House price plunge may add to UK policy jitters 7 Oct 2010 The 3.6 pct monthly fall in the Halifax house price index looks worse than it is, after rises in recent months. But house prices are likely to slide, and the shocking number may make the government nervous about cuts. Even so, the coalition mustn't be diverted from tough action.
Euro will stay high as Trichet longs for exit 7 Oct 2010 The ECB president can't bear countries with huge fiscal deficits and doesn't like giving banks all the cash they want. He longs to return to a normal, precrisis world while the US and UK edge to the printing press. The euro may go higher, harming the zone's recovery prospects.
Credit boom’s biggest casualty: U.S. lifestyles 7 Oct 2010 For a decade the American middle class made up for stagnant incomes by going ever deeper into hock. With debt still at 123 pct of disposable income, and no housing wealth to tap, a bout of inflation is one of the few alternatives to a decade of austerity.
Missing the chance for UK pension reform 7 Oct 2010 John Hutton's report on Britain's public sector pensions sums up the problem: employees must work longer, pay more and accept lower rewards. The gravy train for highflyers is also clearly unfair. Yet his interim suggestions are feeble, and miss the point. There is a better way.
iPad’s destructive reach extends further faster 7 Oct 2010 Apple s tablet is taking off at a breakneck rate. Analysts now predict up to 40 mln will be sold in 2011. With income and spending stagnant, it s looking like a zerosum game in consumer electronics. Forget PCs and netbooks. The iPad will eat into camera and GPS device sales too.
China must budge to avert currency war for real 6 Oct 2010 There isn't yet a multicountry currency conflict; China is the world's single big currency manipulator. But trade and exchangerate wars will start if China doesn't cooperate soon. The world should be satisfied if China gives ground gradually.
Ukraine has a lot to lose from Arcelor dispute 6 Oct 2010 The steel giant's $5 billion investment in the country's largest steel plant is under threat. ArcelorMittal is accused of reneging on social commitments made during privatisation. The outcome of the case will show whether Ukraine can shake off its terrible business reputation.
GE shareholders get a little too deal-happy again 6 Oct 2010 They seem overjoyed to see the conglomerate back in shopping mode. Given the low returns on investment on offer from Dresser or Wellstream that s curious. For a company that has incinerated value equal to Apple s market cap, undisciplined M&A would be a bad sign.
Apple to score more than Verizon in iPhone deal 6 Oct 2010 The U.S. carrier finally looks like it will get to sell a new version of the hot handset early next year. While Verizon will snatch dissatisfied customers from rival AT&T, it may find good returns harder to find. Apple, on the other hand, won t face this problem.
Obama deeds may calm business even if words don’t 6 Oct 2010 The White House is still rhetorically clumsy when talking to Corporate America. But it s growing more nimble on policy, hinting that corporate tax cuts may be on offer. President Obama is also asking tech CEOs for ideas to cut waste. Now he just needs to hire one of them.
Liverpool FC board shows mettle in Red Sox deal 6 Oct 2010 In April, the soccer club's owners agreed to accept reasonable bids. Yet they are fighting a fair approach from the backers of the U.S baseball team. The offer clears LFC's debt but values the equity at nil, so they may as well resist. But the board must keep pursuing the deal.
Cameron’s wobble is bad omen for UK spending cuts 6 Oct 2010 Slashing child benefit for the better off produced a predictable outcry. To soften the blow, Britain's prime minister has resurrected the idea of a token tax break for married couples. But with the real pain of reductions in state spending still to come, his response looks weak.
Prada and China could make for an odd ensemble 6 Oct 2010 A Hong Kong IPO for the fashion label would add a new twist to a vintage theme. China may soon be the biggest luxury market, and investors are used to powerful foundershareholders. A price tag of $6.5 bln may be within reach if Prada's founders can cope with public scrutiny.
Three reasons U.S. homeowners shouldn’t lose hope 6 Oct 2010 Folks already depressed by the shrunken value of their biggest asset should skip the IMF s missive on the risk of a double dip in property prices. The fund s grim outlook is hard to dispute. But three historic measures now suggest that homeowners can put down the revolver.
Rio leaks speak an inconvenient truth 6 Oct 2010 It is widely accepted that Rio and BHP's plan to combine their Australian assets is unlikely to take off. But comments from the board to that effect before it actually happens are embarrassing, not least because Rio has reason to maintain the fiasco for a little bit longer.
Mexico makes most of funding sweet spot 6 Oct 2010 Investors rushed in for a rare 100year bond like kids to a busted piñata. The appetite reflects enthusiasm for emerging markets, Mexico s economic turnaround and the 6.1 pct yield. But domestic risks and past crises still hang in the air. Mexico s strike looks wisely timed.
Europe and U.S. must pull together on bank reform 6 Oct 2010 A new report highlights the danger of divergence if the two shores of the Atlantic move in different directions. Hugo Dixon, one of the authors, spells out the risks of goitalone approaches on toobigtofail banks, accounting, taxes and the finer points of Basel III.
AIB can afford to shrug off loss of M&T deal 6 Oct 2010 The Irish bank is selling its 22 pct stake in the U.S. lender in the market after a deal with Santander fell through. A sale to the Spanish bank could have raised a bit more cash. But judged against AIB s 5.4 bln euro governmentbacked fundraising, the difference is minimal.
Basel-inspired inflation could hobble bank returns 5 Oct 2010 Higher capital cushions and lower leverage are already squeezing returns on equity. Now regulators are changing the way lenders calculate riskweighted assets, forcing balance sheets to expand. Though banks can scale back their exposures, dividends and buybacks may still suffer.
Univision owners script a telenovela-worthy twist 5 Oct 2010 Buyout firms larded on debt to acquire the U.S. Spanishlanguage broadcaster in 2006 for $13.7 bln, fending off rival suitor Televisa. The Mexican group is avenging its loss by buying in at a 40 pct discount. For current owners, the upside is a better chance at a happy ending.
Pandora shows PE-backed IPOs needn’t be charmless 5 Oct 2010 Shares in the Danish jewellery maker were priced at the top end of the range and rose 15 pct on their debut, despite its private equity owner making a partial exit. Pandora is unleveraged and demand for its distinctive bracelets is brisk. Others can learn from its success.
Latvia is example of how austerity can work 5 Oct 2010 After draconian cuts designed to head off devaluation of the lat, GDP fell 18 pct in 2009. Now Latvia s economy is turning up and the currency s parity with the euro seems assured. The government responsible even got reelected. Keynesian stimulus isn t the only answer to a bust.
Bank of Japan starts to get it 5 Oct 2010 Launching QE and cutting interest rates close to zero won't do much to address the overvalued yen because the U.S. Federal Reserve is likely to engage in an even bigger bout of QE. But the BoJ's action is still a positive step to tackle deflation by the conservative institution.
Sirius investors should heed the Pandora challenge 5 Oct 2010 The top dog of music streaming websites may challenge satellite radio s monopoly. Why pay a monthly subscription when it s free, and more tailored, on a smartphone? Sirius has a big content edge that looks hard to beat. But it may eventually need to consider a defensive deal.
VTB must justify high price for railway bank deal 5 Oct 2010 Russia's secondlargest lender intends to buy TransCreditBank, which is being spun off by Russian Railways. Although the deal has pluses, the valuation of up to 2.2 times Tier 1 capital looks demanding. VTB's independent shareholders should question whether the price is merited.
U.S. bank tax might yet rise from the dead 5 Oct 2010 It's hard to find a pulse on the planned levy to cover bailout losses yet bankers still fear a revival. They know Congress, eager to pay for expiring tax cuts, hears the $90 bln calling. And even if banks dodge that bullet, Fannie and Freddie solutions await in the wings.
Roman Abramovich’s Irish assault could backfire 5 Oct 2010 The Russian billionaire has accused Ireland of deception over plans to force haircuts on guaranteed junior Irish bank debt. His intimidation of an impoverished Ireland will infuriate taxpayers. That may yet sway a future government to walk away completely from the weakest banks.
Vimpelcom faces heavy weather with Orascom 5 Oct 2010 The Russian mobile operator is paying up for Weather, the holding company of Egyptian tycoon Naguib Sawiris. The $6.6 billion price tag looks inflated given the high debt of Italian operator Wind and the risks weighing on Algerian business Djezzy. Investors are right to worry.
GM should bag some core shareholders pronto 5 Oct 2010 Persuading strategic partners and sovereign funds to buy a stake in the carmaker ahead of its IPO may bolster confidence ahead of its stock market return especially after it halved the deal. But regular investors will need more encouragement to follow suit.
Kazakhmys stake shuffle could hurt minorities 5 Oct 2010 The Kazakh state has seminationalised the Londonlisted miner by purchasing an 11 pct stake from chairman Vladimir Kim. It's good the $1.3 bln stake wasn't just dumped on the market. But with the government holding a 26 pct stake, politics could prevail over shareholder value.