China must live with hot money – or revalue 7 Jan 2010 For all Beijing's gripes, an undervalued currency will inevitably attract speculative capital, even with capital controls. If policymakers won't revalue the yuan, the best they can do is close some loopholes to reduce the damage. But hot money will keep driving asset prices up.
Argentine fiscal soap opera will continue to run 7 Jan 2010 The central bank chief nobly resisting the government s plans to seize reserves is refusing to step down. He won t succeed in keeping President Fernández from raiding the bank s $48 bln cookie jar. But he ll be vindicated when Argentina enters another crisis as the funds run dry.
Dodd departure boosts Wall Street in Washington 6 Jan 2010 The likely retirement of the Connecticut senator would hand the Senate Banking Committee over to a friend of the financial industry in 2011. It would also reduce the chances of tough financial regulation reform this year. 2010 is starting well for the masters of the universe.
Fujii’s departure might be bad for bondholders 6 Jan 2010 Japan's finance minister was reckoned the budget hawk within the Hatoyama cabinet. Yet his 2010 budget still involved borrowing of 10 pct of GDP and debt rising above 220 pct of GDP. Another spending spree could push Japan's debt management over the edge.
Even successful VCs need to slim down 6 Jan 2010 Investors have suffered 10 years of poor performance in venture capital. Natural shrinkage should raise returns for the survivors. Yet NEA just raised another $2.5 bln fund. This may not be good for the industry or NEA s backers.
Corporates don’t deserve derivatives exemption 6 Jan 2010 European and U.S. companies don't want to be bound by new rules forcing derivatives onto clearing houses. A carveout would distort the market. Far better to tweak bank capital charges to encourage clearing houses while allowing bilateral trades for those who really need them.
Wall Streeters should beware ski blindness 6 Jan 2010 The $24 bln lawsuit Credit Suisse faces for funding nowbankrupt winter venues looks a stretch. But it offers a timely reminder to financiers heading off to the piste: being a fan of the slopes doesn't make you an expert at picking the next big ski resort investment.
Conditions finally ripe for mobile ad bonanza 6 Jan 2010 That's what recent deals by trendsetters Apple and Google appear to suggest. Thanks to the rising popularity of smart phones, mobile advertising could reach $13 billion in revenues by 2013. But it's less clear who the financial beneficiaries of this longanticipated boom will be.
UK vision for offshore wind farms is fantasy 6 Jan 2010 The imminent allocation of seabed to build vast wind farms will be spun as a new North Sea oil for Britain. But offshore windmills are horribly expensive to build and maintain, far from the customers, and only work when the wind blows not too hard.
UK leadership deficit threatens pound and gilts 6 Jan 2010 Gordon Brown may face a leadership contest. The main parties and the government itself are divided over the UK's huge deficit. Investors know the deficit won't be tackled until after this year's election but don't know who will address it. Sterling and UK debt are vulnerable.
DP World London listing could alleviate many woes 6 Jan 2010 The Dubai ports group is looking to take a UK quote that could see it join the FTSE100. A dual listing may address the poor liquidity of its domestic stock. Bluechip status should help the rating. For troubled parent Dubai World, which holds 80 percent, the benefits are clear.
Pack may follow Tiger cub’s lead 6 Jan 2010 Chris Shumway, formerly of Tiger Management, has sold a stake in his $8 bln hedge fund to a Goldman vehicle. Other alternative asset managers may follow. Valuations of strong firms have risen significantly. Those who have waited out the crisis now have a chance to sell.
Good Marks for M&S, but not good enough 6 Jan 2010 The UK retailer says it traded successfully over Christmas. That's hardly surprising given the reduced sales tax, low interest rates, helpful weather and the lack of public spending cuts. Other retailers did better, though. M&S's new chief executive faces a harsh baptism.
Kraft inches towards better Cadbury offer 5 Jan 2010 By selling its U.S. pizza business to Nestle for $3.7 bln, Kraft increases its firepower by only $1.3 bln. What's more, the offer hasn't been raised. Still, this could be a precursor to a more tempting bid.
Iceland’s treatment should not be too harsh 5 Jan 2010 The island's president has vetoed an unpopular bill to repay Britain and the Netherlands for bailing out depositors in a failed lender. The two countries may try to block Iceland's IMF bailout and derail EU entry. But undermining Iceland's recovery would be counterproductive.
RUSAL’s $36 bln price tag doesn’t reflect its quirks 5 Jan 2010 The Russian aluminium giant, set to list in Hong Kong, has low costs and sits close to a fastgrowing China. That would justify its premium rating if it weren't for a multiplicity of risks that have very little to do with mining. A lower price would be more appropriate.
Nestle shows itself a canny buyer and seller 5 Jan 2010 The world's largest food group is pocketing $28.1 billion by selling its stake in Alcon. Now Kraft's bid for Cadbury has given Nestle the chance to nab a dominant slice of the North American frozen pizza market. Nestle remains in a strong position to pick up other choice assets.
UK government must clarify Northern Rock guarantee 5 Jan 2010 Suitors are preparing to bid for the good half of the nationalised UK bank. But the government must first decide when to stop guaranteeing all the Rock's deposits. If it gets its timing wrong, savers might head for the exit again and scupper state efforts to get a good price.
China’s real estate may look more Japanese 5 Jan 2010 Recent curbs show Beijing has more power to cool down a property bubble than Japan did in the 1980s. But the difference may be overstated. True, leverage in China remains low. But falling savings rates, an ageing population and limited land supply mean familiar themes may appear.
Time Warner faces challenge for worst deal crown 5 Jan 2010 The exTW boss says his merger with AOL was the worst deal of the century. But what about France Telecom/Orange, Deutsche Telekom/Voicestream or Vivendi/Seagram other TMT deals that nearly bankrupted the buyers? And, outside TMT, what about ABN AMRO's carveup?
Apple’s iSlate overflows with expectations 5 Jan 2010 Investors are certainly expecting a lot from the company's new tablet gadget. They have slapped a iSlate premium of some $25 bln on the company. It's hard to doubt Steve Jobs, but there are some big assumptions underlying these hopes.
Summers’ liberal critics should pipe down 5 Jan 2010 The White House economic chief is the target of a whispering campaign within his own party that blames his deficitphobia for a skimpy stimulus and resulting jobless recovery. That's misguided the controversial economist instead deserves praise for fiscal sanity.
Can Murdoch make Chipmunks out of Na’vi? 5 Jan 2010 The worldwide box office take for Avatar produced by News Corp s Fox has blown past $1 bln. But to create longterm value for shareholders, Fox needs to create a franchise like the one Alvin, Simon and Theodore dominate. That may be tricky.
Buffett puts Kraft CEO in a bind 5 Jan 2010 The Sage's reproach of the Cadbury bid leaves Irene Rosenfeld with few palatable options. At best, she tweaks it to address Buffett's concerns about share issuance. At worst, the bid fails. Either way, she can't undo a rare public scolding from the world's most admired investor.
China boosts gravitational pull on southeast Asia 4 Jan 2010 The Middle Kingdom's newly free trade with ASEAN countries marks a significant shift for the global economy. Southeast Asia s trade with China already exceeds that with the U.S. While China's trade with the U.S. still trumps both, that may soon change to America's discomfort.
Advice to CDS regulators for 2010 4 Jan 2010 Lawmakers and bankbashers have pinned blame for the financial crisis and in particular the collapse of AIG on credit default swaps. Changes to and tighter oversight of the $31 trillion market are needed. But action should address real, not imaginary, problems.
Alcon minorities deserve more from Novartis 4 Jan 2010 Novartis has made Alcon minority shareholders a lowball $153ashare offer for their 23 percent of the eye care firm. Meanwhile, the Swiss drugmaker is paying Nestle $180 per share for its 53 percent stake. The minorities may not have much clout. But they should demand more.
ManU scrambles to avoid financial penalty area 4 Jan 2010 The Glazer family needed an expensive paymentinkind note as well as bank debt to purchase thefootball club in 2005. That PIK not due until 2017 threatens to become a ballooning liability. Tapping the resurgent bond market would put the club on a sounder financial footing.
US heralds a protectionist 2010 4 Jan 2010 Political and policy concerns make a White House protrade push unlikely. Instead, expect more duties on foreign goods like the newly imposed ones on imported steel pipe stalled trade negotiations and increased friction with China. It all amounts to a restrained recovery.
US should pull the plug on ResCap 4 Jan 2010 Despite nabbing the bulk of the latest $3.8 bln infusion into GMAC, the car lender's mortgage unit is a mess. ResCap still may not pull through, and there's no reason for taxpayers to prop it up. Like its former subprime lending peers, it should be disposed of or allowed to die.