US gun sale spree running out of ammo 20 Oct 2009 Private equity shop Cerberus plans to float gun maker Freedom Group. It had better hurry. President Obama s victory sent weapon sales and firearm valuations shooting upward. Falling backlogs could trigger a plunge in sales.
Icesave deal won’t bring instant diplomatic thaw 20 Oct 2009 Iceland is close to agreeing a revised plan to reimburse the UK and the Netherlands for the bailout of Icesave depositors. But the deal still leaves Iceland with a debt burden equivalent to half of its GDP. Relations with London and Amsterdam are likely to remain cool.
Brazil using 2009 boom to roll back free market 20 Oct 2009 At first glance, the country has a good case for its capital inflow tax. It s fighting hot money from sloppy global monetary policy. But the tax violates market axioms and hits foreigners, as does the new oil regime. President Lula may no longer deserve the benefit of the doubt.
Gatwick auction back from the dead 20 Oct 2009 Spanish infrastructure group Ferrovial postponed the sale of the London airport in May. The conditions for an auction are now more favourable and BAA, the subsidiary that owns Gatwick, is in better shape. Still, that doesn t mean the asset will fetch the £1.6bn its vendor wants.
Credit Suisse takes up bonus challenge 20 Oct 2009 The Swiss bank, lately forward thinking on pay, has moved first to set out details based on G20 guidelines. Higher base salaries might raise eyebrows and upside on deferred cash seems a bit rich. But clawbacks and the use of return on equity as a benchmark make good sense.
Banks should perfect their art 20 Oct 2009 Not the art of trading, deals or lending, but the paintings decorating hallways or clogging storerooms. Deutsche, JPMorgan and UBS own 130,000 works. Their collecting urge is hard to explain or justify. Taxpayers are helping banks so much. They should get to see the pictures.
BlackRock-lite deal inches Morgan Stanley forward 20 Oct 2009 Morgan Stanley's sale of retail asset management isn t as big a deal as Merrill s tieup with BlackRock. It will hardly affect Morgan s bottom line. But it s the right move at a decent price, and it allows chiefinwaiting James Gorman to focus on more pressing issues.
China’s African investment: both change and bubble 19 Oct 2009 In Africa, China increasingly rivals and even outguns the US as a trading and investment partner. Africa undoubtedly benefits from the competition. But China s domestic boom has encouraged scattergun investments. A bubble may have to burst before the relationship becomes healthy.
Pound’s technical bounce belies weak prospects 19 Oct 2009 Sterling enjoyed a sharp rally last week amid an apparent short squeeze. But the currency s ultimate fate will be determined by the UK s still frail fundamentals. Further weakness seems in store, as the UK seeks a rebalancing which megastimulus may have delayed.
Bankers’ tax is justifiable – as last resort 19 Oct 2009 The industry has enjoyed a windfall on the back of taxpayer support and is now proving extraordinarily insensitive in pushing ahead with plans for megabonuses. A windfall tax is normally a bad idea. But unless the banks rapidly get onmessage, it will be unavoidable.
Citigroup’s loss could be Banamex’s gain 19 Oct 2009 The Mexican supreme court just might force the troubled US bank to divest the profitable Banamex. Citi might not like that, but the Mexican bank might benefit. Citi doesn t help its funding costs much, while nonUS ownership could help it attract previously reluctant customers.
Citi’s Banamex is worth fighting for 19 Oct 2009 The beleaguered megabank conceded defeat to the US government and sold Phibro. But executives shouldn t cave so easily if Mexico s supreme court decides Citi must hive off Banamex. The unit isn t just profitable. It s also the model for Citi's international ambitions.
Dollar might yet take bite out of Apple 19 Oct 2009 The US tech company s dominance of the market for digital music devices is clear in its sparkling results. More surprisingly, Apple says the dollar's weakness didn't cause any real benefit. That's good, but a strengthening dollar could hurt.
Banks dodge mortgage loan-to-value caps 19 Oct 2009 The UK regulator trusts chastened lenders and tougher capital rules will prevent a resurgence of housing loans with low or no equity. This indirect approach may be justified for now. But the FSA should not be too afraid of imposing blunt rules if the market starts to heat up.
Galleon scandal teaches fund governance lesson 19 Oct 2009 Not just because administrators at the hedge fund founded by Raj Rajaratnam, now accused of insider trading, may have missed a trick or two. But also because fund investors shouldn't tolerate the kind of dominant role Rajaratnam seems to have played at Galleon.
National Express shouldn’t count on Stagecoach 19 Oct 2009 The struggling bus and coach operator has received an allshare merger proposal from rival Stagecoach, after a takeover bid fell through in the eleventh hour. The news may have stopped a rout in the National Express share price. But it doesn t address the company s real problems.
Hot money is cost of frozen renminbi 19 Oct 2009 Some $60bn of mystery funds crept into China s currency reserves last quarter. The culprit isn t spivvy foreign investors, but a toocheap renminbi. It entices those who can to swap US dollars for their Chinese counterparts, adding to the central bank s $2.3 trillion headache.
BofA Q3 shows Merrill wasn’t Lewis’s only fumble 16 Oct 2009 The messy purchase of the Wall Street brokerage ultimately cost the Bank of America boss his job. But the firm is also suffering from earlier deals, including Countrywide and LaSalle. BofA's quarterly loss is a timely reminder that Merrill wasn't the only reason Lewis had to go.
Bill Gates advances his economic conversion 16 Oct 2009 The Microsoft founder s $30bn nonprofit foundation started with his hightech DNA. Its latest focus is quite different. Small family farms are the simplest of economic activities. But Gates entrepreneurial skills remain useful. He has identified a huge underserved market.
Carrefour turns its back on Russia’s promise – fast 16 Oct 2009 The French retailer will leave Russia barely a month after opening its second store there. Shareholder pressure may have prompted the abrupt reversal. But it looks like Carrefour can t afford the uncertainties and high corruption costs of this otherwise attractive market.
NBC not best ad for GE’s capital allocation skills 16 Oct 2009 The US industrial conglomerate may finally part ways with the media arm it spent 24 years and at least $33bn assembling. A Comcast deal valuing NBC at $24bn wouldn t be a total disaster but Rob Cox and Aliza Rosenbaum say it s hardly a vindication of GE's management philosophy.
Barclays gets back to something like normal 16 Oct 2009 The UK bank is confident enough to get on with its strategy of beefing up European retail operations. It acquired Citi s Portuguese credit card business and is in talks to buy 135 Italian bank branches. More moves are likely as rescued banks restructure.
Beware the limits of UK house-price derivatives 16 Oct 2009 Contracts that enable traders to bet on where house prices will be years hence may express a market view on the direction of travel. But this year s predictions have been all over the place. Derivatives are a risky tool for divining future house prices.
London should forget its fantasy-island airport 15 Oct 2009 Mayor Boris Johnson s plan for a new airport on the Thames Estuary doesn t tick enough boxes. Construction would be hugely expensive and the area s birds could be a crippling problem. Then there s the fate of Heathrow and its 72,000 employees. The idea is a distraction.
Latvia might show way forward for burden-sharing 15 Oct 2009 Swedish banks are aghast at Latvia s proposals to limit mortgage repayments to current property values. But the scheme could make devaluation more acceptable to Latvians. And a devaluationcap combination has a rough justice. Everyone was foolish and everyone will suffer.
Xstrata’s deal-making prowess takes a scrape 15 Oct 2009 First Vale, then Lonmin, now Anglo American. Xstrata s dealjunkie CEO Mick Davis is wracking up a list of failed mining transactions. Withdrawing the weak approach for Anglo may be sensible, and the game for Lonmin isn t over yet. But Davis reputation is becoming less fearsome.
Spanish economy gets blacker 15 Oct 2009 That doesn t mean gloomier. Quite the contrary. Tax dodging, always big in Spain, seems to be booming in the recession. But it s a dangerous habit that may make the government s task of balancing the budget harder when growth returns.
Goldman feasts while Citi flails 15 Oct 2009 The vampire squid posted another blowout quarter, earning $3.2bn. Vikram Pandit s megabank, meanwhile, managed to squeeze out just $101m. But strip out the funnies, including a bumper tax break, and Citi looks even more like a beached whale.
Google should think twice about investment binge 15 Oct 2009 The search giant thinks the recession bottomed in the third quarter. So it s now ready to invest heavily . Google s economic forecast is optimistic and its tryanything investment style is even more so. Investors should hold the company to its more recent discipline.
Second Sainsbury run could make sense for Qatar 15 Oct 2009 The UK supermarket chain s shares leapt on rumours of a reprise of the 2007 Qatari approach, crushed by the beginning of the credit crunch. That eleventhhour retreat left the investors looking amateurish. But they are savvier now and Sainsbury s shares are cheaper.