Evercore’s giddy ambitions look risky 26 Apr 2012 The boutique bank has been growing by leaps and bounds despite its Q1 blip. Now CEO Ralph Schlosstein wants Evercore to be in a league with older and bigger Lazard and Rothschild. Such competitive aspirations are laudable, but history suggests they can backfire on Wall Street.
Watchdogs coming up short on ETF risks 26 Apr 2012 It’s heartening to see Finra going after brokers for mis-selling complicated variants of exchange-traded funds. But investors need more protection earlier on in the process. That means ensuring potential buyers are well-informed of the risks and the fees before they jump in.
AstraZeneca now needs a cultural revolution 26 Apr 2012 The old CEO is gone and a new chairman will come faster than planned. The board has moved decisively to address shareholder concerns about strategy and performance. But the pharma group’s difficulties are ingrained in its psyche. The company needs more than new leaders.
Deutsche and Barclays’ fortunes could yet converge 26 Apr 2012 The UK lender’s investment bank outpaced its German rival in the first quarter. But Deutsche Bank is in deleveraging mode, while Barclays’ risk-weighted assets actually rose. Capital challenges and mutual vulnerability to a misfiring euro zone could yet spoil 2012 for both banks.
Pharma saga shows bad lending’s long half-life 26 Apr 2012 Singlehandedly funding the 2007 buyout of Actavis, an Icelandic drugmaker, was one of Deutsche Bank’s worst boom-era moves. Failed M&A rescues, restructuring and $1.7 bln of charges followed. At least Watson Pharma is now ending this unhappy saga with a near-$6 bln takeover.
Thailand’s weak exports don’t dent recovery story 26 Apr 2012 Rebuilding after 2011’s floods should produce a V-shaped recovery. Falling European demand is a worry, but investment is booming and output should rebound as factories reopen. Government handouts will prop up rural consumption. That augurs well for earnings and stocks.
Iran offers Egypt limited lesson in subsidy reform 26 Apr 2012 The IMF says Cairo should look to Tehran’s example in its bid to reform energy subsidies. But a poor country like Egypt can hardly afford Iran’s near-universal and inflationary cash handouts at a time when it needs to slash public spending.
Fed’s rising growth, falling inflation are wishful 25 Apr 2012 The U.S. central bank sees a pick-up in growth even as the annual rise in prices declines from the current run-rate above the Fed’s 2 pct target. These trends aren’t apparent from recent data, and the Fed needs contingency plans if they don’t pan out so conveniently.
Can hedge funds help save the GOP from itself? 25 Apr 2012 These big money backers of Mitt Romney have also been leading the charge to legalize gay marriage. Although their social liberalism may turn off the Republican base, it could also bring in swing voters who agree with the party on fiscal policy but not its cultural conservatism.
Florida example could help drowning Dewey lawyers 25 Apr 2012 Ruden McClosky kept its business going by pulling off a unique pre-agreed bankruptcy and merger. Dewey & LeBoeuf might do the same, if partner and client defections don’t swamp it first. But the maneuver is tricky, and the New York firm could learn from Ruden’s experience.
Be wary of Santander’s Mexican fiesta 25 Apr 2012 The Spanish lender hopes to boost capital by listing its Mexican unit, which should fetch a higher valuation than the parent. Santander did the same in Brazil in 2009. But given the bank’s knack for selling at the peak, investors will have to be convinced there is some value left.
Rupert Murdoch telegraphs shareholder indifference 25 Apr 2012 The News Corp chief spoke with care when grilled by a UK media inquiry on the interplay between his political contacts and commercial interests. Sadly, he was at ease in brushing aside shareholder demands that he sell his newspapers, and voicing regret about taking Sky public.
Draghi’s growth babble is no retreat on austerity 25 Apr 2012 The ECB head has called for a euro “growth compact”. The words may be new but the vision is unchanged. Francois Hollande feigns to see this as a support for his ideas. But what Draghi has in mind isn’t what the French socialist plans to do if elected president.
BofA-UBS job swap offers symbolic snapshot 25 Apr 2012 The U.S. group has poached old-school investment banker Alex Wilmot-Sitwell from UBS, just after bold dealmaker Andrea Orcel went the other way. As the Swiss lender shakes up its culture, BofA is also reshaping Merrill. The moves are emblematic of firms adapting to a new reality.
TARP success doesn’t make it good finance 25 Apr 2012 The government’s $700 bln bailout plan stabilized the U.S. banking system and carmakers, but taxpayers won’t see any direct returns from the investment. Treasury’s fuzzy math wouldn’t fly with any sensible portfolio manager. What it calls a profit looks more like a $230 bln loss.
BTG Pactual looks fairly priced at $14 bln 25 Apr 2012 The Brazilian investment bank’s IPO values it at three times book, way ahead of U.S. rivals. Better margins, returns and comp levels justify that. But its volatile trading desks, an ambitious regional expansion drive and CEO Andre Esteves’ tight control are reasons for caution.
Ethical economy: Prosperity need not kill religion 25 Apr 2012 Predictions about the death of religion and the decline of morality have been around since the advent of the industrial age. But while prosperity and urbanisation do break up old social patterns, and old moral certainties, there is room for spirituality in the new world order.
Credit Suisse still shrinking its way to stability 25 Apr 2012 The Swiss bank returned to the black in the first quarter, even though revenue was below the same period of 2011. Cost-cutting helped, and balance sheet shrinkage lifted returns. But Credit Suisse has more to do to meet its capital targets. Choppy markets won’t offer much help.
No need for UK panic as Europe brings recession 25 Apr 2012 The latest report shows British GDP has fallen for the second quarter in a row. With Europe in recession and Britain in austerity, such weakness is no surprise. But the government and the central bank should still worry more about inflation than economic decline.
Jailing IPO bankers is a step too far 25 Apr 2012 Hong Kong talk of allowing lawsuits against negligent sponsors sounds fair. Reputation isn’t the safeguard it was. But the regulator’s idea of adding criminal liability may just damage the market’s efficiency. And it misses the real problem: investors lap up overpriced deals.
Pro-growth polices won’t come out of thin air 25 Apr 2012 Euro zone voters want growth, and they want it now. But GDP won’t automatically bound skyward by reversing austerity - even if central banks help with money printing. Joblessness and debt burdens can only be lifted slowly - or by scarily radical policy shifts.
RBS scrapes barrel with reverse stock split 25 Apr 2012 The UK bank’s planned cut in its share count may help it look more like a normal bank. But unlike a similar ploy by Citi last year, punitive EU state aid penalties mean RBS can’t restore dividends as well. As such, the move underlines that managers have few other levers to pull.
It’s too soon to be doubting Apple 24 Apr 2012 Fears over a slowing U.S. smartphone market and chip problems sent investors scurrying in April. But the company smashed expectations yet again, almost doubling profit in the latest quarter. The trends powering Apple - China, rising margins and the halo effect - still have legs.
JPMorgan sends big gun after small bounty 24 Apr 2012 Deploying its global head of investment banking, Jeff Urwin, to run things from Hong Kong may help Jamie Dimon catch up with regional leaders UBS and Goldman. But given Asian deal fees are just a fraction of the total pool, Urwin’s frequent flyer miles will probably grow faster.
Space mining plan more than just sci-fi fantasy 24 Apr 2012 A U.S. company’s plan to scour asteroids for precious metals sounds bonkers. Its success depends on huge technical leaps and stratospheric prices. But even if the project never returns a single rock to Earth, the innovations it spawns could reward its billionaire backers.
Cuba unveils a Hugo Chavez hedge: economic reform 24 Apr 2012 With the island’s last rich patron battling cancer, Raul Castro may finally see the writing on the wall. If he can reduce the state’s role in the economy and relax restrictions on capitalist activities, Cuba’s future won’t be North Korea or even Vietnam - but rather Turkey.
DBS deal tests Indonesia’s deep Singapore-phobia 24 Apr 2012 Even a 52 percent premium may not secure the Singaporean bank’s $7.2 bln takeover of Bank Danamon. A deal would benefit all sides and burnish Indonesia’s image as a hot investment destination to boot. But looming elections and longstanding mistrust may trump commercial logic.
Murdochs’ UK political friendships backfire on all 24 Apr 2012 A public probe is exposing unhealthy contact between the British government and News Corp. That creates new uncertainty over the media group’s part ownership of pay-TV firm BSkyB. And the impression that ministers were compromised has the makings of a full-blown political crisis.
What would a Spanish bailout look like? 24 Apr 2012 Spain is too big to bail like Portugal or Greece - but it can be saved. Spain needs a three-way package: aid for its banks, support for its bond market and a revised fiscal programme. It could be controversial, but the alternative, a contagion spiral, would be worse.
Fed targeting only inflation would have it easier 24 Apr 2012 The U.S. central bank’s double focus on prices and jobs blurs its mission. And aggressive efforts to smooth hiring cycles risk unintended consequences. They also let fiscal policymakers in Congress off the hook. A plan to make the Fed fixate on prices alone could change that.