LSE shutdown highlights exchange vulnerability 3 Nov 2010 The London Stock Exchange suspects that foul play shut down its alternative trading venue for over an hour on Nov. 2. Though worrying, that is less embarrassing than a technical glitch. Even so, it's another reminder that traders cannot take market infrastructure for granted.
Bernanke’s bond spree raises more risk than reward 3 Nov 2010 The Fed s announcement of $600 bln of Treasuries purchases was well signaled, but the money is very likely to flow into commodity speculation and overheated emerging markets. Pointing a smaller money hose directly at small business would ve been more effective and less risky.
Wall Street could suffer some voters’ remorse 3 Nov 2010 U.S. midterm elections have delivered a measure of payback for banks miffed about financial reform and Obama s populist rhetoric. Their campaign dollars helped fund huge Republican gains. But the new Tea Partyinfused GOP will present as many new challenges as opportunities.
Obama shouldn’t escape blame for Democrat losses 3 Nov 2010 It wasn't just the economy, stupid. The bruising suffered on Tuesday by Democrats owes as much to the unpopular and offpoint Obama agenda as it does high unemployment. A policy pivot might have limited the damage, but the White House failed to see the trouble until too late.
Bonus rules risk tying banks’ hands on costs 3 Nov 2010 Higher base salaries and regulators demands to defer bonuses are making investment banks onceflexible costs more fixed. That will make it harder for them to quickly cut costs in a slowdown. Lower bonuses and increased hiring and firing seem an inevitable consequence.
Don’t look for bond bubble in Nigerian debt issue 3 Nov 2010 The most populous African nation s latest attempt at tapping global capital markets isn t necessarily a sign that investors have lost their sanity. As one of the continent s top oil producers, with relatively low debt and some stability, its $500 mln offer deserves a look.
Tea Party set to stir up U.S. fiscal pot 3 Nov 2010 The antiestablishment movement helped Republicans to big midterm gains. But now the newcomers have to turn passion into policy. It could be a rough start, even involving the threat of a government shutdown. But the Tea Partiers' aversion to spending may also bring some realism.
Lloyds’ new CEO ticks all the right boxes 3 Nov 2010 The British lender has picked Antonio HortaOsorio to replace Eric Daniels. The Portuguese banker did a good job expanding Santander's UK arm, and should enjoy the support of the authorities. But avoiding a breakup of Lloyds and returning it to private hands is still a challenge.
Botins keep it in the family with Santander UK job 3 Nov 2010 The Spanish bank's veteran chairman, Emilio, has appointed his daughter Ana Patricia as UK CEO. Filling the shoes of departing star Antonio HortaOsorio and overseeing the unit's IPO next year is a tough gig. But if Botin Jr delivers, she will be wellplaced to succeed her dad.
Germany’s meddling in Hochtief war would backfire 3 Nov 2010 Berlin says it does not want to interfere in ACS's hostile bid for Hochtief. But even offering discreet support for a white knight, including Qatar, would be a slippery slope. Furthermore, a reckless defence could backfire on the German construction group.
Midterm beating could help Obama shift to center 3 Nov 2010 Presidents usually win second terms, even if their parties suffer midterm blowouts. But Obama had better not rely on history for 2012. To lift his and the economy's fortunes after Tuesday's losses he needs to work with incoming Republicans to create jobs and cut spending.
Russia could pay high price for fiscal populism 3 Nov 2010 The World Bank wants Russia to rethink its loose fiscal policy. The current 3 percent budget deficit looks enviable, but rising spending will add to economic strains. It will boost inflation, lead to higher taxes and fuel corruption and worse if the oil price falls.
Heed Australia and brace for global acceleration 2 Nov 2010 World recession? Things looks different from the southern hemisphere. Australia's central bank has raised rates again because it sees abovetrend global growth, a stillstrong China and high commodity prices. Cheap western money looks about to push up global growth and inflation.
National Enquirer goes bust – gory details inside 2 Nov 2010 American Media, the parent company of the supermarket gossip rag, is now making titillating headlines of its own with a second debt restructuring in as many years. Scandal, sex and gambling aren't going out of style. It's just harder to get paid to rake muck.
Potash shareholders should just say no to BHP bid 2 Nov 2010 Not because Saskatchewan needs protecting, but rather because BHP s offer is too low relative to share rallies of rival fertilizer groups. Agrium s have surged a third since BHP s bid, while Mosaic s and CF s added more than 40 pct. On this basis alone, Potash is a $150 stock.
European truckmakers could clear M&A highway 2 Nov 2010 Good results have boosted Europe's truck manufacturers this year, while crossshareholdings and competition issues remain obstacles to M&A. Even so, the pressure for consolidation remains. Fiat's coming demerger looks like a catalyst for deals in Europe and perhaps globally.
Clearwire can’t easily escape trouble hot spot 2 Nov 2010 Craig McCaw achieved a milestone by launching 4G in New York this week. Still, the company is burning cash and its WiMax standard looks like an alsoran. Selling spectrum should help but its awkward characteristics could mar the auction. Clearwire s future remains fuzzy.
Lloyds investors right to shun blue-sky valuations 2 Nov 2010 The UK bank's Q3 update held few surprises, but its shares still fell 3 pct. The eventual return of higher interest rates should help support the price. But higher funding costs and regulatory threats mean investors should treat more optimistic scenarios with caution.
BP’s second kitchen-sinking can’t mask comeback 2 Nov 2010 The UK oil giant has upped the estimated cost of the Gulf of Mexico spill by $8 bln to $40 bln. But Q3 results show strong underlying profit and the divi could be restored early next year. It's not business as usual. Still, this is a helpful starting point for new CEO Bob Dudley.
Federal Reserve is late to its own QE party 2 Nov 2010 The central bank can t juice the economy without going through markets. But investors already have priced in some $500 billion of Fed debt buying for the second round of quantitative easing. Absent some shock and awe, the intended boost may be over before it officially begins.
BBVA’s Garanti swoop starts making more sense 2 Nov 2010 The Spanish bank has achieved its two objectives in taking a 24.9 pct stake in the Turkish lender: buying at a discount and gaining strategic influence. Moreover, the surplus funds from a related 5 bln euro rights issue provide extra flexibility to tackle domestic challenges.
Short memories finance private equity payouts 2 Nov 2010 Dividend recaps are on pace to exceed the volume of 2007. Dunkin' Brands and Getty Images mark the latest efforts by buyout firms to pay themselves ahead of a potential US tax change. But in their quest for Treasurytopping yield, investors seem to have forgotten recent lessons.
New York Times smartly joins refinancing fiesta 1 Nov 2010 The newspaper publisher will pay only 6.6 pct on the $225 million of debt sold Monday. A good chunk should help repay Carlos Slim Helu the Mexican billionaire who lent $250 million at 14 pct when no one else would. Still, the Times has already paid plenty for the favor.
Investors face trick-or-treat week 1 Nov 2010 Highflying markets are braced for an actionpacked few days. Investors expect a treat from the U.S. Federal Reserve and the Bank of England to slam its door. A U.S. election that shuts out Democrats may only add to the merriment. But any surprise tricks could prove dead scary.
Rousseff should follow Early Lula not Late Lula 1 Nov 2010 Brazil s new president promises to follow Lula s policies, but it s unclear which. Lula started out fiscally cautious, but fought poverty with the Bolsa Familia stipends. Later he flouted property rights while increasing spending. Rousseff seems worryingly keener on Late Lula.
Blocking BHP’s Potash bid could damage Canada 1 Nov 2010 The government will decide this week whether to allow the $39 bln deal. A BHP takeover may squeeze the tax that Potash Corp pays its home province. But those costs are outweighed by the discount that Canadian companies would suffer if the country was viewed as protectionist.
SGX’s Bocker must justify M&A ambitions 1 Nov 2010 The Singapore exchange chief once said Asia didn't need consolidation. No wonder shareholders don't like his offer for the Australian bourse. If he really thinks a tieup is compelling, Bocker may have to redraft the deal terms even if that leaves him with a smaller role.
Ireland needn’t raid pension cookie jar – yet 1 Nov 2010 Government advisers think the state pension pot should be forced to buy sovereign debt. The 18 billion euro fund could help Ireland finance its monster deficit, but the political cost could be great. Besides, the country isn't that desperate for money right now.
Obama deficit panel may surprise on tax reform 1 Nov 2010 The White House commission has a mandate to cut the U.S. budget gap. But the panel may surprise in another area: tax reform. Democrats and Republicans are focusing on a plan that would simplify the code and cut corporate taxes. Although not perfect, it would be a big improvement.
Shale gas bulls go all-in with $4.4 bln LBO offer 1 Nov 2010 EXCO Resources chairman Douglas Miller is no stranger to big energy bets, and neither are backers like T. Boone Pickens. The company sold off nearly all its conventional assets to concentrate on shale gas. Now its backers are taking it a step further by contemplating a buyout.