Apple’s latest iPad looks sufficiently incremental 7 Mar 2012 The new tablet device comes with a sharper screen, more powerful chip and better camera. The update is evolutionary, not revolutionary. That may disappoint gadget fiends hoping for something more. But history suggests it should be plenty for Apple investors craving growth.
Billionaires get new hymnal from one of their own 7 Mar 2012 The Forbes mega-rich list arrived with all the voyeuristic fanfare it typically commands, despite the rise of the 99 percent. But new, similar-looking rankings from Bloomberg threaten to displace its seasoned rival. It may be the latest case of new money crowding out old.
Fortune 500 plays tough for home-court advantage 7 Mar 2012 Weary of fighting shareholders in multiple states, big U.S. companies want to force M&A lawsuits into their preferred forum, Delaware. But investors deserve a say in the matter. Deal lawyers and bankers will give the hot-button issue a hearing at their annual New Orleans confab.
Apple needs good, not just better, supply chain 7 Mar 2012 Despite the bad press, Chinese workers preparing the iPad 3 are treated less badly than many in electronics - which in turn beats the toy and clothing sectors. But with the “lonely leadership” of Apple’s brand and cash, doing things relatively well isn’t enough.
Seat PG bond swap finally dials down debt 7 Mar 2012 Creditors are taking over another overstretched directories publisher. Seat Pagine Gialle’s 1.2 billion euro debt swap will leave private-equity and public shareholders almost nothing. Post-deal gearing looks manageable – provided the Italian firm can reinvent itself online.
Republican hopefuls rely on faith in economics too 7 Mar 2012 Romtorumgrich promise tax cuts while simultaneously shrinking the U.S. deficit. Economists criticize their math, which doesn’t add up. The candidates say that critics aren’t accounting for stronger growth from lower taxes, or “dynamic scoring.” Neither should voters.
Ethical economy: The lesson of Fukushima 7 Mar 2012 A year after the Japanese nuclear disaster, both opponents and proponents of atomic energy are saying, “We were right all along.” Their differing analyses and cost comparisons reflect a deep philosophical divide. These days, the nuclear debate ought to be able to get past that.
Greek debt threat won’t trigger Armageddon 7 Mar 2012 Athens is threatening not to pay holdouts in its debt swap, dispelling any pretence of a voluntary restructuring. The sabre-rattling is spooking markets, but an outbreak of minor chaos should help bring stragglers on board. A disorderly default still looks remote.
Japan quake anniversary shows lessons unlearned 7 Mar 2012 The economy bounced back after 2011’s disaster, but Tokyo squandered a chance to push through painful economic reform. Now growth is slowing. That leaves Japan in the same state it was in before the earthquake – only deeper in debt and one year closer to its moment of reckoning.
Fiat CEO’s call for EU auto fix is barmy 7 Mar 2012 Sergio Marchionne says Brussels must take a lead in eliminating the industry’s excess capacity, by spreading needed cuts in production across the continent. But that’s not the EU’s job. Its remit is to ensure sound competition – which should help the sector take care of itself.
UK would gain from intelligent industrial policy 7 Mar 2012 British politicians have long shied away from coherent long-term economic plans. But ad hoc decisions on technologies, infrastructure, immigration and banking are not good enough. Vince Cable, the business secretary, is right to call for a new vision.
Australian GDP shows vulnerability to cooler China 7 Mar 2012 Mining investment plateaued in the fourth quarter. That left the economy at the mercy of weak housing. Investment may pick up again for a while. But Chinese policy suggests slower increases in demand for stuff from the ground. A linchpin of Australian growth looks wobbly.
Lehman is back! Is the financial crisis over? 6 Mar 2012 If only. Sure, the worst may be history as the ghost of the Wall Street firm finally emerges from bankruptcy. But uncertainty still obscures new rules and how another Lehman meltdown will be avoided. Worse, governments look far more enmeshed in financial markets than before.
Texan mini-Madoff gets comeuppance 6 Mar 2012 The cricket-loving Allen Stanford topped the Ponzi master for chutzpah, cheating almost 30,000 investors of $7 bln. His conviction is a win for prosecutors. But it’s also a reminder that crooks exposed by the crisis are easier to catch out than financiers who helped cause it.
Exxon fears hammer home risks of Kurdish oil rush 6 Mar 2012 Speculation the U.S. major may not enter Iraqi Kurdistan after all has pummeled shares in the region’s oil companies, including a 24 pct drop in Gulf Keystone. Exxon was meant to break the political impasse in Baghdad, without which big energy bets in the region may be off.
Euro cost studies are misleading and meaningless 6 Mar 2012 The IIF puts the price of a Greek default at 1 trln euros. Lombard Street Research reckons the cost of keeping the euro zone intact is even greater. But predicting alternate economic outcomes is subjective. Beyond advancing specific agendas, the exercise has little merit.
Fondiaria saga recalls Italian power-broker heyday 6 Mar 2012 The struggling Italian insurer’s investors have to choose between merging with rival Unipol and a private equity offer led by ex-Capitalia chief Matteo Arpe. Both carry risks. But the benefits of the Unipol deal in particular look skewed to power-brokers rather than shareholders.
Demographic flip endangers U.S. jobs recovery 6 Mar 2012 Some 4 mln people under 55 may soon seek employment, a Breakingviews analysis of labor participation rates shows. Yet the share of older folks working has grown – and they might not retire so fast. As the economy improves, the two trends could wreak havoc on the jobless rate.
Spain replaces Italy as bad boy in euro class 6 Mar 2012 Since August, Italy has been the big troubled euro economy, with higher yields than Spain. But Rome’s borrowing costs are now a touch tighter than Madrid’s. Economics and politics are responsible for the flip. The gap could widen further – at least until Italy’s next elections.
Peugeot’s $1.3 bln cash call inspires confidence 6 Mar 2012 Underwriters sought a 32 pct discount to the theoretical ex-rights price for the carmarker’s fundraising in its alliance with GM. That seems steep, but reflects a challenged industry. Indeed, for a company raising a third of its market value, the 6 pct share price drop is muted.
Rahul Gandhi’s drubbing may be boost India needs 6 Mar 2012 The Congress Party faces defeat in key state elections, suggesting its reliance on handouts and the Gandhi family magic needs a rethink. That could be a turning point. Fear of losing 2014’s general election might just jolt the party into action on urgently needed reforms.
Dubai’s flying shoppers could ease its debt burden 6 Mar 2012 The emirate wants to borrow at least $500 million against its giant airport retailer’s future revenue. Rising passenger numbers and expanding retail space seem immune to Dubai’s debt hangover. And securitisation looks increasingly attractive as Western banks withdraw.
Flawed Western governance needs Eastern fix 6 Mar 2012 “One share, one vote, one board” has its problems. But reform rarely goes beyond tinkering. Something radical is needed. A clever dual-class share system, borrowed from 19th century Chinese banking, could keep managers loyal and stop unwanted meddling by capital providers.
U.S. stock bubble is in profit, not value metrics 5 Mar 2012 The S&P 500 trades at 14 times earnings, so valuation multiples aren’t excessive. But U.S. domestic corporate profitability is running 50 pct above the long-term average, while global profits have soared even higher. This is unlikely to last long.
Who cares how many jobs Apple has created? 5 Mar 2012 Shareholders should be scratching their heads after the gadget king commissioned a study showing it produced half a million jobs. This subjective report misses the point. Apple has created $400 bln of value in the past three years - that’s good for the economy and capitalism.
ECB cash palliates crisis but drives up oil price 5 Mar 2012 The euro zone’s crisis has been eased by a trillion euros of financing from the European Central Bank. But this easy money comes with major risks. It has helped drive up the oil price, indirectly funds deficits and, as Germany fears, could bring inflation and a debased currency.
U.S. natural gas looks irresistibly cheap vs oil 5 Mar 2012 With crude prices rising and gas sliding further, oil is now eight times dearer than gas based on energy content - the biggest gap since the 1950s. Global shifts dictate the price of the black stuff but, as news from Detroit shows, local market forces should work on American gas.
Lucrative Sino-Gulf ties will survive Syria clash 5 Mar 2012 China and Gulf Arab countries have different views on whether Assad should be forced out. But they also have $90 bln in trade. It’s in neither’s interest that this is disrupted. If the Syrian conflict escalates, Beijing may need to further soften its position.
Glencore shouldn’t overplay its hand with Xstrata 5 Mar 2012 The commodity trader’s CEO, Ivan Glasenberg, has said the deal’s terms are fair and questioned why he should pay a higher premium for miner Xstrata. It’s easy to see why he is acting like he holds all the cards. But in reality, his poker face isn’t that convincing.
BP’s big opponents may blink next 5 Mar 2012 The oil major’s Gulf of Mexico deal neutralises one set of plaintiffs – with a modest increase in expected payments. And if the injured parties are happy, U.S. federal and state governments are more likely to agree to fines which BP can bear without too much more pain.