BSkyB directors should quiz James Murdoch 26 Jul 2011 Before confirming Murdoch as chairman of the payTV group, independent directors should ask him searching questions about his role in cleaning up the hacking scandal at News of the World. If he is evasive, they should ask him to step aside.
U.S. gets serious on Russian mega-corruption case 26 Jul 2011 The U.S. is the first country to impose visa bans on Russian officials connected with the death of hedge fund lawyer Sergei Magnitsky. This may sour relations with Moscow. But Russia's conspicuous failure to investigate this crucial case is forcing the West to act.
U.S. debt capers may expose risk-free fallacy 26 Jul 2011 America's fiscal woes have put its AAA rating at risk even if a budget deal is struck. With plausible riskfree assets on the wane, broad swaths of investment theory including options pricing, portfolio management and Basel capital rules could be undermined over time.
Euro bailout fund’s main problem isn’t size 26 Jul 2011 The EFSF's 440 billion euros can finance the latest Greek plan, help recapitalise Spain's banks and prop up bond markets. Size doesn't matter yet. The key issues now are whether the euro zone's political unity will hold, and whether austerity will work.
U.S. government can still save its AAA rating 26 Jul 2011 Even with a smaller deal than credit raters want, there may be ways to stave off a downgrade. It would require a committed path to cut, including some sacred cows, and a plan not held hostage by a debt ceiling debate. The question is if lawmakers think staying AAA is worth it.
UBS right to concede trading ambitions to Deutsche 26 Jul 2011 The Swiss bank won't make its midterm 15 billion Swiss franc pretax profit target. The German lender repeated its 10 billion euro pretax goal. Deutsche's bet on being a global trading powerhouse looks like paying off. UBS should shape its ibank to support the private bank.
China oil barter system won’t solve Iran’s woes 26 Jul 2011 It isn't unusual for countries to trade goods in exchange for oil. But even if China sends machinery instead of money to circumvent U.S. sanctions, and with supply to India cut for similar reasons, Iran still needs hard currency to insulate itself from economic problems.
Regulation alone doesn’t explain Soros exit 26 Jul 2011 The hedgie godfather suggested SEC red tape led him to bow out of investing other people's money, echoing Druckenmiller and others. But with trivial sums of outside cash he needed little encouragement. Rules are a handy scapegoat, but they're not chasing away industry lions.
Lawyers look petty suing legal self-help website 26 Jul 2011 Attorneys claim LegalZoom practices law without a license. The real beef may be that it's more costeffective than they are. If lawyers have a legitimate case against the U.S. online provider of basic documents, which may soon go public, they should make it in the marketplace.
Tarnished Cameron’s lack of cuts leaves UK weaker 26 Jul 2011 The hacking scandal has hurt him. Today, low growth means the prime minister's economic judgement is under fire. Cuts are blamed for the slowdown but, in fact, spending is still rising. Had Cameron been tougher, he could do more now for the economy. What he mustn't do is weaken.
Athens rescue is a pig in a poke 25 Jul 2011 A deal was better than a disaster. But this rescue has the astonishing byproduct of increasing Greece s debts. It also lets private creditors off lightly while making taxpayers elsewhere in the euro zone pay through the nose. It doesn t even mark the end of the crisis.
Joe Ackermann shouldn’t be Deutsche Bank chairman 25 Jul 2011 The chief executive of Deutsche Bank is to be succeeded by Anshu Jain and Juergen Fitschen. But Ackermann remains in line to lead the German lender's supervisory board. He would be a poor choice. He could prove to be an interfering backseat driver.
Lagging Petrobras won’t win back investors easily 25 Jul 2011 The energy giant has massively trailed rivals ever since Brazil forced it to buy overpriced offshore oil reserves nearly a year ago. Now Petrobras is trying to make amends trimming unpopular refining projects and lifting output goals. But the group's pledges deserve skepticism.
Train crash highlights Chinese hard landing risks 25 Jul 2011 The highspeed train tragedy shows when things fail to slow down properly in China, they crash. Highspeed rail is a typical symptom of China's investmentled growth models: wasteful, hazardous and unsustainable. A badly handled accident can trigger political tensions.
Bank of Ireland’s new backers aren’t loopy 25 Jul 2011 The Irish lender is getting 1.1 billion euros from asyetunnamed overseas investors. BoI still has big funding problems, but its main difficulty is its weak sovereign. If Ireland's politicians can keep their credibility, buying in now makes longterm sense.
Peru’s Humala offers movie we haven’t seen before 25 Jul 2011 That's the new president's claim, as he defied expectations and appointed centrists to key economic posts. Investors are flocking back. Stocks are up 19 pct. Peru's government is small, so he can expand it somewhat without Braziltype bloat provided commodity prices stay high.
Vocal shareholders quieted but not silenced 25 Jul 2011 A U.S. court quashed a rule making it easier for investors to challenge corporate boards. It's a right worth fighting on for but the SEC's plate looks pretty full. All isn't lost, though. The watchdog provided an alternative, if clumsier, path to oust unwanted directors.
Financial engineering won’t help Euro oil majors 25 Jul 2011 Big European oil companies are trading at large discounts and could be tempted to follow Conoco's lead and demerge upstream and downstream activities. But valuations in Europe are low because oil majors are barely growing reserves. Splitting up wouldn't change that.
Greek deal bizarrely increases its debts 25 Jul 2011 The sustainability of Athens' borrowings will improve because the new debt will be longterm and cheap. But the country's borrowings will go up by 31 billion euros and its estimated peak debt/GDP ratio will rise to 179 percent, according to a Breakingviews analysis.
U.S. and euro showdowns drive investors to gold 25 Jul 2011 The euro is an experiment in trouble and its inventors are floundering. The dollar is being weakened by politicking and fear that the U.S. response to economic weakness and fiscal deficit will be to print more money. The gold price bubble will get bigger.
U.S. lawmakers play mad game of chicken with markets 25 Jul 2011 Politicians shouldn't need threat of market mayhem to do their jobs. But that may be the case in Washington as the deadline to boost borrowing authority nears. Weekend talks brought more confusion than clarity. Coming days may test assumptions about the inevitability of a deal.
Microsoft ought to kick off search for Bing buyer 22 Jul 2011 The distant number two in online search is a distraction for the software giant and one that cost shareholders more than $2 bln in the latest fiscal year. Facebook or even Apple would make a better home for Bing. Moreover, a sale would be a boon for Microsoft's owners.
Debt deal takes euro zone closer to endgame 22 Jul 2011 The monetary union's leaders and the ECB have agreed a robust plan to tackle the Greek crisis and head off contagion. Crucial details are still lacking on private sector participation. But with an enhanced bailout fund, the euro zone is moving in the right direction.
Banks escape Greece with a minor trim 22 Jul 2011 Large lenders have signed up to a plan that gives them a 21 pct haircut on their Greek bonds. Though ratings agencies will declare it a default, the outcome is better than the 50 pct loss markets had been pricing in. But unless Greece recovers, the pain has only been postponed.
In all, News Corp’s papers could be worth $6 bln 22 Jul 2011 News Corp's UK newspapers may fetch as much as $1.3 billion were Rupert Murdoch to sell up. His whole newspaper empire may be worth $36 billion. The industry's terrible economics and the UK hacking scandal both discourage M&A. Yet trophy buyers could emerge.
News Corp may escape U.S. bribery action 22 Jul 2011 Ever since reports surfaced that News of the World paid bribes to UK police, American voices have suggested Murdoch's U.S.based empire should be prosecuted stateside under foreign corruption law. James Ledbetter explains why that's a legal stretch and unlikely to happen.
Morgan Stanley’s trading win is a nice distraction 21 Jul 2011 A decent fixedincome showing helped the bank beat Q2 estimates and show up archrival Goldman. Strip out funnies, though, and it's less impressive. Either way, trading targets will have less impact on Morgan Stanley's bottom line than cranking wealth management up to full speed.
Express/Medco deal is antitrust roll of the dice 21 Jul 2011 Express Scripts is offering $29.1 bln for Medco, creating a kahuna in the pharmacy benefits industry. That looks like a provocation to trustbusters hence no regulatory break fee. But by highlighting Medco's flaws, the duo is emulating AT&T's tactics. Victory will be elusive.
Asia’s Euro-contagion risk starts with Korea 21 Jul 2011 South Korea s banks took on $13.8 billion in shortterm loans from abroad in the first quarter of 2011. Most of it probably came from Europe. The Asian nation is robust, but it s right to worry that a new loss of confidence will see foreign lenders start sucking their money back.
Rigid banker pay will turn slowdown into cull 21 Jul 2011 Sluggish markets and higher capital charges are forcing investment banks to cut expenses. In the past, they could save cash by pruning bonuses. But bigger base salaries and more deferred compensation mean banks have little choice but to axe headcount.