Cameron’s softer deficit rhetoric is half right 29 Jan 2010 The Tory leader now says extensive cuts may not be needed immediately if he wins the coming UK election. That may reduce the risk of a doubledip recession. But quick decisions will still be needed even if savings don't come overnight. Otherwise, the UK could end up like Greece.
Infineon revolt is welcome development for Germany 29 Jan 2010 The German chipmaker beat forecasts in Q1. But that will do nothing to quell a shareholder rebellion over the proposed appointment of an insider as chairman. Such open revolt is rare in Germany. It is a sign that shareholder engagement there is gradually improving.
Latest US GDP data show more inflation than growth 29 Jan 2010 Headline economic growth was an annualized 5.7 pct last quarter, but net of inventory rebuilds the gain was only 2.2 pct. Meanwhile, prices rose at a 2.7 pct rate. The payments balance and savings rate improved, but U.S. growth is sluggish and inflation looks to be edging up.
Greece, EU and markets in big game of chicken 29 Jan 2010 Europe wants Athens to get serious about executing deficitreduction plans. It may serve the EU's purposes that the market doubts its willingness to help. But Europe cannot wash its hands of Greece, and will find ways to help if needed.
Amazon’s cash flow flood could dry up 29 Jan 2010 The Internet retailer generated a stunning $2.6 billion in cash from operations in the fourth quarter, and it is plowing $2 billion into a stock buyback. But much of this bounty comes from delaying payment to suppliers that may not be sustainable.
How Volcker rule can be improved 29 Jan 2010 The planned U.S. ban on proprietary trading isn't just crude, but threatens to disrupt the creation of the global banking regime. But regulators may have found a way to control excessive trading, while keeping the global regulatory process intact.
Politics still Telefonica’s big hurdle in Italy 29 Jan 2010 Speculation that the Spanish telecoms group might acquire Telecom Italia has flared up again. Some of TI's shareholders seem amenable to the idea. But most Italian politicians are resistant. Without their blessing, the prospect of a tieup looks highly unlikely.
Fannie, Freddie fiction stores trouble for future 29 Jan 2010 The two U.S. mortgage giants are escaping public wrath and much in the way of accountability, despite their 12digit bailout and open spigot of taxpayer cash. Failing to address the downside of government subsidizing home ownership means the housing time bomb is still ticking.
Obama’s fiscal challenge has no precedent 28 Jan 2010 Politicos love comparing Barack Obama to Bill Clinton and Ronald Reagan, presidential predecessors who won second terms after early stumbles. But Obama is squeezed by far worse economic and fiscal pincers. The plans offered in the State of the Union speech can't get him out.
Ford shares priced for absolute perfection 28 Jan 2010 Back out the group's nonauto assets from liabilities and investors value the car business at $52 bln. Ford avoided bankruptcy, boosted market share and posted its first annual profit since 2005. But to justify its valuation, Ford needs to prove its rebound has staying power.
Wall Street can’t escape Obama’s cross-hairs 28 Jan 2010 Jobs may be the president's number one focus but Wall Street is a close second. The State of the Union offered another sign Obama will seek to regain political momentum on the backs of bankers. Whether Congress will match this populist rhetoric with policy is another matter.
ING appeal could spark anti-Brussels fight-back 28 Jan 2010 In midcrisis, the Dutch bancassurer took aid on punitive terms. Now it is asking for leniency. The Commission may not relent, but other rescued banks could be emboldened to fight against mandated asset sales. In calmer times, a new competition commissioner may be sympathetic.
Bernanke needs fresh ideas for second term at Fed 28 Jan 2010 Don't expect a radical shift. But the dissent evident in the Senate vote confirming his reappointment might bring some adjustments. A greater focus on asset bubbles, government deficits and Fed independence should be on Bernanke's agenda.
Bonus curbs could undo London’s housing recovery 28 Jan 2010 Bankers with big bonuses usually drive up house prices in the UK capital. But this year's payouts will contain less upfront cash. Meanwhile, housing supply is likely to increase. Add it up, and London house prices look set to give up some of last year's surprising minirecovery.
Climate rules may offer little help to investors 28 Jan 2010 SEC boss Mary Schapiro's heart is in the right place in asking U.S. companies to reveal more about the threats from global warming. They may even coax businesses into better analyzing the risks. But for now, the SEC's initiative will likely just mean more boilerplate.
Carl Icahn needs to justify his Biogen escalation 28 Jan 2010 The veteran activist gave the biotech firm the shakeup it needed. He won two board seats, ousted the CEO and put the company on the block. Unless he has more, better ideas, his 6 pct stake doesn't merit the extra board representation he wants. If not, he should just buy Biogen.
ITV’s new no-frills CEO will have plenty to do 28 Jan 2010 The UK commercial broadcaster has brought its leadership debacle to an end. Adam Crozier will join new chairman Archie Norman. Neither knows much about TV, but both relish a challenge. That's fortunate as ITV urgently needs strategic direction in a harsh new media world.
First Shanghai IPO of 2010 is an encouraging flop 28 Jan 2010 XD Electric's 2 percent fall on its Shanghai debut may not be as bad as RUSAL's 11 percent dayone dive in Hong Kong. But it's lousy in Chinese terms. Increased IPO supply and shortterm market jitters may be dampening investors' exuberance. Hopefully the rationality will last.
China still lags in scientific research 28 Jan 2010 The production of research papers quintupled over the last decade. But in science, China is still something of a poor cousin to the U.S. and Europe. For its wealth, China isn't even more scientific than Brazil. With a sciencefriendly government, that is likely to change.
How can size not matter in banking? 28 Jan 2010 President Obama says he wants to end the Too Big to Fail mentality of the banking industry. But his broad proposals to reform the financial system don't actually call for reducing the size of the country's banks. This seems an odd contradiction.
Sarkozy’s anti-market rhetoric misconceived 28 Jan 2010 The French president used his address in Davos to blast the untrammelled free market. While the economic crisis has certainly exposed deficiencies in financial capitalism, this is largely because market forces were too weak rather than too strong.
America’s bloated budget needs some bigger cuts 27 Jan 2010 The White House calls Obama's proposal for a minimalist budget freeze a fiscal scalpel rather than a hatchet. But while some spending restraint is better than none, serious surgery is called for. Herewith, a few suggested cuts you won't see in Obama's State of the Union.
Missing IPO discount leads to RUSAL flop 27 Jan 2010 The Russian aluminium giant's 11 percent drop in early Hong Kong trading is embarrassing. RUSAL was priced last Thursday, before the latest fall in the Chinese market. But RUSAL investors should have demanded a lower price to protect against exactly this sort of hiccup.
New rules lessen, don’t eliminate, money fund risk 27 Jan 2010 Proposed new U.S. regulations will boost liquidity, improve credit quality and shorten the maturities in money market funds. That's good. But the industry successfully beat back an effort to demystify the $1 NAV illusion. Without that, there's still risk in the system.
Apple’s iPad beauty spells trouble for operators 27 Jan 2010 Unsurprisingly, the tech supremo's new tablet is a gorgeous device that does everything but make your breakfast. Over time, more apps will be added and its price will drop, making it even more desirable. And that's a problem for already strained carriers like AT&T.
Private equity springs to life in Europe 27 Jan 2010 Banks appear to be lining up to back the biggest buyout in two years a 5 bln euro bid for Kabel Deutschland. It's a great business: little competition, good growth and hefty margins. Plus bond investors are hungry for utilitystyle assets, so refinancing loans should be easy.
Fed’s exit strategy begins on risky path 27 Jan 2010 The U.S. central bank is withdrawing liquidity while keeping interest rates low the opposite of Bagehot's crisis advice to lend freely but at high rates. The Fed's tactics beat keeping the firehoses running, but could restrict credit to important sectors like small business.
Housing market still lacks a solid foundation 27 Jan 2010 Obama's bet that home ownership can be as much a part of the solution as it was the problem isn't paying off. Declining home sales and loan refinancing suggest the trillions pumped in so far haven't been enough. The market will probably need more propping up to lead any recovery.
China needs fertilizer more than steel 27 Jan 2010 If the Middle Kingdom's industrialization follows the course of other nations, per capita demand for infrastructure like concrete and steel will peak long before meat consumption. This may explain why M&A in agriculture, not steel, is so hot. Case in point: Vale's $3.8 bln deal.
Toyota gives Detroit an opening — and a warning 27 Jan 2010 The glitch that forced the Japanese carmaker to halt sales of 63 pct of its U.S. fleet should benefit Motown rivals. But shared platforms exacerbated Toyota's pain. With the Big Three making greater use of the costsaving measure, they may want to invest more in quality control.