Buyout firms lack artistry on Michaels deal 10 Apr 2012 Bain and Blackstone paid $6 bln for the U.S. crafts retailer near the top of the cycle in 2006. The bad timing was papered over by the success of scrapbooking and beading as cheap family fun in the downturn. That should enable the firms to chalk up a modest return in an IPO.
China’s positive data hides healthy economic pain 10 Apr 2012 Surprisingly high inflation and a big monthly trade surplus are misleading. Producer prices are falling and exports slowing. But the news is not bad enough to provoke monetary stimulus. Reformers think slowing growth pains are required to make China’s economy more balanced.
Euro zone powerless to avoid big oil divide 10 Apr 2012 Some euro members are more unequal than others in the face of rising oil prices. The hit to growth is greater in enfeebled and touristy countries like Greece, Ireland or Italy than in richer ones like Germany. And there’s little governments can do to alleviate the pain.
Brotherhood holds Egyptian army to ransom on aid 10 Apr 2012 The popular Islamist movement won’t support an IMF deal without new terms, or unless the army gives up control of the government. With Egypt’s finances in a precarious state, this kind of tough talk will force the military to compromise, or risk a disorderly pound devaluation.
Singapore may not escape India’s offshore tax grab 10 Apr 2012 The country’s tax crackdown is likely to prompt an exodus of investors from Mauritius. Some are already shifting their operations to Singapore. The city state is a better established financial centre. Nevertheless, the very act of hopping islands may look like tax avoidance.
Facebook’s defensive Instagram M&A raises red flag 9 Apr 2012 Online photos are supposed to be a core Facebook competence. Paying $1 bln for the picture-sharing app may boost the social network in mobile. But paying over the odds for revenue-free rivals is usually what anxious, mature firms do - not growth companies seeking to go public.
New image top priority for Conoco refining spinoff 9 Apr 2012 Phillips 66, the $30 bln-odd firm set to separate from the U.S. oil major on May 1, wants to be something else. Refiners get low valuations next to racier pipeline and chemical firms. But with 84 pct of Phillips’ capital tied up in refining, investors will take some persuasion.
Argentina case puts bite in holdout hedgies’ bark 9 Apr 2012 Elliott Associates spurned the nation’s debt swap but may still get paid, thanks to a U.S. judge’s plan for blocking payouts to other bondholders. If upheld, the ruling might muddle sovereign lending and workouts. But it should also reassure creditors that deal terms have teeth.
Microsoft opens pricey new front in patent wars 9 Apr 2012 The software giant is spending $1.1 bln to buy some 800 patents from AOL. At over $1 mln apiece, the rate tops even the huge ones paid last year for intellectual property for mobile phones. This first salvo in the Internet space throws down the gauntlet at Google and Facebook.
World Bank wackiness explains odd U.S. choice 9 Apr 2012 If the competition for the World Bank’s presidency were a normal process, Jim Kim wouldn’t stand a chance. But geopolitics and the bank’s mandate explain why the doctor who couldn’t stop Dartmouth frat boys from consuming “vomelets” may actually be an inspired choice.
Avon CEO hire risks making corner office crowded 9 Apr 2012 Sheri McCoy, Fortune’s 10th most powerful woman in business, should make a turnaround of the cosmetics firm a real alternative to a sale. But retaining Andrea Jung, the outgoing CEO and number six on the Fortune list, as executive chairman makes McCoy’s job look harder.
Jamie Dimon lets smaller rival grab his pulpit 5 Apr 2012 The JPMorgan chief’s closely watched annual shareholder letter falls a bit flat this year. It rehashes old gripes and doesn’t lay much new ground. Step up Robert Wilmers, boss of regional bank M&T, whose take on the state of finance makes it the must-read missive of the season.
Why is IBM even sponsoring the Masters? 5 Apr 2012 Golf and business often mix well. But Augusta National remains an all-boys club. That defies IBM’s diversity aims - very noticeably so given its new CEO, Virginia Rometty. Even if the financial logic for sponsorship wasn’t fuzzy, the tech firm would be better off pulling the plug.
Delta would be crackers to fly into refining 5 Apr 2012 Pricey fuel is the airline’s nemesis. But buying Conoco’s idled plant would increase Delta’s risk. It wouldn’t hedge volatile crude prices and would leave the company exposed to the financial challenges of running a refinery. There are better ways for Delta to cut its costs.
Review: Parasites, trust and morality 5 Apr 2012 Without trust, society splits into warring tribes and parasites prosper. Moral psychologist Jonathan Haidt explores the roots of the left/right divide in “The Righteous Mind,” while security expert Bruce Schneier says in “Liars & Outliers” that all societies need a few defectors.
Spain reveals holes in Europe’s crisis plan 5 Apr 2012 Rising Spanish yields have thrust the euro zone back into crisis mode. The ECB’s liquidity boost is fading, and the obsession with austerity looks self-defeating. Though Madrid could use some support for its banks, a full bailout will be difficult. Self-help is the only answer.
Rothschild Anglo-French union secures family grip 5 Apr 2012 The investment bank is merging its French and British subsidiaries into a single listed vehicle, Paris Orleans. But the new group’s limited partnership structure guarantees airtight family control - regardless of who takes over from current chairman David de Rothschild.
YPF folly could end up costing Argentina double 5 Apr 2012 If President Cristina Fernandez makes a grab for the country’s oil group, it’s unclear how she would reimburse majority owner Repsol. But even if the state managed to fork out a “fair” price, the cost of scaring off foreign investors would exceed any gain from nationalisation.
Nigerian billionaire’s LSE-quote plan is watershed 5 Apr 2012 A mooted London listing for Aliko Dangote’s $11 bln cement group is a milestone for Nigeria and for Africa. The resource-rich continent has seen false starts before, and Dangote’s venture isn’t without risks. But a FTSE 100-sized Nigerian company gives cause for celebration.
Wall Street hangs in limbo despite market rebound 4 Apr 2012 Investment banks have started 2012 far better than they ended 2011. Revenue should be higher in all but M&A and equities. A more stable Europe has helped. But even if the recovery sticks this time, most firms will need considerably more trading and deals to earn decent returns.
Moody’s gives GE another reason to snap up banks 4 Apr 2012 The rating agency is downgrading the firm and its $554 bln finance arm on concerns about funding. GE knows it’s an issue, which is why it scooped up MetLife’s $7.5 bln of deposits last year. But it may need to find five times that amount to prove GE Capital poses little threat.
D.C. holds $23 bln fix for cash-strapped states 4 Apr 2012 That’s how much they could raise from taxing online retailers. A pre-Internet ruling currently forbids such tariffs, forcing states like Georgia to resort to contorted ways around it. A federal solution is needed. Luckily, Congress may have hit on one that even Amazon supports.
Newest burger kings get Whopper of a finder’s fee 4 Apr 2012 The public return of Burger King via a tie-up with a London SPAC gives financiers Bill Ackman, Nicolas Berggruen and Martin Franklin something to relish: a finder’s fee of stock worth some $160 mln. And the hamburger chain gets a far meatier valuation than just two years ago.
Against the euro, the pound looks sound 4 Apr 2012 Britain’s economy probably grew 0.5 percent in the first quarter. That’s a big improvement on Q4 - and a lot better than the euro zone. UK inflation is stubborn too, making further rounds of money printing less likely. It all bodes well for sterling against the euro.
UK social investment fund merits cautious welcome 4 Apr 2012 The government has siphoned 600 mln stg from banks to help finance socially valuable businesses. Its “Big Society Capital” fund will need to show it’s not just making soft loans to duff projects. But it could help private capital plug the hole left by cutting grants to charities.
Pain now should bring gains later for U.S. lawyers 4 Apr 2012 Like doctors and bankers, they’ve lost cash and cachet. But there’s an upside to the technological and economic changes roiling their profession. Smart computers can take drudgery out of legal practice, while a more law-abiding Wall Street will need attorneys to keep it in line.
Wage happy Germany may worsen euro zone divide 4 Apr 2012 As most of Europe cuts wages, Germany is letting them rise. The economic powerhouse can afford the generosity and its growth will benefit. Periphery exports may get a bit of a boost but if German inflation leads to tighter monetary policy, the zone’s divisions will get worse.
Who will fill Ian Hannam’s shoes? 4 Apr 2012 The JPMorgan banker’s resignation leaves a hole in the London market. Candidates to fill it are rival investment banks and Hannam himself, assuming he clears himself of market abuse charges. But it’s also possible that some of the business he generated just won’t come to London.
Greece faces new taboo: not defaulting 4 Apr 2012 Some bondholders rejected the country’s debt swap. Holdouts could drag Athens through international courts if it defaults, and stymie its recovery. But repaying them would be politically difficult, and rile creditors who took a loss. Greece can afford to play hardball for now.
Tata’s new guard can break open old markets 4 Apr 2012 Cyrus Mistry’s first major appointment is a young charismatic head of business development. Tata may be one of the few groups with the political and economic clout needed to breathe new life into India’s retail and financial services markets.