FDIC’s cautious optimism at odds with the market 31 Aug 2010 Bank investors digested the Q2 positives the regulator is just pointing out weeks ago. Now revenue shortfalls and chances of a double dip worry them enough to drive many bank stocks below book value. The FDIC s report is a handy historical snapshot, but may already be outdated.
Barclays faces crucial judgement call on structure 31 Aug 2010 The UK bank's universal structure allows it to tap cheap funding. If new regulations remove this advantage, spinning off Barclays Capital could help reduce its stock market discount. But jumping the gun without knowing the full scale of the crackdown could do more harm than good.
Decent Canadian recovery outshines sluggish U.S. 31 Aug 2010 The annualized Q2 growth rate of 2.0 pct north of the border didn t much beat the U.S. pace, but final demand growth at 3.2 pct was much stronger. That s an indication that Canada s economy, though weighed down partly by its neighbor s weakness, is recovering more robustly.
FSA pay boost is evidence of necessary upgrade 31 Aug 2010 The number of UK watchdog staff paid more than 100,000 pounds a year has trebled from precrisis levels. The FSA is finally competing for talent with City firms. If the new highflyers detect more crime and prevent future crises, the extra costs will be more than justified.
Potash bull case rests on doubtful economics 31 Aug 2010 The more China eats, the more fertiliser it needs, say bulls. Presto, higher prices for producers. Yet Beijing can reap productivity gains that don't use more potash. Moreover, food selfsufficiency is a choice which China may one day decide it is better off without.
Credit Suisse UK bonus u-turn is hard to justify 31 Aug 2010 The UK bonus tax prompted the Swiss bank to cut pay for top London staff by 30 pct last year. Now some are getting a special bonus. Credit Suisse has talked up its responsible culture. But whatever the origin of the plan, the impression is that it's avoiding the tax in spirit.
Icahn may now present Lions Gate with best picture 31 Aug 2010 The sweetened $1 bln bid for the film studio from activist Carl Icahn could at last signal a denouement for this epic tale. Lions Gate is riding high with the success of The Expendables and Mad Men. Given Hollywood s lumpy fortunes, this could be as good as it gets.
Japan’s fate hangs on US 31 Aug 2010 Tokyo's latest mini fiscal stimulus and the central bank's supply of yet more cheap loans has impressed nobody. The too strong yen keeps rallying. Currency intervention may be the next move. But even that will achieve little. Japan desperately needs a stronger US recovery.
Ideas would help Burkle’s Barnes & Noble crusade 31 Aug 2010 Activist investor Ron Burkle has shaken up the U.S. bookseller and may merit board representation. But absent a strategy for the company, he doesn t deserve three seats. Trouble is, splitting the votes doesn t look easy. Shareholders should leave him screaming from the sidelines.
Ghost of Ken Lewis haunts Bank of America shares 31 Aug 2010 The former CEO s expansionism saddled the bank with bad mortgages, an anemic top line and slow reserve releases. The new regime s regulatory reform cost estimates spooked investors, too. But BofA s dismal stock performance looks overdone.
Takeover toolkit lacks pills but not poison 30 Aug 2010 North American firms have cut back on standardissue takeover defenses like rights plans and staggered boards. That ostensibly leaves more of them vulnerable in a depressed market. But Barnes & Noble, Casey's and Lionsgate show there are still ways to fend off predators.
Sanofi, Genzyme play chicken over price 30 Aug 2010 The U.S. biotech wants a bigger offer before talking. The French pharma group, meanwhile, has gone public with its lowball $69ashare offer, hoping to pressure its target into talks that might yield a higher price. But Sanofi's threat of a hostile bid looks hollow for now.
Infineon deal sticks closer to Intel’s knitting 30 Aug 2010 The $1.4 bln purchase of Infineon's mobile unit is a far cry from Intel's expensive gamble on security software maker McAfee. The business hews closely to Intel's core competencies in semiconductors, and gives the company a better shot at catching up to rivals in mobile devices.
HP tries big buyback to quell investor discontent 30 Aug 2010 Like many tech companies, HP is sitting on a large cash pile. The company's bidding war for 3PAR raises fears this hoard could be squandered. Promising to repurchase $10 bln of stock soothes shareholders. An ounce of prevention refraining from such battles would be better.
Strong yen is not Japan’s main problem 30 Aug 2010 The BOJ's latest moves failed to weaken the currency. In any case, the tradeweighted yen is weaker than its real 19902010 average and Japanese exports are still rising. Export lobbies may have the government's ear, but intervention could make Japan's domestic predicament worse.
3PAR battle is case of undisciplined cash vs. cash 27 Aug 2010 Bidding for the storage firm reached a silly $2 bln with HP s third riposte to Dell. At triple 3PAR s undisturbed value, only a creative financier with a spreadsheet and a bong could justify the figures. Cash is burning holes quickly in the pockets of these wayward tech giants.
Bernanke fights phantom problem, ignores real one 27 Aug 2010 The Fed boss said on Friday he would act against deflation but he ignored the federal deficit. Even Japan has not had significant longterm deflation, while the U.S. deficit is at record levels. Bernanke s faulty diagnosis and treatment are unlikely to produce faster growth.
Even the good part of Fannie and Freddie is bad 27 Aug 2010 A federal report on the U.S. mortgage giants shows it was guarantees, not portfolios of home loans and securities, which caused the bulk of $226 bln of losses to date. Yet guarantees in some form are a sacred cow in the American mortgage debate. Slaughter shouldn t be ruled out.
Canada takeover laws make Potash easier to snare 27 Aug 2010 The country's weak protections for minority shareholders and limits on poison pill defences make hostile bids easier than in the U.S. BHP will need to raise its offer to win Potash Corp. But, the miner's bigger challenge may be persuading its investors to support such a move.
Sanofi can’t risk hostile Genzyme bid 27 Aug 2010 The French pharma group is understandably cautious in its approach to Genzyme. It needs access the books to get a full understanding of industrial problems that have plagued the U.S. biotech. Only with that cooperation could Sanofi improve its $18 bln offer within limits.
Santander could beat BBVA to the American dream 27 Aug 2010 Spain's rival banking giants have both made the United States their next frontier, yet are following radically different strategies. While it's too soon to be sure who will come out on top, Santander's strategy looks more convincing.
South Africa has work cut out to reach BRIC goal 26 Aug 2010 President Jacob Zuma wants South Africa to leap from the emerging CIVETS grouping into the club representing the biggest fastgrowing economies. That would bring a deluge of foreign investment. But Zuma has plenty to prove including that he can avoid the BRICs worst failings.
BHP bid should sail through Canada’s regulators 26 Aug 2010 Foreign buyers must prove a deal will be a net benefit to the country. The Australian miner's pursuit of Potash Corp should easily pass that test. And national security isn't an issue. Canadians might not like losing another top company. But there's no reason to prevent it.
M&A buyers get little benefit of the doubt 26 Aug 2010 Despite expectations that high cash balances will lead to deals, companies announcing them of late including BHP, Intel and HP have taken a beating. Though some of the reactions look excessively negative, they reflect a mood in which cash, caution, and skepticism dominate.
China’s big banks may defy catastrophe mongers 26 Aug 2010 Strong quarterly results suggest the risk of a homemade financial crisis may be overstated. Even if state borrowers get into trouble or property prices tumble, big lenders are unlikely to collapse. But a global doubledip and chronic capital misallocation may still inflict pain.
Bernanke’s message: we can get out of this hole 26 Aug 2010 The Fed chairman is to address the policymakers powwow at Jackson Hole amid heightened fears for the U.S. economy. Bernanke can plausibly argue that economic recovery is just about intact. But he will almost certainly remind us of the Fed s moneyprinting remedies if it isn t.
Obama dumping rules part of good cop routine 26 Aug 2010 The White House s tighter dumping rules look like an economic owngoal, robbing shoppers of lower prices while irking China. But Obama is seeking to head off still more damaging moves from Congress. Behind the rhetoric, his policies look slightly more tradefriendly.
Diageo offers bond-like solidity in volatile world 26 Aug 2010 Its products may be exciting, but the spirits group makes a virtue of being dull. Sales and earnings rise slowly, as the world becomes affluent enough to drink Johnnie Walker whisky instead of hooch. Strong cash flow and rising dividends add up to a lowrisk equity investment.
Potash CEO’s big payday won’t decide the deal 25 Aug 2010 A $500 mln check would normally sway the minds of most mortals. But Potash CEO Bill Doyle has sat on larger sums before and held tight. With his golden parachute just 6 pct of the payoff, he has no obvious incentive to shortchange shareholders with a quick flip of the firm.
SEC’s speedy Potash Corp charges put FSA to shame 25 Aug 2010 Barely a week after BHP launched its $39 bln bid for the Canadian mining group, the U.S. watchdog has charged two Spaniards with insider dealing. The speedy international swoop makes the UK Financial Services Authority's muchhyped crackdown on whitecollar crime look vegetative.