Soaring Apple still looks safe valuation bet 20 Apr 2011 The $315 bln tech giant's revenue surged 83 pct in the past quarter from last year and profit almost doubled. There are hiccups in its supply chain. But adjust for cash, and the stock trades at a discount to the market. That seems cheap for a firm at the top of its game.
Demographic investments could pay dividends 20 Apr 2011 Russia plans to spend $53 billion to boost birth rates and extend longevity. Other advanced economies might want to take notice. Stagnant or declining populations and workforces pose a huge risk to growth, especially for aging nations deep in debt.
Swiss finish won’t be the end for Swiss banks 20 Apr 2011 Critics of new Swiss capital rules set to be approved today warn they may make Credit Suisse and UBS uncompetitive, damage Switzerland s financial centre and push up interest rates. The regime is far from ideal. But fears it will badly harm Switzerland and its banks are overdone.
Cuba reforms point more toward Ukraine than China 20 Apr 2011 This week's modest central planning reforms don't look enough for a Chinastyle takeoff. Without reformist leadership to unclog bottlenecks they will be bogged down by regulation and corruption as in the 1990s. In such systems, the only successful capitalists are cronies.
S&P warning may have wrong effect on Washington 19 Apr 2011 Prodding Obama and Congress to agree on a debt plan might achieve just the opposite. S&P's dour take on Treasuries could inflame the debtceiling debate, leaving little energy for a grand budget compromise. And the austerity the agency desires would have few takers anyway.
Buy Korea is risky play on Japanese/U.S. dynamic 19 Apr 2011 Seoul stocks have gained amid postquake supply chain tangles and a reviving U.S. economy. But the rally is vulnerable to a rapid Japanese rebound or an end to Fed money printing. And relative merits aside, Korea's fundamentals are not compelling.
Warring U.S. budget plans: ideology vs numbers 19 Apr 2011 S&P's rating warning this week suggested America's budget woes are partly political. Rival longterm plans involve sharply different mixes of tax reform and spending cuts. The trouble is, it's not a question of meeting in the middle to solve the problem. It's a clash of visions.
J&J earnings show Synthes just a nice distraction 19 Apr 2011 A series of recalls has buffeted the U.S. health conglomerate, as firstquarter results show. Buying medical device firm Synthes for around $20 bln would secure a rarelyavailable gem and handily consume cash trapped overseas. But it wouldn't fix J&J's quality issues.
White House in a pickle over its GM exit plan 19 Apr 2011 The Obama administration must relish selling Uncle Sam's remaining stake in the automaker before election season heats up. But with GM's shares wallowing below their IPO price, waiting would be fairer to taxpayers. As it stands, either option is a gift to Republicans.
Gordon Brown’s IMF interest rightly scorned 19 Apr 2011 The UK's former premier has been slammed by his successor as a bad candidate to head the IMF. David Cameron calls him a deficit denier. But Brown's real problem is that he lacks the diplomatic savvy needed in the job. And the vacancy, when it arises, shouldn't go to a European.
Goldman Q1 inches up toward its own high bar 19 Apr 2011 The bank's $2.7 bln profit wasn't far off its return target. Given the relatively subdued quarter industrywide and Goldman's lowish leverage, beating the target shouldn't be too hard as the economy improves. But hitting it on average through the cycle still looks a stretch.
Tesco’s new era starts with right focus: returns 19 Apr 2011 The UK retailer's new CEO has fleshed out how and when he will hit a punchy returnoncapital target. Getting there will mean revving up poorperforming international stores. After breakneck expansion and missteps in America, a more disciplined approach to growth is needed.
Russian squeeze points Telenor to Vimpelcom exit 19 Apr 2011 Having closed its deal with Egypt's Wind Telecom, Vimpelcom's core Russian shareholder Altimo intends to scrap its agreement with Telenor. That will weaken the Norwegian telco's influence, encouraging it to sell out. But it will also hurt other minority shareholders.
Air Lease investors put wallets in pilot’s hands 19 Apr 2011 A firm with leasing pioneer Steven UdvarHazy at the controls can't be ignored, and investors jumped on board at a heavy premium to peers. But its $2.4 bln IPO came with barely half a year of figures and the CEO's Rolodex as the main asset. The market has its head in the clouds.
Raj’s defense gamble is smarter than it looks 19 Apr 2011 Closing arguments are due on Wednesday in Raj Rajaratnam's insider trading case. With the evidence against him looking strong, it's not obvious why he fought the charges. But getting his story out may help him. And he may have little to lose but the cost of his lawyers.
Finns drill hole in euro zone consensus 18 Apr 2011 The populist right's success in Finland's parliamentary elections, and the government's ousting, will complicate rather than kill Portugal's bailout. But acrimony between the euro zone's savers and the spendthrifts threatens the consensual decisionmaking that helps it function.
Chesapeake JV regimen has cloudy side effect 18 Apr 2011 The ambitious U.S. gas group's recent moves to cut leverage are helping narrow the valuation gap with peers. But the return on its efforts could be diminishing. Chesapeake's thickening fog of joint ventures and productionsharing deals is making it increasingly tough to value.
Citi’s split personality keeps shares depressed 18 Apr 2011 There's much to like in the U.S. megabank's core units, capped by $4 bln of Q1 profit thanks to decent asset returns. Citi's troubled past still casts a shadow, though. It's not as dark as the one at BofA, but until Citi can shake off its demons, its stock is likely to languish.
Saudi handouts ratchet up fair price of oil 18 Apr 2011 A spending boost of $130 bln will push up the price the Kingdom needs to balance its budget to over $80 per barrel. Add in rapid growth in domestic oil consumption, and it's no wonder that Saudis are hinting that prices won't come down much.
Parmalat saga sends maddening legal omen 18 Apr 2011 A Milan court acquitted BofA, Citi, Deutsche and Morgan Stanley of aiding the milk seller's fraud, seven years after its collapse. It won't cheer prosecutors still probing crisis actions of financial intermediaries. But banks won't like the long legal tail risk prospects either.
Deutsche’s failed BHF sale leaves a big headache 18 Apr 2011 Regulators have halted the German lender's sale of private bank BHF to Liechtenstein's LGT. Having shut out other bidders, Deutsche appears to have little choice but to integrate the business. This threatens to be another drag on its underperforming asset management unit.
UK house prices might bottom in 2013 18 Apr 2011 Forget the frothy London market. Elsewhere in Britain, homes are taking longer to sell and supply is up. Low interest rates may have lifted the market off its lows. But history suggests a return to stagnation for the next two years, and a negative feedback loop with the economy.
Nigeria’s decent election lifts economic outlook 18 Apr 2011 High oil prices have brought growth, but corruption and population increases have impeded takeoff. Goodluck Jonathan's genuinelooking win in the weekend's presidential election could change that and spur foreign investment as long as the chance to clean house isn't wasted.
S&P states the much-needed obvious on U.S. debt 18 Apr 2011 The rating agency's shift to a negative outlook on Uncle Sam's AAA credit shouldn't come as any surprise. But both lawmakers and markets deserved the reminder. S&P's move should be a reality check for political pointscorers in Washington and headinsand investors alike.
HSBC sets high bar with executive pay reform 17 Apr 2011 A new bonus scheme for the UK bank's top 50 executives gives them shares after five years which they cannot sell until retirement. This should promote stability rather than breakneck growth. Though details of the plan will need scrutiny, it looks a model for others to follow.
Facebook’s legal woes mirror earlier bonanza 17 Apr 2011 The social network's disputed paternity and burgeoning wealth as much as $85 billion at last check is attracting lawsuits galore. This may seem a modern dilemma, but parallels with the many claims on Nevada's wild silver rush 150 years ago are uncanny.
China’s hot Facebook clone will cool down 17 Apr 2011 Renren's may be the first big social network IPO anywhere. With 100 mlnplus users already and China's 1.3 bln population, investors are likely to fill their boots at the mooted $4 bln valuation. But if Facebook manages to join the many domestic rivals, there'll be less to like.
Overheating China threatens global inflation 15 Apr 2011 Growth and prices are running too fast, and wages spiralling. The cheap exports that long helped keep global inflation down will soon get more expensive. China's likely response to its own inflationary pressures to strengthen the currency will make the West's problem worse.
TNK-BP oligarchs have the means to play hardball 15 Apr 2011 The Russian tycoons' rejection of BP's $27 bln offer for their 50 percent stake in the oil joint venture looks greedy. But their stubbornness makes sense. The stake is worth more, and BP must come to terms with its partners, whatever the future of its uncertain Rosneft tieup.
BofA chief’s tricky balancing act fails to impress 15 Apr 2011 Brian Moynihan used oneoff gains to offset more mortgage claims and post a meager Q1 profit. But he also warned of several more quarters of home loan pain and lost his new CFO. Moynihan is making progress, but BofA's bumpy showing doesn't yet deserve the benefit of the doubt.