likely to receive much of the cash. But globally, this is likely to be another boost for the commodities sector.
Private equity exits give IPO market indigestion 21 Dec 2009 Recent private equitybacked offerings haven t been greeted with enthusiasm. Now Blackstone is launching a $2 bln IPO of Travelport. Investors are rightly being choosy. That doesn t bode well for private equity returns, because big buyouts need successful IPOs to make money.