Irish should fear not IMF but ghost of boom past 22 Nov 2010 The Irish see a bailout as rescue for the banks and pain for themselves. But the EU and IMF teams are unlikely to demand faster adjustment than the government already planned. It's the ghost of boom past that will make for Irish pain. Austerity will persist for years.
Ireland faces hard choice on senior debt haircuts 22 Nov 2010 With the EU's help, the Irish government will soon pump more capital into its banks. Applying a stiff haircut to the senior debt of its three largest banks, and a sharper one on subordinated debt, would cut the cost. But meddling with senior creditors is difficult and risky
The world is wasting a good crisis 22 Nov 2010 Bailouts, such as the one being negotiated for Ireland, may be needed to prevent chaos. But the conditions must be tough otherwise the world won't learn the lessons from the crisis, and justice won't be seen to be done. Most bailouts since 2008 have been too soft.
World needn’t fear U.S. commitment to Basel III 22 Nov 2010 Sure, regulators shrank from the last set of bank rules. And a report that U.S. firms have a $150 bln capital hole may stoke concerns. But banks have years to plug it. And the Fed is already using Basel III to judge balance sheet health. This time around, the U.S. looks on board.
CVRs a long shot for Sanofi-Genzyme deal 22 Nov 2010 The two companies can t agree on a price, so the idea of a future payout based on the eventual success of a key drug sounds appealing. But contingent value rights are best suited to outcomes with a neutral referee, like a drug regulator. Otherwise, they are too easily gamed.
Replacing Summers proving a challenge for Obama 19 Nov 2010 The White House knows the ideal replacement for Larry Summers would be a female CEO who could reach out to Republicans and business without irking liberals. Buzz about Evercore founder and banker Roger Altman joining shows landing that dream candidate may be mission impossible.
Miners still need to plant their flags in London 19 Nov 2010 Resources companies are eyeing the east for listings, where demand for their goods resides. Larger firms like Glencore may put feet in more than one camp, yet on the three things that count liquidity, information and corporate governance London is still far ahead.
Greek banks’ recovery falls victim to contagion 19 Nov 2010 The swelling of the euro zone crisis has shut Greek banks out of the capital markets again, just as they were making a tentative return. So long as investors fear Greece may renege on its obligations, its banks will struggle to achieve rehabilitation.
Motorola split should finally unlock value 19 Nov 2010 The mobile tech group promised in early 2008 to break itself up under pressure from activists. It will finally happen in January. That sounds like plenty of time for investors to ferret out hidden treasure. Yet there s still a gap between Motorola s current and potential worth.
Irish central bank runs risks with own capital 19 Nov 2010 The Irish central bank has increased emergency funding to the nation's struggling banks. It has lent them up to 35 billion euros. This is risky given that the central bank has only 1.5 billion euros of reserves. No wonder the governor seems keen on an EU/IMF bailout.
Fed misses a transparency trick with stress tests 18 Nov 2010 Putting the 19 most significant US financial firms on the treadmill again is a welcome move. But keeping the test s criteria and results private is a mistake. Full disclosure last time helped rebuild confidence and for banks it s a small price to pay for being too big to fail.
Comcast left standing alone by Cablevision spinoff 18 Nov 2010 Even the Dolans, U.S. cable s most idiosyncratic operators, are now separating content from distribution. That makes Comcast s move in the other direction, buying NBC, stand out even more. Though it struck a good deal, it will have to execute impeccably to satisfy investors.
Job well done by GM bankers – over to management 18 Nov 2010 After an overambitious start, the IPO settled at a sensible size, met strong demand, got upsized and uppriced, and finally on its Thursday morning debut popped higher by a defensibly modest 7 pct. So far so good for GM s market rebirth; now the future is about the business.
EU shouldn’t cut nose to spite face with Irish tax 18 Nov 2010 Forcing Ireland to increase its 12.5 pct corporation tax rate as a condition for a bailout wouldn't just hurt the emerald isle. It would hurt the rest of the EU. Germany and France may grumble but with the UK's support, Ireland is likely to keep its flagship tax policy intact.
Muni market concerns look overblown 18 Nov 2010 Sharp declines in the U.S. municipal bond market the playground for taxsensitive wealthy investors were stomach churning. Yields soared this week and issuers pulled deals. The fire feeding the turmoil, however, doesn t look like it has much more fuel.
Gold/platinum ratio indicates investors’ gloom 18 Nov 2010 The yellow metal is seen as a haven against financial turmoil. Platinum demand rests on industrial production. Both have risen strongly in price in the last two years, for different reasons. But the ratio between the two suggests goldhoarding bears currently have the upper hand.
Kayak floats, or sinks, behind U.S. antitrust boat 18 Nov 2010 The $50 mln IPO of the fastgrowing travel website looks promising. There s one big hitch Google s purchase of ITA Software means the giant wants to dominate online travel search. A bet on Kayak is a wager that Uncle Sam will halt Google s acquisition which isn t far fetched.
Walter’s $3.2 bln deal stokes coal industry 18 Nov 2010 The once sleepy fuel source has woken up to a new surge of activity. Walter s bid for Western Coal, at a 56 pct premium, lifts the sector s global deal tally this week to $15 bln. Clean balance sheets and an Asian shine will keep this dirty little corner of the energy market hot.
Rattner case flaunts lawmen’s timing again 18 Nov 2010 The former car czar is being sued by New York's sheriff in a kickback scandal on the very day that GM has gone public. It evokes the SEC's pursuit of Goldman as financial reform hung in the balance. Watchdogs may not always have the strongest bite but give them credit for bark.
QE trade faces disorderly unwind 18 Nov 2010 Backwardlooking number crunching makes bets on equities and commodities underpinned by quantitative easing look like a sure thing. But if a sudden confounding of statistics forces a rush for the exit, the unwinding of leveraged positions could make for a messy outcome from QE2.
Caesars needs to price IPO so house doesn’t win 18 Nov 2010 GM whetted IPO appetites but not necessarily for the Harrah s casino operator. The group owned by TPG and Apollo is heavily indebted, pulled back too much on capex and has limited Asian prospects. To get a deal done, the casino will need to sell at a major discount to rivals.
Murdoch’s threat to UK looks desperate 18 Nov 2010 It is hard to see how News Corp could significantly move investment abroad if the government blocks the media conglomerate's bid to buy the 61 pct of BSkyB it doesn't already own. James Murdoch's tactics suggest that News Corp is worried.
Greece budgets for even tougher austerity 18 Nov 2010 The Greek budget is for those with strong nerves. Having formally missed this year's targets, the government plans deep adjustment in 2011 amid a 3 percent further fall in GDP. Debt at 153 percent of GDP by the end of 2011 will keep the spectre of restructuring present.
Irish bank rescue could cost over 100 bln euros 17 Nov 2010 That's the rough amount needed to fund the country's largest lenders for three years, while boosting capital ratios to 15 pct. But the EU may not have to hand over that much actual cash. If banks were able to issue debt backed by a European guarantee, confidence could return.
Republicans grudgingly refuse pork with their tea 17 Nov 2010 The U.S. Senate GOP leader s backing for a ban on earmarked funding for pet local projects is a win for the Tea Party faction. But it s also good news for fiscal hawks of all political stripes. Earmarks may only cost some $17 bln a year, but they invite undisciplined spending.
U.S. CPI is subpar compass for navigating economy 17 Nov 2010 The third successive flat month for core inflation seems to justify further monetary stimulus. But it includes some odd adjustments for housing and technology. It s also contradicted by rising import and producer prices. Wise policymakers will consider the full range of signals.
Investors live dangerously with EU periphery debt 17 Nov 2010 Greece's postbailout experience suggests there may now be money to be made buying Irish and Portuguese government bonds. Markets may have exaggerated the gloom. But shortterm trading opportunities cannot mask peripheral EU countries' deepseated debt problems.
A single-focus Fed could still backstop economy 17 Nov 2010 Republicans might one day succeed in stripping the central bank of its duty to promote employment, forcing it to focus exclusively on price stability. Democrats and the Fed would protest. But even a narrower mandate wouldn't prevent it from acting in a financial crisis.
Market right to remain sceptical of UBS targets 17 Nov 2010 The Swiss bank needs to increase revenue by almost a third from this year's run rate to meet its ambitious pretax profit goals. Without a sustained market rebound, many of the targets still look overoptimistic. But if UBS gets close, its shares will begin to look very cheap.
GM IPO boosts first giveth, then taketh – sort of 17 Nov 2010 Upping the sale price and size provides evidence of a process managed carefully to be successful. The price increase reduces the US government's loss and the breakeven target for its remaining stake. But selling a third more stock offsets the benefits, making it close to a wash.