Beer goes flat in developed markets 23 Feb 2010 Brewers used to be considered recessionresistant. But Heineken and Carlsberg are finding that drinkers in Europe and North America are guzzling less or trading down to cheaper brews. That helps explain the expensive scramble for assets in still beerthirsty developing markets.
London banker hiring boom running out of gas 23 Feb 2010 Headhunters say vacancies are up from the crisis nadir. But while last autumn saw some highprofile expansion and rebuilding, these seem to have run their course. In Europe at least, the postcrisis job market for investment bankers may already have peaked.
Japan’s experience should comfort policymakers 23 Feb 2010 Japan may sound like an economic horror story: huge fiscal deficit, minimal GDP growth and constantly looming deflation. But look on the bright side. A huge asset crash has hardly dented prosperity and bond yields remain low. Western countries will be fortunate to do as well.
Wal-Mart throws weight against cable companies 23 Feb 2010 The giant U.S. retailer sells tons of DVDs and CDs, but digital delivery is shrinking sales. WalMart s trying again to muscle its way into the nascent market via its purchase of Vudu. Whether it will succeed is unclear but the rivals taking on cable TV keep multiplying.
Bigger state role in banks might hurt UK taxpayers 23 Feb 2010 Vince Cable wants to force statecontrolled RBS and Lloyds to increase lending. The plan of the Liberal Democrat's economics thinker, and potential UK Chancellor, might help some small firms. But the increased meddling would make it harder to sell the bank stakes at a profit.
Canada may lose at hockey but win in economics 23 Feb 2010 Like Sunday s Olympic hockey game with the U.S., the fiscal competition between the countries appears closefought. But Canada has achieved similar results without a large bank bailout or excessive stimulus. The end result of the economic match should be a Canadian victory.
BofA returns to form with Merrill rehire trick 22 Feb 2010 The bank is bringing back two veteran rainmakers who left in the merger dislocation. While not an entirely uncommon practice on Wall Street (think John Mack or Felix Rohatyn), it s something of a habit for Merrill and perhaps a worrying sign of costly volteface management.
Bankers’ longevity dream inches closer to reality 22 Feb 2010 UK pension funds might like to buy insurance against longevity risk, the cost of beneficiaries who live longer than expected. Bankers have been salivating at the prospect, but the longevity trade has never got off the ground. A new market and a big deal suggest this is changing.
Shareholder democracy crawls forward in Spain 22 Feb 2010 The government is finally moving to scrap certain company rules that limit shareholder voting rights to 10 pct. That could effectively remove poison pills for the likes of Repsol and Iberdrola. But don't expect a deluge of hostile bids. Other obstacles to unwelcome buyers remain.
UK bank bonus restraint must be genuine 22 Feb 2010 RBS boss Stephen Hester has sensibly decided to follow his counterparts at Barclays and waive his bonus for 2009. But the gesture is only meaningful if Hester and other bank chiefs are not able to claim bigger payouts in future. Otherwise they are just dodging the UK's bonus tax.
Schlumberger’s got some explaining to do on Smith 22 Feb 2010 The oil services giant is paying more for Smith International than is justified by the numbers. The cost savings support a bid at around $42 a share. So the FrancoAmerican group s $45 bid looks valuedestructive unless it hits an unexpected gusher.
UK politicians should think before sidelining UKFI 22 Feb 2010 The entity that looks after the UK's bank stakes risks being marginalised after the election. But diluting its mandate would undermine UKFI's efforts to maximise value for taxpayers. Besides, the past year has shown politicians can benefit from keeping the banks at arm's length.
Obama health plan travels further down wrong path 22 Feb 2010 It costs $75 bln more than the U.S. Senate proposal, limits a tax on highend plans and increases regulation by trying to limit price hikes. Worse, the president s bid to break a political impasse will further polarize Congress. A tactical win could become a strategic loss.
Italy should heed warning from euro’s godfather 22 Feb 2010 Robert Mundell helped inspire the single currency. Now he thinks Italy, not Greece, is the biggest threat to the euro. While Italy is not in critical condition, the Italian government must cut spending to prevent a debt spiral before a shock sends the country into emergency.
Judge Rakoff ends era of regulator rubber-stamps 22 Feb 2010 The jurist presiding over BofA s Merrill fiasco has begrudgingly approved the bank s revised $150 mln SEC settlement. Though he refrained from pushing for an even more punitive deal, future actions by the watchdog will need to be Rakoffproof. Banks can expect a tougher ride.
UK can’t wait for strong growth before it cuts 22 Feb 2010 Some leading economists say the UK should wait for robust growth before cutting government spending. The wait could be too long. While strong growth looks distant, contagion from the euro zone could easily prompt crisis. Perhaps only markets can prompt painful reform.
Lowe’s still waiting for its housing bump 22 Feb 2010 Delayed gratification isn t cutting it for Lowe s shareholders. The American home improvement retailer is asking investors to trust that a sales recovery is coming, eventually. Investors are right to be cautious given the still murky outlook for housing.
Chinese dissaving could spur inflation 19 Feb 2010 Chinese consumers are saving less, in part because they don t like the belowinflation yield on savings accounts. The savings decline will eventually help balance the economy. But for now, higher spending is bidding up prices. Higher interest rates could recapture surplus cash.
Banks forced to face up to Spanish property crash 19 Feb 2010 Lenders to troubled real estate company Colonial will take a hit in a new restructuring. Colonial will raise 2 bln euros of new capital and could also swap 2 bln euros of debt for new shares. This should keep the company alive, but shows Spain's property crash is far from over.
In choppy markets, pick your quant fund carefully 19 Feb 2010 Managers which rely on complex patternbased trading rules hit a rough patch in 2009. The quant funds computers were caught out by whipsawing markets, or favoured safety over rallyfollowing. As long as sovereign jitters persist, trendfollowing funds may continue to struggle.
Markets right to take Fed move badly 19 Feb 2010 At first glance, it looks ridiculous for investors to treat the U.S. central bank's optimistic, well signalled and largely technical increase in the discount rate like a piece of bad economic news. But financial markets run on credit. The Fed move presages more expensive fuel.
Anglo American’s withheld divi shows confidence 19 Feb 2010 With rivals reviving payouts, Anglo is the only big UK miner with no dividend. The stance seems bold after a hostile approach recently put Anglo on the defensive. But saving cash will help the credit rating, and good operational progress means Anglo can afford to think long term.
Benign U.S. inflation data conceal turbulence 19 Feb 2010 Consumer prices rose 0.2 pct in January, less than expected. Excluding food and energy, prices actually declined. But there are some artificial oddities underneath the data. And with import and producer prices up sharply, inflationary pressures are building.
Schlumberger can make a $9 bln Smith takeover work 19 Feb 2010 The market is punishing the oilservices giant over the rumored purchase of its smaller rival. But if previous deals in the sector like Baker HughesBJ are a useful guide, Schlumberger can afford to pay nearly a 30 pct premium without burning its shareholders.
Goldman, Greece and governance failure 18 Feb 2010 In 2003, Nicholas Dunbar put Goldman Sachs' swap deals with Greece into the public domain. Revisiting the original story, he argues that the current controversy over the transaction highlights what goes wrong when weak public sector governance meets financial innovation.
Russia’s threat to TNK-BP looks a bargaining ploy 18 Feb 2010 A state environmental agency has advised that BP's Russian joint venture should lose its licence for a big Siberian gas field. The best interpretation for the UK oil group is that the move is a negotiating tactic to force a deal that admits a state energy company to the project.
PPR’s strategy shift has timing problem 18 Feb 2010 The French group wants to sell retail and add fashion brands to its Gucciled luxury stable. Purchase prices are pretty low now. But PPR is so highly leveraged it needs to sell first and CEO Pinault won't move until the market picks up. But by then he will have to pay up.
Digging deeper can pay off for private equity 18 Feb 2010 That s one lesson from the $1.1 bln sale of Duane Reade. Oak Hill pumped in an extra $125 mln last year, turning its original 2004 buyout of the drugstore chain from a potential bust into a 12 pct annualized return. But for others, like Guy Hands and EMI, the trick may not work.
Verizon Wireless can’t deny dividends much longer 18 Feb 2010 The U.S. phone company has used the prodigious cash flow of its mobile subsidiary for growth rather than share the largesse with minority owner Vodafone. Yet size rules out further deals and Verizon needs cash. Something has to give.
Obama deficit reform panel could backfire 18 Feb 2010 A threestep plan to exacerbating a financial crisis: 1) admit nation is dangerously in debt; 2) create highprofile commission to find solution; 3) have commission fail. Of course, the resulting market tumult could force a fix. But that's no way to solve fiscal problems.