Rio right to play long game with Riversdale 29 Mar 2011 The AngloAustralian miner may fail to take control of coal specialist Riversdale with its $4 bln bid, and instead end up paying a premium for a minority stake. The path to a majority may not be smooth. But the investment still makes sense, and Rio can afford to take it slow.
Share buybacks return in force at wrong time 29 Mar 2011 U.S. companies have a stunning record of buying their own stocks high and selling them low. Home Depot became the latest, adding to the $136 bln of planned repurchases announced so far this year. Only the market peak of 2007 saw more such activity. That's not a good sign.
U.S. gets religion on adopting mortgage standards 29 Mar 2011 In a sense, it's back to the future. Regulators are championing the return of 20 pct down payments and other sensible, if relatively conservative, lending practices to housing finance. Some banks may squawk since it effectively ends a path to easy profits, but it's worth it.
Lazard signals generation shift with Costa exodus 29 Mar 2011 Ken Costa is stepping down as chairman of Lazard International. The veteran dealmaker was lured to the independent investment bank by Bruce Wasserstein. A year and a half after Wasserstein's death, it's another sign of how CEO Ken Jacobs is shaping his own top team.
AT&T not only telco worry for antitrust watchdogs 28 Mar 2011 A brewing spat between Google and Facebook over whether to allow its nextgeneration handsets to download contact info from the social network sounds like an esoteric geek debate. But it raises big questions about Google's growing mobile dominance and the temptation for abuse.
Merkel rout has multiple costs for Europe 28 Mar 2011 The trouncing of Angela Merkel's party and allies in BadenWuerttemberg elections could leave her unable to make the tough decisions facing her. On the euro zone crisis, the German banks or the future of nuclear energy, the risk is either paralysis or populism.
Market’s calculated bet on Eni looks right 28 Mar 2011 The Italian oil firm's shares have only underperformed the European sector by 3 percent since trouble began in Libya, to which it is heavily exposed. There are certainly risks of something going very wrong but the prognosis is not all doom and gloom.
UK flirts dangerously with wealth taxes 28 Mar 2011 Business secretary Vince Cable is again talking about a kind of mansion tax on highvalue homes, as a quid pro quo for ending the 50 pct top rate of income tax. But wealth taxes like this end up being either punitive or trivial. It would be better to focus on tackling evasion.
Four reasons to hedge against Japanese equities 28 Mar 2011 The bright side, so hard to see in the wake of the disaster, is now the consensus in Japan's market. But politics, power shortages, consumer conservatism and the unresolved nuclear crisis are chipping away at the optimism. It is time to hedge against disappointment.
Baghdad bourse unlikely oasis amid Arab turmoil 28 Mar 2011 Global markets are unsteady but the Iraqi stock exchange is thriving up 26 pct this year. After decades of war, the oilrich nation is set for doubledigit growth amid tentative signs of stability. From the back foot, Iraq could become an unlikely refuge in the risky region.
M.Stanley Asia choice shows rise of China bankers 28 Mar 2011 The Wall St bank has promoted its China head to joint chief of its Asian business, making Wei Christianson the region's top Chinaborn banker. It's a signal of the rising value of local knowledge in the world's most promising market. Rivals will face pressure to follow suit.
EBay sensibly bids $2.4 bln to go beyond auctions 28 Mar 2011 The fastgrowth days for the Internet auction giant's marketplace unit are behind it. Running Web efforts for others promises growth and is a natural extension of its own business. Buying GSI Commerce does the trick. The 51 pct premium is big but the price still looks reasonable.
Obama should get in New York fiscal state of mind 28 Mar 2011 Governor Andrew Cuomo struck a budget deal without raising taxes and five days ahead of deadline. It's the latest example of how leftofcenter politicians, often considered profligate, can be better placed to cut spending. The president is missing a Nixon to China moment.
ECB aid for addicted banks must not be free lunch 28 Mar 2011 The central bank may provide mediumterm funding to struggling lenders. That would allow the ECB to normalise its liquidity operations, while letting banks in peripheral states shrink their balance sheets more slowly. But those who tap it must have their feet held to the fire.
Rosneft a dubious long-term investment for BP 28 Mar 2011 The Russian oil giant has outperformed BP since the pair agreed a share swap in January. That may make the deal look financially sound even when a strategic exploration tieup is in trouble. But further upside for Rosneft may be limited, and the deal terms may be revised anyway.
Fringe U.S. candidates just might win ideas race 25 Mar 2011 Odds are long for real estate magnate Donald Trump or libertarian Rand Paul to secure the 2012 Republican presidential nod. But their Tea Partyfriendly proposals are generating interest. Even if they don't run, the buzz suggests there's a populist economic niche to occupy.
Bond insurance zombie MBIA isn’t dead yet 25 Mar 2011 That's small consolation to Warburg Pincus, which pumped in funds as the crisis torpedoed the whole industry. If MBIA, with claims possibly climbing over $20 bln, can fend off a lawsuit by banks challenging its split, there might be hope for the investment but not the business.
M&A league table folly put on full display 25 Mar 2011 Listen for Wall Street's collective gasp at Goldman's slump to an alltime low of 10th place in the quarterly U.S. merger rankings. And oohing and aahing will be heard at the seemingly dramatic rise of the boutiques, led by Evercore. But take note appearances can be deceiving.
BP must face costly outcome of Russian fiasco 25 Mar 2011 A court has sided with the oil group's Russian partners in TNKBP, ruling it can't go ahead with its planned tieup with Russia's stateowned Rosneft. BP unconvincingly argues that the deal may be salvaged. Either way, it faces costly options out of the selfcreated mess.
Spain could yet rouse docile markets 25 Mar 2011 Madrid has been isolated from the punishment bond investors are inflicting on Portugal. The hope is that Spain is out of the woods. Yet it is vulnerable to a weak banking system and unruly regions. Rising Portuguese yields should be a reminder this is no time for complacency.
Disaster insurance could fix Spain’s caja headache 25 Mar 2011 The central bank thinks a 15 bln euro capital injection will shore up the country's savings banks. But the lenders would need almost 40 bln euros more to cope with an Irishstyle property crash. Breakingviews explains how an insurance scheme could square the circle.
Europe can, and will, give Portugal time 24 Mar 2011 The resignation of premier Jose Socrates means the euro zone must address Portugal's debt problems in a political void. But the shortterm pressures two major funding deadlines in April and June are manageable. Allowing Portugal to default isn't remotely on Europe's agenda.
Extra Fed transparency might keep Congress at bay 24 Mar 2011 Ben Bernanke must know quarterly press conferences won't hurt the central bank's effectiveness. After all, JeanClaude Trichet gives one after each of the ECB's monthly meetings. And more openness could dissuade lawmakers from trying to exert influence on monetary policy.
Pfizer diet shouldn’t be hard to start 24 Mar 2011 The drug giant's years of expansion haven't fattened shareholders' wallets. With executives responsible for bloating Pfizer leaving, it's a good time for a fresh start. Spinning off the animal health, consumer and nutrition units looks a profitable way to slim down.
Egypt needs a reconstruction fund too 24 Mar 2011 Japan will be spending tens of billions of dollars on rebuilding after its earthquake. Egypt can't afford to finance an equivalent fund after its political tsunami. But foreign powers could help by showing they are not just interested in bombing neighbouring Libya.
Britain looks a safe haven for nuclear power 24 Mar 2011 The UK government has set a price floor for electricity generated from fossil fuel. For companies contemplating investment in new nuclear plants, that could make all the difference. It's a clear signal that events in Japan have so far not undermined Britain's nuclear ambitions.
Ping An’s too-clever financing may backfire 24 Mar 2011 The Chinese insurer's $2.5 billion placement to a single tycoon raised capital quickly, and helped it save tax. But selling at a discount negates the savings, and investors aren't happy. The falling share price shows bending the norms may not pay.
Chemicals give Exxon half a reason for integration 24 Mar 2011 Giant energy firms tend to treat their chemicals units as poor relations. The big exception is Exxon, which is now benefiting from speedy Asian growth. That gives the biggest oil major an argument for vertical integration that rivals don't have but it's only partly convincing.
Ireland’s new bank bailout could add to debt agony 24 Mar 2011 Forthcoming stress tests could use up most of the 35 billion euros the country and its EU partners have earmarked to prop up ailing lenders. But that will further reduce Ireland's chances of servicing its crippling debt burden. George Hay crunches the numbers.
Tokyo nuclear firm protected, but not shareholders 24 Mar 2011 After raising $25 bln of debt, stricken Tepco should be able to cover losses, keep output up and meet financial obligations. Equity investors are pricing in a $24 bln hit. Tepco is too big and important to fail. But if losses prove much bigger, shareholders may lose everything.