Even hawks can’t fix U.S. budget any time soon 3 Feb 2010 The White House lacks a longterm plan to stanch America's fiscal hemorrhaging. Republicans say they do. The Party of No may have a chance to sell its ideas if it can retake Congress in the midterm elections. But even if successful, the budget bleeding wouldn't stop for decades.
Bankers should be in bonus penalty box for 2010 3 Feb 2010 The industry has lost credibility because of its crass bonus behaviour in 2009. To get back on the front foot, compensation this year needs to be much lower. Governments and regulators should make this happen and do so quickly. Delay will just store up trouble for everybody.
Movie Gallery’s second flop should be its last 3 Feb 2010 The alsoran U.S. video rental chain is in bankruptcy protection for the second time in just over two years. Even back in 2007, it was apparent Movie Gallery was losing a fight against entertainment and technology trends. Some companies should just be put out of their misery.
US could save by cutting public sector pay 3 Feb 2010 The EU wants financially strapped Greece to cut the pay of government employees. The same prescription could help in the deficitridden US. Civilian federal employees are paid double what private sector employees get. While controversial, it's a potential source of big savings.
US natural gas calls up reserves in war with coal 2 Feb 2010 Natural gas, long a secondclass citizen in U.S. energy circles, is on a roll now that technology has added dramatically to the reserves available. On the numbers, gas has a case for getting a lot more attention. Old biases and coal's political clout stand in the way.
UBS revival blown off course by Swiss tax ruling 2 Feb 2010 A court has ruled that a deal to hand over the Swiss bank's U.S. client data is illegal. The Swiss authorities may yet defuse the situation through diplomacy or legislation. But even if UBS is not about to lose its U.S. licence, Swiss bank secrecy remains under attack.
Bank of New York pays full price for small gain 2 Feb 2010 The trust bank is buying PNC's backoffice operations for $2.3 bln, or 23 times earnings. The heady multiple brings only a marginal market share boost while PNC gets funds to pay back Uncle Sam. BNY Mellon will need hardtoproduce revenue synergies for the deal to pay off.
Nomura papers over a weak quarter 2 Feb 2010 The Japanese broker had an exceptional three months in accounting terms. Poor trading conditions were masked by rapid growth, while a fee for Nomura's own megaequity issue flattered corporate finance profits. Strip out these oddities, and Nomura is facing a tough year.
Russian IPO rush means investors can be choosy 2 Feb 2010 Some $20 billion of Russian equity issuance is forecast this year, mainly on the LSE. Russian companies are under pressure to repair balance sheets and fund delayed expansion. Investors should be able to drive a hard bargain.
Marc Bolland should be rewarded like Marc Bolan 2 Feb 2010 M&S may pay its new CEO millions. But retailers have rare talents. Competition in this sector is relentless, and top shopkeepers must be obsessed with the customer. While bankers liken themselves to footballers or rock legends, retailers really do need star quality.
Who will succeed Trichet as ECB head? 2 Feb 2010 Italy's Draghi and Germany's Weber are the leading contenders for the ECB presidency when Trichet steps down in October, 2011. The choice of the ECB's vicepresident this month will give an idea of the winner. Pierre Briancon examines each man's pluses and minuses.
Fed’s self-contradiction on rates makes sense 2 Feb 2010 The U.S. central bank says it will keep interest rates low for a while. Along with other regulators, it is also warning banks to be ready for rate hikes. The messages appear mixed but policymakers need to know that when the time comes, they can lift rates without harming banks.
Blackstone shows restraint with Travelport IPO 2 Feb 2010 The airline reservation group's IPO will raise about $1.78 bln to pay off debt. Private equity owned firms have a poor stock market record. But the valuation looks undemanding. And with other IPOs in the pipeline, Blackstone has good reasons to make sure Travelport takes off.
Activist could have bad read on Barnes & Noble 2 Feb 2010 Ron Burkle is irked about the bookseller's poison pill and wants to double his 19 pct stake to the same amount as the Riggio family. His governance complaints look valid. But B&N still faces mounting ebook challenges. Burkle may win this battle but lose on his investment.
BP could lose momentum this year 2 Feb 2010 The oil giant had a good 2009 overall, lifting production and chopping costs without compromising safety. But a disappointing Q4 heralds a weaker period ahead, and it's not clear if cost cuts are sustainable. BP outperformed Shell last year. Their fortunes may soon be reversed.
Vague Volcker could use some Dugan detail 2 Feb 2010 The exFed chairman's Senate testimony added little flesh to the bones of his plan for bank regulation. Meanwhile Dugan, who heads the OCC, made a cogent and specific case against forcing banks to retain securitization risk. Volcker needs some time with the detail devil, too.
Obama’s energy woes worsen budget outlook 2 Feb 2010 The probable demise of the U.S. capandtrade plan would be a much bigger financial failure than the implosion of healthcare reform. Taxing carbon was the hidden key to funding Obama's agenda while limiting deficits. Now the administration is scrambling for a Plan B.
Obama’s 2011 budget underlines depth of US woes 1 Feb 2010 By then, bailouts and stimuluses will be all but over, recovery should be under way, and Obama's promised spending freezes should be in place. Yet even on his own figures, the deficit next year will still be an eyewatering $1.3 trn. Bigger spending cuts are needed and soon.
Spain’s planned cuts not enough to stop the rot 1 Feb 2010 It sounds like a swingeing attack on a huge budget deficit, currently more than 11 percent of GDP. But it amounts to much less. Tough talk may help, but more will be needed to reverse the deterioration. Lost competitiveness and weak growth could push Spain into a crisis.
Ryanair has been punished long enough 1 Feb 2010 The budget airline is coping well with the recession and is raising guidance. Investors should see that as a validation of Ryanair's strategy. Operational management also looks strong. The shares' poor performance against the sector should now reverse.
Deutsche’s Abu Dhabi move not the end for Dubai 1 Feb 2010 Deutsche Bank is opening a branch in the UAE Capital. Others are bound to follow as power moves to Abu Dhabi. Yet while Dubai's woes have strengthened the case for those headquartered in the emirate to mull a shift, banks won't ditch Dubai just yet.
UK water could disappear beneath the waves 1 Feb 2010 Should Northumbrian Water be swallowed by private equity, just three UK water and sewage companies would remain listed. When the state sold the original 10, comparison was supposed to be a proxy for competition. But without the market's scrutiny, that's effectively impossible.
Community banks don’t need another Obama sop 1 Feb 2010 That's what the US president proposed with a pledge to give them $30 bln of TARP money to make small business loans. But small banks already have lots of capital and would only take the money if it came without strings that protect taxpayers. It's great rhetoric but a bad idea.
Global bailout fund looks unlikely to fly 1 Feb 2010 Regulators and bankers are pushing for a crossborder fund, financed by a levy on banks, to handle future failures. While banks should pay for being too big to fail, cashstrapped governments will want to keep tax revenues for themselves.
Still too early to call McClatchy’s recovery 1 Feb 2010 The Miami Herald publisher is marketing $875 mln of bonds. The group has boosted online revenue and slashed costs. But its performance will be hard to maintain without stemming the decline in metro newspaper print advertising. Investors should demand to be paid for this risk.
Exxon delivers in Q4 – but still needs XTO deal 1 Feb 2010 The Texas titan boosted production by 2 pct and again demonstrated its industryleading efficiency. But the fact that even modest output growth cheered the market underlines how important its $31 bln U.S. gas acquisition is to future production and reserves.
Tesla IPO looks racier than its Roadster 1 Feb 2010 Outsourcing problems mean the lossmaking electric sportscar maker could soon face a year's hiatus in vehicle sales. Sure, Tesla has a habit of confounding skeptics, and its green credentials make it a trophy buy. But the firm's finances may be too volatile for many investors.