John Malone gets good read on Barnes & Noble 20 May 2011 Unlike the hamfisted takeover attempts by Ron Burkle and Bill Ackman, the cable pioneer's strategy and timing look smart. There's a premium for shareholders and an olive branch to company architect Len Riggio. Yet it's not obvious what Malone sees in the bookseller.
BP no longer fighting Macondo battle alone 20 May 2011 The UK oil major has reached a $1.1 bln settlement with Mitsui, one of its minority partners in the Macondo well. It s a fraction of BP's estimated $41 bln bill. But BP could get more from Anadarko and Transocean. The chances that BP is found grossly negligent look slimmer, too.
What if the IMF chose its chief on economic merit? 20 May 2011 The race to succeed Dominique StraussKahn will involve personalities and politics. But if the state of a candidate's home economy were the sole criteria, none of the frontrunners would pass muster. Ranking the fund's 187 members suggests South Korea should supply the next boss.
Investors giving hedgies little benefit of doubt 20 May 2011 FrontPoint seemed to have handled its insider trading fallout but is still losing investors. Three firms raided by the FBI in November have closed. Galleon was out of business way before its boss was convicted. Allegations alone can kill, so hedge funds must be whiter than white.
Glencore’s debut may be weaker than it looked 20 May 2011 The Swiss trader's IPO is hugging its float price. But early trading can be deceiving. New issues often benefit from intervention by bookrunners mandated to stabilise the shares. This saves the issuer face, but it can create distortions and attract the wrong type of investors.
Japan recession could lead to strong rebound 19 May 2011 The economy shrank 0.9 percent after March's earthquake hit consumption and the supply chain. That's worse than expected. But it looks like disruption rather than destruction. If the central bank is spurred on to necessary monetary easing, this could presage a powerful recovery.
Even LinkedIn’s bankers underestimate the hype 19 May 2011 Based on the near doubling in the stock on its debut, they left almost as much money on the table as they raised for the online U.S. business network group. But if the hype doesn't wear off soon, the scarcity value of listed Western social networks surely will.
Vote on Pru chairman makes his position untenable 19 May 2011 Nearly a quarter of shares in Prudential, the UK insurer, voted against the reappointment of Harvey McGrath as chairman. He is being held responsible for last year's botched AIA deal. Though it is a minority vote, McGrath should heed the clarity of the message, and walk.
UK’s newly muscular watchdog will need market help 19 May 2011 Britain's reformed banking supervisor will be given powers to overrule management and to force failing firms to close. Though the shift is welcome, regulators are not omniscient. Better disclosure from banks will help investors to keep lenders on the straight and narrow.
ECB cries wolf with Greek debt collateral threat 19 May 2011 Juergen Stark, the ECB chief economist, says its statutes would make it impossible to lend to Greek banks by accepting government bonds as collateral if the country restructures its debt. That's an exaggeration. Restructuring could create problems, but there are ways round them.
Asia gets less bang for its investment buck 19 May 2011 Take China. It now gets a third less GDP per dollar it ploughs into fixed assets like roads and factories than 30 years ago. Other Asian nations tell the same tale. Creating sustainable growth will require better capital allocation, and politically painful restructuring.
Obama offers slim pickings for Arab spring 19 May 2011 A bit of debt relief here, a loan there, and the promise to support investment across the region. Barack Obama failed to wow in his muchanticipated speech. Perhaps more will come later. But the U.S. could do more to reassure the region's struggling economies in transition.
Pandit’s new bonuses make mockery of $1 hair shirt 19 May 2011 The targets Citi's board has set for the CEO to rake in $16.7 mln or more are too soft and come on top of regular annual bonuses. Pandit deserves credit for steering Citi through the crisis while earning $1 a year. But this kind of easy money ought to be a thing of the past.
U.S. states shouldn’t spend unexpected revenue 19 May 2011 The recovery has brought states like California modest windfalls. There's pressure to spend it right away. But longterm pension obligations, previous overspending and continuing shortfalls in property taxes for local governments are all reasons to be stingy.
Spanish banks must face up to property losses 19 May 2011 As the country's lenders foreclose on property developers, they are accumulating a growing amount of real estate. This is clogging up banks' balance sheets and may be delaying the overdue adjustment in house prices. The Bank of Spain should force them to come clean.
Lampooned lawyers make solid legal investment case 19 May 2011 Jacoby & Meyers, the U.S. firm whose TV ads made it fodder for the Beastie Boys, wants to overturn rules stopping outsiders from owning legal practice stakes. The UK and others are already more flexible. New sources of capital might just help lawyers do better work, and cheaper.
Baidu spat shows censorship is a capitalist issue 19 May 2011 A lawsuit against the Chinese search engine by U.S.based activists sounds farfetched. But it shows freespeech tensions are spilling over into the corporate world. This is bad news for those like Facebook who fancy China's online growth, but not the political brickbats.
BlackRock should show up on regulatory radars 19 May 2011 The asset manager's stock buyback from BofA is the latest sign of its growing might. Boss Larry Fink doesn't think BlackRock is too big to fail. And it's not comparable to a bank. But its $3.6 trln of assets and increasing influence still make it systemically important.
Glencore’s IPO gets only middling marks 19 May 2011 The commodity trader's jumbo IPO started trading just a smidgen above its 530p float price. That's not bad. But nor is it great, given the 23 bookrunners, host of cornerstone investors, and a lastminute hike in the price range. Glencore could have priced the deal more keenly.
Howard Marks faces delicate balancing act with IPO 18 May 2011 Oaktree's founder, also the author of mustread investing missives, has lamented the tradeoff fund managers often make between gathering assets and maintaining good performance. The firm's plans to pursue a fully public listing will put Marks' preference for returns to the test.
China luxury boom gets new impetus from old bags 18 May 2011 No wonder Prada and peers are flocking to Hong Kong. A used handbag retailer set a record after its IPO was 2,180 times oversubscribed. China may soon be the world's largest luxury market, but investors don't seem to be considering risks like tariffs, fakes and changing tastes.
Middle East needs its own development bank 18 May 2011 The Arab Spring has highlighted the region's need for credit financing. Rich Gulf nations could channel part of their wealth to a bank that would finance infrastructure and private sector projects, serving as a catalyst for other investors. But the politics of it would be tricky.
Medvedev further asserts reformist ambitions 18 May 2011 The Russian president's ambition to run for office again in 2012 is ever more obvious. He is advancing his liberal agenda and distancing himself from Vladimir Putin. Although his newfound energy is welcome, Medvedev can't go too far and antagonise his prime minister.
UK property’s great divide is ever more entrenched 18 May 2011 Land Securities' shares surged after a bumper year for its topgrade roster of office blocks and shopping centres. Supply shortages mean prime landlords will continue to thrive. But with lenders deleveraging fast, the picture in secondary locations could still get worse.
U.S. refiners would struggle to fix prices 18 May 2011 Not for the first time, politicians are accusing refiners of colluding to push up pump prices. If refiners conspired, they have done a lousy job. Margins have been wafer thin until recently, making up 2 cents on a $4 gallon of gasoline. The blame for rising prices lies elsewhere.
ETFs gone wild: a guide for the perplexed 18 May 2011 Financial engineering is invading the previously simple world of exchangetraded funds. Regulators fear ETFs could pose systemic risks. But how do the funds work in practice, and why could they become a problem? Breakingviews provides a road map for the uninitiated.
Hollywood adds a moral to Too Big to Fail story 18 May 2011 A dispassionate narrative is what made the book a valuable piece of financial crisis history. The HBO adaptation goes inside the tense and cloistered action too but staples a clumsy conclusion onto events. The more subtle reminder is of Wall Street s divide with Main Street.
China needs price hikes to end power cuts 18 May 2011 Expensive oil and coal have squeezed China's electricity producers. Now some consumers face shortages. Higher prices would help reduce demand. With inflation high and growth a priority, politicians might not like the idea but China would benefit in the long term.
Lloyds’ revamp should start with a bad bank 18 May 2011 The UK bank's new boss is considering shifting its most toxic loans into a separate division. Segregating core assets from the legacy of its HBOS deal will improve clarity and help Lloyds shrink its balance sheet. But investors will need other reassurances to calm recent jitters.
BP needs to get decisive in Russia 17 May 2011 The collapse of BP's share swap with Rosneft isn't the end of the oil giant's Russian saga. A buyout of its existing JV, TNKBP, remains a way of salvaging the situation. That would hurt. But the same goes for returning to the status quo. Either way, BP must find a resolution.