U.S. tinkers around edges of housing market 6 Feb 2012 The White House wants to breathe life into a depressed U.S. housing market. Its latest flurry of initiatives is as dizzying as the whirlwind of programs launched three years ago. The trouble is, housing policy isn’t easy - and President Barack Obama’s plans won’t make much difference.
EU needs contingency plan to handle Greek blow-up 6 Feb 2012 The latest game of brinkmanship being played in Athens will probably end in a fudge. But if it doesn’t, Greece’s banks will go bust and the rest of the euro zone will need a plan to prevent a panic in its own banking industry.
EBA has tight deadline to avoid paper tiger status 6 Feb 2012 Lenders are using sleight-of-hand to meet the European Banking Authority’s demands for higher capital ratios. But the body has no real power to challenge their tricks. Unless it can play a canny political game, the latest tests may undermine confidence in both banks and the EBA.
Lazard lays bare need for better pay transparency 6 Feb 2012 The bank hit expectations for revenue but missed them for earnings. The reason: how it handles deferred bonuses. The matter is becoming a complex calculation that Wall Street firms could use to massage results. Lazard, at least, breaks out the details. Rivals should follow suit.
Expect Mark Zuckerberg to morph into Murdoch 6 Feb 2012 It could take decades or only a few years but the overwhelming control investors are ceding to the 27-year-old Facebook founder will eventually cease to be in their best interest. Or at least that’s the lesson from media empires like News Corp, Viacom or The New York Times.
Mexico looks out of step with world on antitrust 6 Feb 2012 As Europe and the United States block deals that threaten competition, Mexico last week gave Carlos Slim a free pass by stopping two TV barons uniting to challenge his telecoms dominance. The country’s feeble and captured competition authorities are squelching free markets.
Xstrata holders right to fret over Mick’s rewards 6 Feb 2012 CEO Mick Davis’s contract promises millions from any takeover, even if he doesn’t hold out for the best price. True, Davis’s existing shares help align his interests with outside shareholders’. But investors should still examine any Glencore deal closely.
Hugo Dixon: How to end the banker backlash 6 Feb 2012 The system is rigged in financiers’ favour, allowing them to earn more than they deserve. Though one-way bets have been reduced, banks are still too big to fail. Until that ends, they will be vulnerable to the kind of lynching suffered by the current and former bosses of RBS.
China has moral high ground over "dirty skies" 6 Feb 2012 Beijing’s principle of non-interference looks callous when it lends support to oppressive regimes, as in Syria and Sudan. But the refusal to pay the EU’s pointless, extraterritorial and unilateral airline carbon tax is right, even if Chinese doubts about global warming are not.
Egypt equities rebound may be part of bumpy ride 6 Feb 2012 Valuations are attractive even with a 27 pct rise this year. And the risk that the pound would fall harder than expected can be minimised. But even if the political problems have peaked, several potential flash-points promise investors that it won’t be a smooth ride.
World not ending – except maybe for shipping 6 Feb 2012 The Baltic Dry Index was a good crisis indicator in 2008. The measure of cargo ship rental costs just fell below the last-crisis low. End of the world? Probably not. World trade, well above pre-crisis peaks, is growing, albeit slowly. There’s just too much capacity on the seas.
Rising U.S. employment masks lingering malaise 3 Feb 2012 January saw 257,000 new private-sector positions and the jobless rate fell again. That’s good for job-seekers and Obama fans. But labor force participation is well below 2007 levels and long-term unemployment is way too high, making traditional full employment hard to attain.
Glenstrata board faces huge credibility challenge 3 Feb 2012 A look at the business mix of a merged miner-trader suggests Xstrata’s Mick Davis would be CEO with Glencore counterpart Ivan Glasenberg as deputy. Whatever the two decide, investors will take some convincing that the pair will still be snuggled up come Valentine’s Day 2013.
Facebook’s biggest risk lies in palm of your hand 3 Feb 2012 Half of the social network’s 845 mln users now access it through a phone, and that number is surging. Yet Facebook receives virtually no display advertising revenue from small screens. The shift to mobile Internet use could be Mark Zuckerberg’s biggest threat - and he knows it.
Super Bowl may settle buy-side/sell-side rivalry 3 Feb 2012 New York’s Giants are set to battle the New England Patriots on the gridiron Sunday. The fixture reflects enmity between Wall Street’s banks and Boston’s investment industry. Since neither can crow much about performance of late, bragging rights for XLVI offer a big bonus.
Become a U.S. regulator and see the world 3 Feb 2012 America’s financial watchdogs may get to monitor any deals done with any U.S. clients by any bank globally, if the Volcker Rule has its way. To do their duty, regulators will need more staff. Is this how a help-wanted ad might run? And, below, the warts-and-all first draft?
Glenstrata is sideshow to mining’s epic challenges 3 Feb 2012 A merger of already closely tied Glencore and Xstrata would slightly change the balance of large and mid-sized operators. But however much scale the Western miners amass, they can do little about the really big issues: the super-cycle, the shift to Asia and resource nationalism.
Two cheers for Spanish banking reform 3 Feb 2012 The country’s lenders must set aside another 50 billion euros against real estate losses this year. That’s a good start, but bad loans are still rising. Though Spain’s bigger banks can cope, the state will still be on the hook for part of the cleanup.
Facebook needn’t envy life inside China firewall 3 Feb 2012 About half the world’s Internet users live in China, where soon-to-IPO Facebook is banned. But the potential is uncertain anyway. China’s social networking scene is competitive; Facebook would be a latecomer. Google and Groupon show it’s hard to succeed inside the Middle Kingdom.
Rich countries need to escape institutional traps 3 Feb 2012 Greece could balance its trade and budget without becoming much poorer. Spain could cut unemployment and become richer in the process. The U.S. could rein in health care expense. All that is required is institutional reform. Sadly, it seems to take more than crisis to get that.
Too much success is priced into Facebook’s IPO 2 Feb 2012 That’s the message from the social network’s numbers and Google’s precedent. Growth and margins need to track the search giant’s trajectory to justify a $100 bln price tag. Investors will have to decide if much more than $50 bln leaves enough room for uncertainty and upside.
Goldman shooting its messenger may bring good news 2 Feb 2012 The bank is replacing veteran PR chief Lucas van Praag. His colorful ripostes to the press often turned a tin ear to public sentiment, but also reflected Goldman’s culture. Though the firm’s problems go beyond its image, a new mouthpiece suggests more changes could be on the way.
Gupta trial could herald financial “CSI effect” 2 Feb 2012 U.S. prosecutors took down Raj Rajaratnam with wiretaps and Ivan Boesky with a cooperating witness. Neither support seems available to help convict the former McKinsey boss. Just as TV crime shows altered juror perceptions, so too might past successes in insider trading cases.
Glencore-Xstrata would be big, and perhaps better 2 Feb 2012 There’s industrial logic to a tie-up: Glencore’s production assets would move Xstrata to mining’s top league; Xstrata’s would give Glencore’s trading arm an edge. But the cultural combination is risky. If Glencore didn’t already own 34 pct of Xstrata, a deal would be less likely.
Euro’s bounce can’t last 2 Feb 2012 The single currency has risen this year, contrary to market expectations. It’s been buoyed by vast extra ECB liquidity, some useful reforms, and the threat of more U.S. money printing. But Europe’s crisis is fundamentally unresolved and likely to drag the euro down.
Gingrich’s ‘Occupy Moon’ concept not totally loony 2 Feb 2012 The GOP hopeful wants a base by 2020 and statehood. While that may be daft, potential natural resource extraction isn’t, and would cost less than another Middle East war. But provisions of the 1967 Outer Space Treaty would present obstacles – and so would Chinese competition.
Glencore can’t afford to overpay for Xstrata 2 Feb 2012 The commodity trader is closing in on an all-share tie-up with its mining sister worth nearly $90 bln. Glencore could reap about $5 bln of synergies. But an immediate rise in Xstrata stock has already transferred much of this value to outside shareholders.
Ackermann sings a pained Deutsche swansong 2 Feb 2012 The German lender’s boss has built an investment banking powerhouse during his decade at the helm. But his last set of quarterly results are poor, the bank has a capital hole to fill and the long-term share price performance leaves little to write home about.
Sony resets ahead of management reboot 2 Feb 2012 The $2.9 billion of forecast losses for the year reflects a year of glitches. Thai floods, the strong yen and JV write-downs all caused problems. With expectations set low, incoming CEO Kazuo Hirai can focus delivering the winning products and software Sony currently lacks. But it won’t be easy.
Japan’s bluster can’t sink the irrepressible yen 2 Feb 2012 Officials want the central bank to print yen to stop its climb to help exporters. They shouldn’t hold their breath. The Bank of Japan may oblige for long enough to cool the currency’s rise, but an ageing population and massive debts mean fighting for a weaker yen is a losing battle.