Where’s America’s home equity loan Armageddon? 7 Apr 2010 The biggest U.S. banks hold tens of billions of underwater secondlien loans. They ve avoided writing them down because borrowers are making payments. But muddling through is a risky strategy. Regulators would be wise to force them to hold more capital against these loans.
Aussies need more than rate rise to check success 7 Apr 2010 Australia faces little nearterm danger of inflation. However high commodity prices, massive foreign investment, soaring real estate prices and low savings add up to a bubble whose bursting could be painful. Tapping the fiscal brakes as well as the monetary ones may be necessary.
Updated 1930s public works program might help U.S. 7 Apr 2010 Thursday is the 75th anniversary of the Works Progress Administration, the depressionera U.S. jobcreation program. It had serious design flaws, but was probably beneficial overall. With long term unemployment high, it may be time for a new WPA. But it shouldn t be too generous.
Blankfein balancing act underscores Goldman’s jam 7 Apr 2010 The Wall Street boss s letter to shareholders praises governments, portrays Goldman as a force for good and rebuts accusations thrown at the firm. It s a spirited defense. But he can t afford the chutzpah of Jamie Dimon and is unlikely to silence Goldman s critics.
Big Media trips again on Web 2.0 with Bebo 7 Apr 2010 AOL plans to shut or sell the social network just two years after former parent Time Warner paid $850 mln for it. Media conglomerates have struggled to catch waves of new technology or social trends. They can t stop trying but it s high time they stop making the same mistakes.
Renault, Daimler try to pair style and profit 7 Apr 2010 The French and German car groups' new partnership makes industrial sense. Renault has small car expertise and a tie with Japan's Nissan. Daimler offers engineering excellence and brand cachet. But it's hard to see why they felt obliged to seal the deal with crossshareholdings.
Listed credit funds a better bet second time round 7 Apr 2010 Stock marketlisted funds that invest in credit sound like a relic of the boom. The first generation suffered during the crisis. A new HarbourVest fund benefits from a simple structure and better timing. Success isn't assured, but it should fare better than its predecessors.
Still time to stop Rio and BHP’s iron ore tie-up 7 Apr 2010 Australia's competition watchdog has extended its probe of the mining groups' planned joint venture. The deal would leave just two global suppliers of seaborne iron ore. The runaway price and the end of annual contracts have focused regulators' attention. Just in time.
Unilever’s shocking idea: put the customer first 6 Apr 2010 There's no business without customers. This blindingly obvious truth is frequently lost in the clamour for shareholder value. Unilever's CEO Paul Polman has reasserted it and the shares have risen dramatically. Other bosses, and investors, might learn something from him.
Enel shouldn’t overload its green IPO 6 Apr 2010 The indebted Italian utility is planning to raise cash through an IPO of its alternative energy unit. Investor enthusiasm and peergroup multiples may help it reach the hopedfor enterprise value of 14 bln euros. But Enel should resist the temptation to load EGP up with debt.
Internet inches away from utility status 6 Apr 2010 A landmark court ruling means broadband operators won t need to treat all traffic on their networks equally. The blow to net neutrality gives the Internet a longer leash than its telco or electricity cousins. But it could spur an even more ambitious Washington power grab.
Scorned refining sector ripe for bargain hunters 6 Apr 2010 Refiners have become the most unloved part of the U.S. energy business. With feeble demand and a global glut, investors now value them at just a quarter the cost of building new capacity. Such excessive pessimism creates opportunity for the bold.
Markets’ new trust in growth renews old risk 6 Apr 2010 The economic spring is finally here, with signs of growth plus a likely truce in the ChinaU.S. currency feud. So stocks and oil are in and U.S. Treasury bonds are out. But higher yields on what remains the world's core financial asset could upset the economy and markets.
Push to shrink banks may be given room to grow 6 Apr 2010 A consensus appears to be forming between U.S. liberals and conservatives that banks need to be cut down to size. But even as the rhetoric grows thicker, details remain thin. Wall Street s biggest problem may no longer be that current reform proposals pass but that they don t.
Fed should know better that semantics do matter 6 Apr 2010 The economy, not timelines, will dictate when the Fed raises rates. Common sense yes, but investors have clung to the Fed s extended period security blanket as they take on more risk. One policymaker appears to understand words matter; more of them should.
Housing short sales get helpful shot in the arm 6 Apr 2010 Housing busts are messy, drawnout affairs. Short sales when the borrower sells at a loss that the bank agrees to eat are among the quickest of fixes. It s encouraging they re on the rise. Hopefully, the U.S. government s latest interest will encourage many more.
Cedar Fair investors wisely get off Apollo ride 6 Apr 2010 The theme park operator and the buyout firm both look bad after pulling the plug on their $2.4 billion deal. Given the valuation, shareholders were right to take their chances on a better offer than Leon Black s. But Cedar Fair s board probably needs to deliver one soon.
The UK should not waste its fiscal crisis 6 Apr 2010 As Britain embarks on its election campaign, Hugo Dixon argues that this is a perfect opportunity to engage in radical tax reforms designed not just to restore the country's fiscal balance but to boost its longterm productivity and competitiveness.
Santander may need to pay up to win RBS auction 6 Apr 2010 The Spanish bank is bestplaced to buy the 318 branches the European Commission has told the statedominated UK lender to sell. But the emergence of Virgin as a credible rival means it cannot afford to be complacent. Santander may have to offer a full price to be sure of victory.
U.S. VAT may need another crisis to catch on 5 Apr 2010 The high cost of U.S. healthcare reform has sparked renewed interest in a valueadded tax. If history is any guide, the program will be even pricier than expected, and plunge the budget deeper into the red. But Americans are in no mood for the medicine.
Chavez pursues surprisingly rational oil strategy 5 Apr 2010 Venezuela s president may enjoy Putin s company, but his plans for developing Orinoco oil are more diversified than it might first appear. As well as Russian and Chinese consortia, he has involved Italian, Spanish, Vietnamese, Malaysian, Indian, Japanese and even U.S. companies.
Are loan market investors just really stupid? 5 Apr 2010 That might explain why they re buying covenantlite debt again. It s easy to see why investors are taking advantage of this dumb reach for yield. But the experiences of 2007 deals, like Claire s Stores, show why investors shouldn t be so ready to give up their rights.
U.S. jobs data show economic pit not bottomless 2 Apr 2010 The first decent rise in job growth since November 2007 suggests labor market recovery is genuine and 12 pct unemployment unlikely. However longterm unemployment rose while real wages declined. Recovery looks slow, with a higher jobless rate the new normal.
IPad rearranges world to fit its screen 1 Apr 2010 Apple s new electronic tablet doesn't hit the shelves until Saturday. It s not even clear if consumers will adopt it en masse. Yet venture capitalists, entertainment companies and rivals are already scrambling to adapt. This suggests Apple's already half way to a hit.
Crisis forgotten in bond-buying frenzy 1 Apr 2010 That's good for companies which want to borrow. Spreads are narrow and yields are low. But as memories of 2009 fade, investors are playing a dangerous game. Rates can only go up from here. Two fewer words from the Fed could trigger the change, as early as the end of April.
JPMorgan’s crisis lead appears to have vanished 1 Apr 2010 Deal data suggest the bank s rivals have reclaimed business lost in the downturn. It s only one quarter, but JPMorgan has less Q1 market share than it did in 2007 for work in M&A, equity and debt. Clients prefer choice and Jamie Dimon s fortress balance sheet now has competition.
Ineos proposes cheeky but sensible debt U-turn 1 Apr 2010 The highly indebted UK chemicals firm wants to sell bonds. That would reduce pressure on liquidity, but lenders first have to waive some tough terms agreed in last year's restructuring. It would be a galling reversal, but a compromise will probably leave lenders better off.
EasyJet could conceivably lose its brand 1 Apr 2010 A simmering twoyear dispute between easyGroup and easyJet over the limits to the orange airline's use of the brand is slated for a court hearing on June 8. The eventual outcome could be a loss of the name and an expensive rebrand for those garish aeroplanes flying over Europe.
Yuan negotiations should be multilateral 1 Apr 2010 Americans complain the loudest about China's fixed currency. But the EU also runs a big trade deficit with China, and rival lowcost producers are squeezed. Widening the debate could depoliticise it but might also weaken the U.S. case. Not everyone hates the status quo.
Moral hazard trade pays off big for hedgies 1 Apr 2010 The top 25 hedge fund managers fattened their wallets by a record $25 bln in 2009. Many of them, including David Tepper and John Paulson, bet on banking and credit recoveries that depended on government intervention. At least they're in the same boat as their investors.