Bigger bucks come to Supreme Court clerks who wait 3 Oct 2012 Top U.S. law firms are offering $280,000 signing bonuses to lure the best young lawyers. But many do stints with the government first. A new Breakingviews calculator shows how that path can be financially smarter over the long run. Uncle Sam gets to hire the best talent, too.
HP’s services turnaround running low on ink 3 Oct 2012 The $29 bln tech company’s PC and imaging businesses are in decline. Investors had counted on IT services to print better numbers, à la IBM, while HP tries to fix the rest of itself. That’s not happening, for now at least. Boss Meg Whitman’s task just got even tougher.
Oil industry steals page from pharma M&A playbook 3 Oct 2012 Honeywell’s purchase of Thomas Russell was the ninth oil services deal in as many days. Scavenging the deep sea and icy climes requires exploration DNA. Specialized technology is becoming to energy giants what biotech is to the drugs sector. Smaller firms are in big demand.
Do Venezuela debt investors have a death wish? 3 Oct 2012 They’re pushing the country’s 10-year yields to near-historic lows, in what looks like a bet on Hugo Chavez losing at the ballot box or succumbing to illness soon. But neither he nor his policies will be easily unseated. That could mean bond buyers are planning their own funeral.
Portugal jumps the gun on ECB’s new plans 3 Oct 2012 Lisbon has raised long-term funds in a canny debt swap and now plans to issue new debt, mimicking a similar move by Ireland. Investors’ willingness to take risk highlights Portugal progress in reforming its economy. The deal may also help kickstart the ECB’s bond purchases.
Nine answers that should win the White House 3 Oct 2012 President Barack Obama and Mitt Romney need to explain how they would fix the U.S. economy when the first of their debates kicks off on Wednesday evening. Breakingviews concocts the nine answers we’d love to hear.
T-Mob-MetroPCS won’t end US telco quest for scale 3 Oct 2012 Scale brings better returns for mobile providers. But a combined T-Mobile-MetroPCS will still lack the wherewithal to compete against giants AT&T and Verizon. That means the new company as well as the likes of Leap Wireless have little choice but to dial up more deal-making.
Deutsche Telekom brightens stateside status quo 3 Oct 2012 Combining DT’s T-Mobile USA with smaller operator MetroPCS is hardly the big bang solution that a sale to AT&T once promised. But adding Metro would bolster T-Mobile’s weak market position, adding customers and spectrum. Cost savings and a stock listing would help too.
Spare a thought for the good old-fashioned merger 3 Oct 2012 Global M&A activity this year, at $1.7 trln, is even more insipid than the headline 16 pct drop implies. It’s hard to find a traditional tie-up among the 30 biggest deals amid all the spinoffs, partner buyouts and nationalizations. Bankers cannot live by such bread alone.
Ethical economy: The EAST cure for unemployment 3 Oct 2012 The Fed and the U.S. presidential candidates are struggling to find a way to fight high unemployment. EAST could help them think more clearly. E is for job-destroying Efficiency, A is for the Asymmetrical result, a Surplus of labour. T is for making jobs the direct policy Target.
Iran at risk of draconian response to rial slide 3 Oct 2012 Tehran’s attempt to ease pressure on the currency helped trigger this week’s sudden and sharp slide. Iran has limited short-term options to stem the panic. A deeper rebalancing of the economy is required. But in tough times that might just result in a more bullying state.
UK lost decade warnings are late – by a decade 3 Oct 2012 Ed Balls, the shadow chancellor, is not alone in warning of a UK lost decade. But the warnings come a little late. The UK has already lost most of a decade. Prospects now are hampered by more debt and the euro crisis, but still look better, provided past errors aren’t repeated.
Scardino exit reignites FT sale speculation 3 Oct 2012 Pearson’s departing CEO famously said she would sell the Financial Times “over my dead body”. The chairman is also fond of the pink paper, and her successor has been at the group for 15 years. Still, post Scardino, Pearson will be less attached to the barely profitable paper.
UK needs to put outsourcing on new rails 3 Oct 2012 The British government has reacted with alacrity to the discovery of errors in the way it awarded the 6 bln stg West Coast rail franchise. But without serious assurance that the system can work better, private providers of state-sponsored services could start jacking up prices.
Chinese sightseers present challenge to the world 3 Oct 2012 Half the country’s 1.4 billion inhabitants are expected to travel during this week’s national holiday. A new love for tourism provides a much-needed economic boost. But giant traffic jams and a deadly boat crash in Hong Kong underscore the difficulty of coping with the crowds.
Forming ECON Team 4 is next president’s top task 2 Oct 2012 Thanks to the fiscal cliff, whoever occupies the White House won’t have the luxury of choosing the first big legislative priority. Striking a bipartisan mega-deal to fix Uncle Sam’s finances will be priority one. Use our new Dream Team Machine to create an economic delta force.
Bankers should be made to eat their own stew 2 Oct 2012 The EU’s Liikanen review says managers should receive part of their compensation in the form of their own banks’ bail-in bonds. Since such debt would plummet if the bank needed a rescue, it would make bosses more alive to the risks their institutions are running.
Ring-fencing could reinforce EU banking disunion 2 Oct 2012 EU banks should fence off their trading assets, a European Commission advisory group says. That looks more like the tough UK Vickers reforms than banks had expected. The risk is national regulators get even more tribal in protecting their own, instead of embracing banking union.
Xstrata is a warning on boards that give up value 2 Oct 2012 An acceptable deal with Glencore doesn’t exonerate the miner’s directors from charges they lack spine standing up for shareholders. The failure to push Glencore to the pain barrier sooner has roots in the same weakness that sanctioned excess pay for CEO Mick Davis time and again.
Super-voting stock hardly super in terms of value 2 Oct 2012 Facebook and Zynga are among the growing number of companies with multiple classes of shares. Yet their returns are worse than for simpler ownership structures over most time periods, new research finds. Investors should consider they’re often giving up more than just control.
Georgia poll looks like win for Putin’s Dream 2 Oct 2012 The Georgian Dream opposition won the parliamentary election. That’s a normal pendulum-swing rejection of the government, in spite of its fine economic performance. But the Dream’s leader is a shadowy billionaire with unsettling good relations with the big boss from the North.
Maybe Jamie Dimon wasn’t so clever with Bear 2 Oct 2012 JPMorgan’s CEO looked shrewd four years ago by sticking the Fed with the collapsed investment bank’s worst-looking mortgage assets before agreeing to buy it. Not only did those securities wind up making money, but New York’s top lawman just showed how Bear’s legal risks persist.
India’s Kingfisher can still avoid futile closure 2 Oct 2012 The airline, which suspended operations on Oct. 1 after a labour dispute, can fly again if its licence is not revoked. A full shutdown would hurt creditors unduly - and undercut the government’s decision to welcome foreign carriers as white knights.
Evaporating goodwill raises M&A bar another notch 2 Oct 2012 European companies wrote off 76 billion euros of M&A-created intangible assets last year, five times the previous period and more even than in 2008. It may be a deck-clearing exercise. Now bitten, however, corporate boards may think harder about sanctioning future deals.
Qatar’s sovereign funds: A guide for the perplexed 2 Oct 2012 Confusion over which Qatari vehicle is eyeing a stake in Eike Batista’s gold firm is a reminder that the emirate’s financial activities go beyond the Qatar Investment Authority. But the lines between Qatar’s various investment entities are blurred. Here’s a handy map.
Hot tech IPO a Frankenstein monster of governance 1 Oct 2012 What happens when a company takes Research In Motion’s two-headed CEO structure, bolts on Facebook’s feudal-class voting rights and injects News Corp’s nepotism worries? In the case of Workday, it creates an eye-popping $3.9 bln valuation for a software firm without any profit.
Brazil’s lending war leaves both sides looking bad 1 Oct 2012 Browbeating Bradesco and Itaú into slashing credit card rates is President Dilma Rousseff’s latest victory in making lending more affordable. But banks may raise other fees instead. And they want to lend more to riskier customers. It’s hardly a path to a stable banking system.
Dying intellectual left awaits rebirth 1 Oct 2012 Marxist historian Eric Hobsbawm, who has died aged 95, never really got over the USSR’s failure. The passing of his generation has left a gap. The financial crisis showed something is wrong with the modern capitalist consensus, but the next big idea remains undiscovered.
Two cheers for European democracy 1 Oct 2012 It’s easy to be cynical. Politicians mislead voters, Italian MPs let technocrats make hard decisions, and the UK Labour opposition backtracks. But the public debate is becoming serious, and voters shy away from extremist solutions. The U.S. has far bigger problems.
U.S. banks securing some deserved debt relief 1 Oct 2012 A rule that forces them to book gains and losses on their own liabilities may at last be scrapped. At best, the accounting standard, implemented just ahead of the crisis, is a needless distraction - at worst, a way to mask a bad quarter. Its demise is overdue, but welcome.