India is behind curve on inflation 10 Jan 2011 It s not just that the latest food inflation figures have reached 18 pct; the current account deficit is also high. The authorities need to get a grip, even if it means sacrificing 9 pct growth. Structural reforms, not loose policy, are the only sure way to sustain rapid growth.
Credit Suisse one-ups rivals on comp yet again 10 Jan 2011 The Swiss group that paid its investment bankers with toxic assets has more tricks up its sleeve. It s now deferring more pay, setting stringent clawbacks and abolishing leveraged stock awards. That keeps banks still pussyfooting around with bonuses playing catch up.
Obama’s hiring spree signals shift to center 7 Jan 2011 Bringing a proglobalization fiscal hawk like Gene Sperling into the White House is the latest sign the president is taking a page from Bill Clinton s playbook. Like his predecessor, Obama needs to work better with Republicans. Chances for budget and trade deals are improving.
Facebook might just pay off for Goldman’s clients 7 Jan 2011 The bank and its clients are paying an astronomical 25 times the social network s 2010 sales. How can they ever hope to make a profit? Well, Facebook s margins are astonishingly vigorous, and should strengthen as it grows. Consider the bull case for Mark Zuckerberg s baby.
CSC still vulnerable despite spirited bid defence 7 Jan 2011 The UK real estate company has given some ground in its defence against the $4.5 bln bid from Simon Property, its U.S. rival. But CSC also insists that its assets are worth much more than Simon should be prepared to pay. The UK mall owner still has to justify its independence.
U.S. banks get one foot in the door in China 7 Jan 2011 Morgan Stanley and JPMorgan have won approval to set up local joint ventures, gaining access to China's $100 bln a year securities underwriting market. But foreign JVs are losing out to local players. And the new arrivals will suffer from not being able to offer broking services.
UK banks must prove bonus restraint 7 Jan 2011 A deal with the coalition government is expected to leave UK banks claiming to have curbed banker pay in deference to the public mood. Given that lower revenues were set to dampen bonuses anyway, the proof of any such statement will have to come in lower payout ratios.
Why it’s time to sell the family silver 7 Jan 2011 Prices have risen so sharply that London antique dealers are buying Edwardian cutlery for scrap. Bulls point to the perils of paper money and the white metal's cheapness relative to its yellow rival. But oversupply means silver may be fool's gold, not the poor man's alternative.
U.S. underclass growing faster than employment 7 Jan 2011 Nonfarm payrolls increased 103,000 in December, but the ranks of the longterm unemployed rose by 113,000. True, the U.S. economic recovery is finally accelerating. But the expanding layer of nearpermanently jobless people is bad news for longterm fiscal and social health.
Investors still over-gloomy on BP 6 Jan 2011 The UK oil major's shares have shrugged off a damning White House report into the Gulf of Mexico spill. It's still hard to be confident about the final tab for the disaster. But based on the latest estimates, a Breakingviews calculator suggests investors are on the bearish side.
Alcoa may finally be ripe for picking 6 Jan 2011 The $17 bln aluminum producer is a mainstay on the takeover talk circuit. But a successful deal for a cyclical company hinges on timing. With the economy ramping up and a trio of eager and frustrated buyers BHP, Rio and Vale in the wings, Alcoa s time may have come.
Commodities cast wary eye on dollar and liquidity 6 Jan 2011 Despite good economic news, commodities have wobbled this week. Oil, food and metals prices all thrived on a weak dollar and low interest rates. But growth, inflation and higher interest rates point to a firmer dollar and tighter liquidity. Commodities may be volatile in 2011.
Phone hacking mess puts yet more heat on Murdoch 6 Jan 2011 The suspension of a senior journalist at the News Corpowned tabloid undermines its claim that the scandal was the work of a rogue reporter. As the UK government considers whether to allow the media mogul to take control of BSkyB, the latest twist adds to the toxic political mix.
Bookseller activists should pen an end to the saga 6 Jan 2011 Beleaguered Borders can t pay its bills and wants help from publishers. That would buy time for Bill Ackman, who last month offered to finance a Borders takeover of rival Barnes & Noble, where Ron Burkle is still agitating. It s time for both investors to put up or shut up.
Ben Bernanke hasn’t solved Fed’s consumer problems 6 Jan 2011 Ever since the subprime debacle, the Fed has fought hard to kill the perception that it puts big banks first. Its proposal to weaken homeowners negotiating leverage with lenders does it no favors. Better the central bank punt the matter to the new consumer protection agency.
European property needs more bank wannabes 6 Jan 2011 Axa has set up funds to invest 2.5 bln euros in real estate debt. The move suggests insurers could help ease the 450 bln euro refinancing burden left by Europe's shrinking banks. Many of these loans will be deemed too risky. But the French group may point the way for others.
Goldman Facebook coup embarrasses rest of Wall St 6 Jan 2011 Though small beans financially, it s a big win in franchise terms. After the lumps Goldman took last year, its investment deal with Facebook shows the firm can still wrap its tentacles around a key client for mutual benefit. Goldman s rivals should be kicking themselves.
Qualcomm makes $3.1 bln push for tablet gold 5 Jan 2011 The wireless technology giant hasn t had much success beyond cellphones. Yet other devices, such as Apple s iPad and its rivals, are starting to take the technological lead from smartphones. Buying Atheros gives Qualcomm the chance to get more mobile.
Eni should seize chance to cash in on Galp stake 5 Jan 2011 The Italian group is in talks to sell its 33 pct stake in Portuguese rival Galp to Brazil's Petrobras. At market price, the 3.8 billion euro stake is worth more than four times the initial investment. No wonder Eni wants to sell. It's harder to see why Petrobras wants to buy.
UK insurers embrace accounting dark ages 5 Jan 2011 European insurers committed to new accounting measures in 2008 to make them easier to compare. Now UK life insurers are doing a Uturn. The new reporting regime may have been flawed. But if so, insurers should fix it rather than turn their backs on better disclosure.
Europe’s topsy-turvy credit world can’t last 5 Jan 2011 The euro zone crisis has turned bond markets upside down; many companies are now considered less risky than their governments. Though some firms may cope with sovereign turmoil, austerity measures and tighter credit mean corporations will face greater headwinds in 2011.
EU must pressure Hungary into policy change 5 Jan 2011 Budapest is taxing foreign firms, suppressing the central bank s independence and clamping down on the media. It s a big embarrassment for Europe just as Hungary takes over the EU chairmanship. If Hungary doesn t change tack, it may discover that populism often leads to poverty.
Anti-Apple brigade readies group therapy session 5 Jan 2011 The giant tech confab CES kicks off on Thursday, again without any of Steve Jobs hipster crew. Their absence will be more acutely felt than ever, as rivals rush to show off answers to the iPad. Expect happy talk, defensive posturing, and denial but little consumer validation.
Comeback kid Anadarko still makes a risky target 5 Jan 2011 BP's unlucky silent partner in its Gulf spill has staged a remarkable bounce. Discoveries from Mozambique to Brazil, along with takeover talk, have returned the explorer's shares to preaccident levels. Yet the $37 bln firm's unknown liability still makes it slippery prey.
Beating the rap easier on Wall, not Main, Street 5 Jan 2011 U.S. authorities have collared few high financiers for their role in the crash. But the FDIC, with a track record of clawing back cash, is lining up lawsuits against 109 commercial bankers and counting. Wall Street wasn t squeaky clean. But the FDIC has more skin in the game.
Possible Obama pick could heal Wall Street wounds 4 Jan 2011 By choosing JPMorgan exec William Daley as chief of staff, President Obama could build bridges with the business community. Daley's protrade views are a big reason the buzz is so loud. The pick would also bode well for reaching deals with Republicans on taxes and spending.
Asset sales could speed periphery’s rehabilitation 4 Jan 2011 Indebted euro zone governments have promised to sell stateowned assets to cut deficits. Successful privatisations will show the region can still attract capital and that its governments are serious about economic reform. That should make up for having to sell on the cheap.
CICC’s private equity owners face turnaround job 4 Jan 2011 China's oldest investment bank has suffered dozens of departures, while its share of Asian IPOs dropped 70 percent in 2010. Fast expansion may have alienated oldtimers. New shareholders, TPG and KKR, will have their work cut out to revive the CICC brand.
De-globalization forces remain strong into 2011 4 Jan 2011 Antidumping policies, capital taxes and currency manipulation erected global market barriers in the Great Recession, while globalizing actions have been few. In 2011, deglobalization could gather pace if commodities continue to surge or if there's another financial crisis.
VAT will fuel UK inflation but BoE must keep nerve 4 Jan 2011 Increasing sales taxes will add to pressure from higher oil prices. Inflation could hit 4 pct, double the Bank of England's target. But growth and excess money are not the problem, and the economy needs all the help it can get. The BoE must ignore calls for higher interest rates.