Kirchner’s death won’t change much for Argentina 27 Oct 2010 True, the former president designed the statist policies pursued by the country since 2003. But high commodity prices have allowed the economy to prosper despite assaults on property rights and the private sector. Voters may yet again reward bad policy in 2011's election.
ACS bid unlikely to fall flat down under 27 Oct 2010 Aussie builder Leighton is lobbying a local regulator to preserve its independence in the event the Spanish construction group succeeds in its bid to acquire its German parent, Hochtief. Even if Leighton gets it way, it wouldn't be much of a poison pill.
U.S. elections exacerbate tough China relations 27 Oct 2010 The most popular villain in U.S. midterm campaign ads might not be banks or bailouts, but rather Beijing. Both Republicans and Democrats are working hard to exploit voter economic angst by tying opponents to China. The smear effort bodes poorly for curbing trade tensions in 2011.
UBS’s i-banking loss mars private bank inflows 26 Oct 2010 The Swiss bank suffered in the third quarter as European investors went on strike. Fixed income and equity trading revenue tumbled. Despite cost cutting, the investment bank made a loss. The only consolation is that UBS's wealth management arm is no longer losing client funds.
Turncoat directors play risky game with Airgas 26 Oct 2010 Board members installed at Airgas by Air Products sided with incumbents to reject a $5.5 bln offer. A similar proxy battle reversal helped takeover target Terra. A rival suitor would help, of course. But good corporate governance also may yet pay off for Airgas holders.
Mervyn King critique spells trouble for big banks 26 Oct 2010 The Bank of England governor has backed away from his singleminded idea of separating retail and investment banking arms. But he is still rightly determined to remove the taxpayer safety net from private institutions. UK banks hoping to defend the status quo face a tough fight.
Six months to showtime for Buffett’s apprentice 26 Oct 2010 Todd Combs, the fund manager tapped by the Sage of Omaha to take charge of some investments, arrives at Berkshire Hathaway barely known. Some 40,000 shareholders may expect that to change for April s AGM. By then, Combs will need to master more than just financial performance.
UK GDP surprise won’t remove risk of double-dip 26 Oct 2010 Britain s economy grew by a fasterthanexpected 0.8 percent in Q3, with much help from construction and higher state spending. But looming government cuts are likely to squeeze growth, as UK consumers tighten their belts, unemployment rises and house prices fall.
AIG needs to redouble efforts to keep momentum 26 Oct 2010 The insurer s hardcharging CEO, Robert Benmosche, has a new fight on his hands, against cancer. The news coincides with a report of Treasury s bungled expectations on taxpayer losses. AIG s decent run of late could be undermined if it doesn t respond well to these new hurdles.
Ford gives only a little fuel to GM’s IPO 26 Oct 2010 Another strong showing from the Michigan automaker offers more proof the industry is back on track. That s good news for GM s upcoming stock offer. But Ford is powering ahead on performance its rival has yet to match. Without it, GM s valuation warrants a commensurate discount.
Why are both ASX and SGX shares falling? 26 Oct 2010 The mega Asian stock market deal is getting the thumbsdown for two reasons. ASX is falling because investors fear regulators may kibosh the takeover, removing their premium. Meanwhile, SGX is down because investors don't like the deal but still think it might happen.
California’s weed revenue may go up in smoke 26 Oct 2010 The state reckons a ballot measure allowing local authorities to decriminalize marijuana sales could harvest more than $1 bln. Stoners and bondholders are stoked on the idea. But even if it passes, cloudy language and feds' opposition make the plan, as designed, look halfbaked.
Russians back with pricey IPOs 26 Oct 2010 Russian companies are again lining up to list abroad. Offerings in progress in London include hypermarket O'Key and internet holding company Mail.ru. But with many IPOs to choose from, investors' scepticism towards Russian ones won't be easily overcome.
King Content, Queen Cable perilously stir subjects 26 Oct 2010 Rupert Murdoch s carriage battle with Cablevision represents only the latest fee feud between program providers and distributors. But the stakes are higher now because so much is accessible online. Each spat just gives viewers another reason to pull the plug, hurting both sides.
Pragmatism wins over ideals in UK’s Swiss tax deal 26 Oct 2010 By binning calls for Switzerland to abandon bank secrecy, Britain has made global progress on tax evasion harder. The withholding tax it will secure in return might also not be huge. But with a big deficit to cut, pragmatism and cash is unsurprisingly displacing principles.
Obama’s deficit panel can afford to think big 25 Oct 2010 The group is eyeing $1 trillion in tax breaks as a way to slash the budget. Slaughtering sacred cows like the mortgage interest deduction may seem an impossible task. But America s 1986 system overhaul shows it can happen if tax rates are also lowered to lessen the sting.
Ferrovial reshuffle signals end of BAA nightmare 25 Oct 2010 Giving up majority ownership of the indebted UK airport group will remove 15 bln euros of debt from the Spanish group's balance sheet. Though cosmetic, the move confirms that the illfated deal is no longer a drag on Ferrovial. Indeed, the BAA stake may actually have some value.
Asian exchange tie-up makes sense but at bad price 25 Oct 2010 Singapore Exchange agreed to buy Sydneybased ASX for $8.3 billion. Combining the two has some strategic logic. Asia lacks a big nonChinese trading platform. Both countries face increasing pressure from outside. But the 37 percent premium Singapore is paying looks excessive.
Negative-yield TIPS do more harm than good 25 Oct 2010 Demand was strong for Treasury s $10 bln of fiveyear inflationprotected securities yielding negative 0.55 percent. This may help manage the Fed s inflation expectations, but will also invite investors to take risks to offset the negative return. Expect more bubbles as a result.
Is Carlyle dialing up more telecom losses? 25 Oct 2010 The private equity firm s investments in Hawaiian Telcom and Japan s Willcom were disasters. Now it s bidding $3 bln for CommScope. This time the target's ability to handle debt, combined with bright prospects for its cellphone tower equipment business, makes it a better bet.
Letter from the Editor 25 Oct 2010 Hugo Dixon explains the background to the retroactive disclaimers made to a series of articles last week to clarify potential conflicts of interest.
GOP poised to gain tax, bank clout in U.S. vote 25 Oct 2010 Republicans will probably retake the House from Democrats and gain Senate seats. Whatever the exact electoral results, the GOP is set for a major upgrade in political sway. Breakingviews offers a primer on how the shifting balance of power may influence key financial issues.
BP offers symbolism but jury still out on safety 25 Oct 2010 New CEO Dudley is trying to rebuild BP s blunderprone image. But reforming the cornercutting culture that produced the Gulf spill and other fiascos is a tall order. A new safety division is a sensible start, but the plan is so far bigger on symbolism than substance.
Popolare puts spotlight on Italy’s big banks 25 Oct 2010 Italy's seventh largest bank is raising 2 bln euros over two thirds of its market cap to repay government funds and boost capital. Italy's big two UniCredit and Intesa shunned state money. But with less capital than peers, their shareholders also have cause for concern.
BankUnited IPO shouldn’t embarrass Sheila Bair 25 Oct 2010 Private equity fat cats Carlyle, Blackstone and Wilbur Ross will get fatter when the bank they bought from the FDIC for a song goes public in coming months. But the deal arguably piqued investor interest in a way that helped reduce overall taxpayer losses from bank failures.
No reason to salivate over Russian privatisations 25 Oct 2010 A plan to sell some $60billionworth of state asset looks impressive, but excitement may be running ahead of the likely benefits. The state will continue to control large companies, and markets' appetite is far from certain. Investors should wait for details before they dip in.
China’s new powers should persuade it to reform 25 Oct 2010 China will become the thirdlargest power at the International Monetary Fund after reforms greenlighted by the G20. The belated shift reflects its growing economic might. Yet great power comes with responsibilities. Beijing must move faster to help correct global imbalances.
Goldman transformation begins with 50-year bond 25 Oct 2010 Grabbing cheap money makes sense. But the longdated debt would also help address maturity match flaws exposed in the crisis. And targeting individual investors shows Goldman sees a need to woo Main Street. Most of all, it sends a signal the firm is now looking ahead way ahead.
Arnault plants flags on Hermès bags 25 Oct 2010 LVMH, the French maker of Vuitton bags and other luxury goods and drinks, has acquired a 14 percent stake in Hermès International, the exclusive familycontrolled group. LVMH owner Bernard Arnault says he doesn t want control. But he mostly doesn t want rivals to get near Hermès.
Ireland sets right pain level for bank bondholders 22 Oct 2010 The government is making an offer to buy out holders of Anglo Irish Bank sub debt but at just below the market value. A premium would have enraged taxpayers, but wiping investors out completely might have alarmed the market. The compromise is the best bondholders can hope for.