Double bankruptcies are a warning for vultures 28 Apr 2009 US department store Fortunoff is being liquidated after filing for bankruptcy for the second time. Filene s Basement is also about to make a repeat appearance in bankruptcy court. This shows that buying failed companies, even on the cheap, isn t necessarily a bargain.
Deutsche Bank fails to swing the naysayers 28 Apr 2009 Record firstquarter debt trading and boomtime return on equity failed to sustain recent share gains. Minor disappointments on capital, equities and wealth management unnerved investors. But the bigger fear is that Deutsche can t sustain this heady pace of revenue generation.
US housing still has a way to fall 28 Apr 2009 The rate of decline in US house prices moderated in February. Great news for housinghobbled banks, right? Maybe not. Better isn t the same as good . And the cities with the worst price declines are still leading the charge downward.
Fortis holders vote with their shoes 28 Apr 2009 Belgian investors weren t content to fight a BNP Paribas takeover of Fortis in the courts. Footwear flew through the air at a shareholders meeting. It s a far cry from the sandwichgrabbing behaviour of yore. But there are better ways to express dissatisfaction.
Generali helps Agricole avoid E1.5bn writedown 27 Apr 2009 Credit Agricole and the Italian insurer have signed a shareholder pact for their combined 11% of Intesa Sanpaolo. That could spare the French bank the pain of marking its 5% stake down to market. Generali s favour allows it to ask for something in return. But when, and what?
Grübel brings some continuity to UBS shake-up 27 Apr 2009 With enough change already, UBS s new boss has chosen a familiar face to lead the investment bank. Veteran UBS dealmaker Alex WilmotSitwell should boost morale, while his cohead, a former Goldman exec, knows about fixed income. But external candidates were probably sparse too.
Is Fed stretching numbers to justify looser money? 27 Apr 2009 The US central bank has calculated the optimal interest rate based on inflation and GDP. But its conclusion minus 5% doesn t add up. The socalled Taylor rule suggests a rate around 2%. The Fed is either underrating current inflation or overrating the output gap.
Qualcomm pays $891m to secure handset toll booth 27 Apr 2009 The mobile technology firm agreed to a huge settlement in a patent suit filed by Broadcom. This certainly stings. But it strengthens Qualcomm s efforts to make handset firms like Samsung and Sony Ericsson pay substantial royalties for using its patents.
GM takes first real stab at Ch 11 – minus the name 27 Apr 2009 The teetering carmaker is slashing dealers, factories and workers, cutting brands, offering bondholders shares only and even wants the US to swap half its loans for equity. But it may still leave GM s balance sheet laden with tens of billions of dollars of liabilities.
Chinese gold rush would benefit China least 27 Apr 2009 Changing US Treasuries into gold would help Beijing undermine the dollar s dominance. But years of mercantilism can t be unwound painlessly. Big Chinese buying would drive the yellow metal s price sky high. The biggest beneficiary of a gold rally? Step forward, Uncle Sam.
Cameron protects UK from its budget folly 27 Apr 2009 One reason the markets aren t freaking out about soaring budget deficits is that investors don t think the government will last beyond next year. Meanwhile, David Cameron, leader of the opposition Tories, is banging on about fiscal irresponsibility and the need for painful cuts.
Germany wise to ignore new protectionist law 27 Apr 2009 A new law allows the government to limit foreign investments on security grounds. With the recession hitting hard and the exportdriven economy shaken to the core, the timing is terrible. Germany needs all the foreign capital it can get. And guess what: the government agrees.
Portfolio’s closure not just about gilded era’s end 27 Apr 2009 Yes, the magazine s April 2007 launch with a $100m budget and golden skyscrapers on the cover was badly timed. But if anyone had the ingredients to make it work, Conde Nast did. The financial crisis, though, accelerated the shift from printed word in ways hard to predict.
3i’s jumbo issue tests appetite for equity 27 Apr 2009 The private equity group is seeking up to £700m of equity half its market cap. Shareholders should support the move, if only because they were keen on 3i s imprudent gearing up a few years ago. And a deleveraging discounted deal could further narrow the shares discount to NAV.
Ackermann defies discarded bank CEO trend 27 Apr 2009 The Deutsche Bank boss has agreed to stick around for an extra three years. He s had a good crisis, so the continuity makes sense heading into a deep recession. But by 2013, Ackermann will have been CEO for 11 years. That s pushing it. The board should aim for change sooner.
Flu scare sets scene for anxiety through the autumn 27 Apr 2009 The chance of containing swine flu is essentially zero. The question now is how virulent it will be especially as the virus will mutate quickly over the next several months. Expect multiple waves of market panic in the runup to flu season.
Swine flu is last thing fragile global economy needs 27 Apr 2009 The virus that has hit Mexico and emerged in New York and elsewhere could hamper mobility and trade, not to mention confidence. With the economy already in the dumps, this could be a bigger blow than SARS.
European telecoms losing status as safe havens 24 Apr 2009 The old idea was that telephone service was a necessity, so operators wouldn t suffer much in a recession. Reduced expectations from Deutsche Telekom and Teliasonera suggest that is an illusion. But investors might find a modified version of the theory still holds up.
US sunshine policy leaves bank investors in the dark 24 Apr 2009 The government s white paper on bank stress tests reveals nothing new. The markets still don t know what loss estimates regulators are using for different assets or what capital levels they want. They should dispel the uncertainty and release more detail.
UK just doesn’t feel triple-A OK 24 Apr 2009 The rating agencies aren t formally considering a downgrade yet. But the latest government budget showed no concern for the risks of huge deficits. That isn t consistent with a top rating. If ratings accounted for possible inflation, the UK would probably have been cut already.
Lack of made in UK becomes central to crisis 24 Apr 2009 The UK economy contracted by 1.9% in the first quarter. That was worse than expected, and undermines the government s brand new growth forecast. Manufacturing, on which any recovery will depend, plummeted. The government s growth gamble keeps on looking riskier.
Exclusive: Barclays didn’t get A in stress test 24 Apr 2009 The UK bank last month let observers believe that it had passed the FSA s stress test with flying colours. In fact, it passed only because it convinced the regulator that it had credible options to shore up its capital if things got really tough.
Morgan Stanley prop spinoff makes more sense than ever 24 Apr 2009 The bank has been debating the idea for 18 months or more. The credit crunch only increases the rationale if the move derisks the firm and gives it more credit as an asset manager. Meanwhile, UBS's Dillon Read fiasco provides useful pointers.
Skype founders unlikely to find Ebay stand-in for Joost 24 Apr 2009 The pair hit a home run when they sold Skype to Ebay for $3.1bn. Now they re said to be looking to sell online video site Joost. They ll be hard pressed to find an eager buyer. Joost is no Skype and the internet openness bubble has deflated since Ebay s fat payout.
Nomura bucks trend with $7bn mega-loss 24 Apr 2009 As US rivals get back in the black, the Japanese investment bank made its biggest ever annual loss. On top of asset writedowns and equity losses, it's still paying the bill for Lehman Brothers. Such oneoffs are transitory, but Nomura faces a longerterm problem: Japaneseness.
KKR’s annex fund is recognition of over-leverage 24 Apr 2009 That's not to say it's a bad idea. The private equity firm is raising a side fund to pump extra cash into stretched companies in its European fund. It means investors double down on their investment to reduce debt. But like a rights offering, at least it treats them fairly.
Fiat risks coming away empty-handed 24 Apr 2009 Chrysler may not be enough for the Italian automaker and its ambitious boss Sergio Marchionne. He s also interested in taking on GM Europe. The new gambit might be largely aimed at Chrysler s unions and creditors. But Fiat s multiple cashfree offers could end up with no takers.
Diageo buyout of Moët could be bubbly brilliant 23 Apr 2009 For Diageo that is. The world s largest spirits maker used to look boringly low leveraged. But past caution leaves it with the firepower to pay E10bn or more for LVMH s cognacs and champagnes. But that doesn t mean the French fashion house would want to play.
Murdoch gussies up MySpace in bid to keep Google 23 Apr 2009 The social network is considered one of News Corp's savviest buys. But the odds of MySpace renewing its rich advertising contract with Google are dimming. It is falling behind Facebook and it needs to turn around quickly. That explains why MySpace founders just got the boot.
Roche rolls craps on Genentech 23 Apr 2009 Drug companies routinely bet billions on uncertain odds. Roche gambled by spending $47bn on Genentech just before the results of an important clinical trial were announced. It lost. Roche overpaid by billions, but it was a gamble worth taking.