China jobs market too hot, too cool and just right 2 Aug 2012 Knowing how many jobs China is creating is hard. Surveys show labour weakness, yet vacancies abound and the reported unemployment rate remains encouragingly low. In reality China has several job markets, each with its own challenges. No wonder politicians focus on growth instead.
M&A discretion will come with a price of its own 2 Aug 2012 Martin Marietta forfeited a hostile bid after rival Vulcan successfully sued it for a confidentiality breach. Now, a Blackstone-owned firm is accusing a suitor of illegal blabbing. Leaks can be harmful, but dealmakers and their clients may also find they miss the chatter.
Goldman shows not all innovation in finance is bad 2 Aug 2012 A $9.6 mln loan to the Big Apple is a canny use of pocket change. The bond will yield a tidy profit only if criminal recidivism in the city declines. It may be PR, but Goldman has a chance to prove not all Wall Street concoctions are weapons of financial mass destruction.
Brazil’s Chevron ban straddles worst of two worlds 2 Aug 2012 Suspending the U.S. oil giant’s operations over a minor spill keeps Latin America’s biggest economy aligned with the likes of Argentina. Such meddling won’t help Brazil revive flagging growth. At the same time, the prosecutorial zeal apes bad practice from the developed world.
Euro breakup risk: easy to label, hard to measure 2 Aug 2012 Mario Draghi has made the case for further intervention by arguing that euro zone sovereign spreads are pricing in “convertibility”. Calculating the breakup premium isn’t easy. But as long as it strengthens the European Central Bank chief’s hand, that may not matter.
Olympics a bad metaphor for economic rivalry 2 Aug 2012 China breaks the rules, the U.S. loses its edge, Britain barely registers at all. It’s easy to see the Games as a mirror for reality. But economics is different. Co-operation is rewarded, the prizes keep growing, and there are many ways to win, provided the competitors play fair.
French banks only solve first existential crisis 2 Aug 2012 Euro zone turmoil gave BNP Paribas and Societe Generale a mighty scare a year ago. First-half results show how they have turned their capital and liquidity positions around. But the euro is far from fixed, and they are still lumbered with subscale investment banking arms.
Man Utd counts on investors behaving like fanatics 2 Aug 2012 The English soccer club’s supporters expect nothing but success. That ethos carries over to Manchester United’s IPO, which seeks to value the enterprise at an optimistic 22 times EBITDA. Though Man Utd fans are rarely disappointed, buyers of the stock at the mooted price will be.
Barclays’ Qatari baggage gets even heavier 2 Aug 2012 Gulf funds spared the UK bank a state bailout in 2008. But the capital always looked costly and an “advisory” relationship with Qatar slim value. If a regulatory probe into disclosure discredits what’s left of Barclays’ top team, the deal will look even more like a Faustian pact.
Fed looks helpless until at least 2013 1 Aug 2012 The FOMC bewailed slowing U.S. growth but made no policy changes. Absent crises, more quantitative easing this year is unlikely. QE3 may anyway be more effective in theory than in practice. After the U.S. election, though, the Fed may face much tougher choices.
The $10 bln LBO may again be within reach 1 Aug 2012 Even if private equity firms don’t scoop up $8.5 bln LabCorp, a buyout on that scale looks possible. Big funds collectively have some $500 bln of purchasing power, lenders are hungry for yield and terms are easing. But it would also mean a return to the dreaded club deal.
Market flap shows danger of throwing glitch stones 1 Aug 2012 Knight Capital’s trading hiccup caused halts in several stocks. The firm, whose shares dropped over 20 pct, is separately demanding recompense from Nasdaq over the Facebook IPO debacle in May. Companies reliant on tech perfection should join hands before they point fingers.
Loser Citi lawsuit sends SEC back to drawing board 1 Aug 2012 A jury cleared a banker of misleading CDO investors, while also urging the U.S. watchdog to bring more financial fraud charges. But quantity isn’t the issue. The SEC has filed over 100 crisis-related suits. What’s too often lacking, as with the Citi example, is a solid case.
Avon needs clean break from discredited Jung 1 Aug 2012 Revenue at the cosmetics giant is tumbling, and it’s losing sales reps in key markets like Brazil. New CEO Sheri McCoy wants to get back to basics. Yet Andrea Jung, her predecessor and architect of the chaos, is still executive chairman. Any value in her sticking around is gone.
Conoco refining spinoff catches industry wave 1 Aug 2012 The May split that created Phillips 66, America’s largest refiner, was nicely timed. Cheaper oil and reduced competition helped the $24 bln company deliver a 14 pct surge in Q2 profit. It’s a useful start, but Phillips 66 still needs to beef up its promising chemicals business.
Eike Batista adds bottom feeding to tangled web 1 Aug 2012 The Brazilian billionaire is taking his logistics arm LLX private after the share price halved in a year. Investors may rue getting on board with Batista, but delays, losses, missed targets and a slowing economy swamping his complex conglomerate make it a good time to jump ship.
Ethical economy: The Big Smothering State 1 Aug 2012 Governments play a valuable role in industrial economies. But in other matters, the value of the extensive and intrusive state is much more questionable. Both critics and defenders of big government often miss the crucial distinction between economic help and social harm.
StanChart finds buffer against Asia slowdown risk 1 Aug 2012 The emerging market lender delivered its customary strong growth in the first half, with income up 9 percent. The worry is that continued expansion comes at the expense of ever-higher bad debts. But StanChart is also benefiting as European rivals retreat from Asia.
Hot money working in Asia’s favor, for a change 1 Aug 2012 When the region’s central bankers were worried about inflation, foreign portfolio investors were their enemy. Rate increases lured hot money, adding to price pressure. Now the Asian authorities want to spur growth, and foreign investors’ thirst for yield is helping them out.
Partners’ noise can’t mask value for BP in Russia 1 Aug 2012 BP’s partners are playing hardball over their Russian joint venture. But a nixed dividend and legal noise are mostly distractions. TNK-BP’s core business shouldn’t be affected, and its valuation has become clearer. With Rosneft circling, BP should have a strong position.
India’s power vacuum needs to be filled 1 Aug 2012 You couldn’t make this up. As the country suffered from the largest blackout in history, the government promoted the power minister and replaced him with a part time substitute. Delhi badly needs to turn the economy around, but it suffers from a gigantic leadership deficit.