Made-in-China inventors may have eureka moment 21 Dec 2012 More patent applications were filed in China than any other country in the world in 2011. Government targets and subsidies doubtless helped to inspire inventors. Yet while the country’s mass-manufacturing of patents merits skepticism, it could also produce some bright ideas.
Diamond Bob will bounce back in 2013 21 Dec 2012 A toxic brew of Libor, bonus spats and regulatory ire led to the ousting of the Barclays CEO in 2012. Yet investors will soon twig that Diamond’s bank wasn’t the only fiddler of interbank rates. He’s unlikely to land another big CEO gig, but he may resurface.
Upward U.S. GDP revisions explain a few surprises 20 Dec 2012 The boffins’ first stab at the Q3 growth rate was 2 pct; the third and final estimate is a much healthier 3.1 pct. That makes unexpectedly good jobs figures seem less odd and may help account for Obama’s win in November. Stronger growth makes the fiscal cliff less scary, too.
A guide for the perplexed: U.S. MBS lawsuits 20 Dec 2012 Banks, trustees and even investors had a hand in the debacle surrounding repackaged home loans. With lawyers running up against post-crisis filing deadlines, the last lawsuits are in sight - but the end of the fallout is years away. Breakingviews explains where things stand.
NYSE’s Niederauer takes ICE-cold shower 20 Dec 2012 The Big Board’s agreed $8.2 bln sale to ICE stacks up financially and strategically. But NYSE is fetching a quarter less than its new owner offered in a joint bid with Nasdaq last year. With its shares lagging the exchange sector since then, capitulation was the CEO’s best option.
Spain’s exit plan for duff banks better than UK’s 20 Dec 2012 Madrid has just put 1.9 bln euros more into its lenders. The economy is still shaky, and foreign interest in the state’s bad bank isn’t the confidence boost it seems. But setting a fixed deadline to sell its new stakes is preferable to the UK’s flaky policy on RBS and Lloyds.
Dawn of a new era at Breakingviews 20 Dec 2012 As Hugo Dixon prepares to hand the editorship to Rob Cox, he reflects on the bubbles, crashes and crises of the past 13 years.
Narrowing French-UK yield rings hollow for Hollande 20 Dec 2012 Yields on 10-year debt issued by the UK government may soon rise above those on French state bonds of the same maturity. But François Hollande has nothing to brag about: it is more the sign of a deteriorating UK economy than proof of investors’ confidence in Paris.
Ireland gets welcome back-up from IMF 20 Dec 2012 The IMF is urging the euro zone to help Dublin restructure its bank bailout, and warns there are limits to austerity. The Fund is moving to a more pro-active role as bailout partner. With markets slumbering and the crisis abating, Ireland needs all the help it can get.
Fed’s foreign bank crackdown is price of stability 20 Dec 2012 Forcing overseas lenders to properly capitalize their U.S. arms is necessary to protect the local - and global - financial system. The Federal Reserve’s unilateral approach could prompt others to follow suit. But fears that fragmentation will stifle global banking are overblown.
It’s 20.12.2012; and it’s the end of a magical era 20 Dec 2012 One doesn’t have to be a Mayan to believe that tomorrow represents a numerological end of an era. It may not mark the end of the world - as some users of the Mesoamerican Long Count Calendar suggest - but after a fertile period for adorable dates, we are now entering a desert.
Shadow banks lead China towards a dark place 20 Dec 2012 The secret sauce in the country’s growth is no longer bank lending, but an explosion in off-balance sheet credit. The troubling expansion of funds extended through wealth management products - many of them short-term and dependent on confidence - may force a moment of reckoning.
UBS points to next banking worry: client risk 20 Dec 2012 Investment banks’ new mantra is to put clients at the heart of all they do. After years of risking client cash in prop trading, new rules have rightly forced a change. But the cosying up by interdealer brokers to their client UBS shows that relationship businesses have risks too.
Bank of Japan needs new rules of engagement 20 Dec 2012 The central bank has agreed to print more money. But ending deflation requires it to adopt a government-mandated price target, and for lawmakers to boost its firepower. That need not undermine the BOJ’s independence, provided the new system is transparent and has legal sanctity.
Derivatives fraud ruling crosses a line 20 Dec 2012 UBS and Deutsche are among banks found guilty of fraud over derivatives sold to Milan. The verdict is likely to be tested by an appeal. But for now, it overrides banks’ usual defence that sophisticated clients know what they are getting into. And it could affect many other deals.
Mini-Berkshire shows it’s hard to beat the master 19 Dec 2012 Markel models itself after Warren Buffett’s company. The $4 bln insurer aims for smart underwriting, picking stocks and adding long-term value. It has even got into reinsurance and owning businesses. But performance isn’t as impressive as Berkshire given its far smaller size.
$2.3 bln Brazilian insurer IPO looks too pricey 19 Dec 2012 That would value the unit state-owned Banco do Brasil wants to hive off at 12.5 times earnings - richer than rivals. BB Seguridade may be a good business. But it will remain majority-owned by a bank that does the bidding of an interventionist government. That warrants a discount.
New Korean leader may be more Merkel than Thatcher 19 Dec 2012 Park Geun-hye, the first woman elected president, is the daughter of a military autocrat. Though conservative, policies including social spending and curbs on conglomerates run left of the incumbent’s. Korea can afford it: German pragmatism is needed, not Maggie’s radicalism.
Growth outlook gives U.S. stocks edge over Europe 19 Dec 2012 On dividend yield and price-to-earnings measures, European shares look attractive - at least compared to the other big, mature market across the Atlantic. But that ignores superior growth potential in the United States. Savvy bargain-hunters will see that better value lies to the west.
German anti-Google bill sets unwelcome precedent 19 Dec 2012 Lawmakers in Germany are examining a bill that would force search engines to pay publishers for the listing of their free content. Media owners who are lobbying for the measure don’t realise it could hurt them most. Other European countries should steer clear of such foolishness.
Greece should lure sea turtles back to the Aegean 19 Dec 2012 China calls returning emigrants sea turtles. Greece needs its own, as ever more young people emigrate to escape high unemployment and austerity. The country loses much needed know-how and energy. The Greek government should find the money needed to lure some turtles back.
Ethical economy: Greed, justice and deception 19 Dec 2012 “Greedy” has become a common insult since the financial crisis. But admissions of greed remain scarce. That’s because people see their own immoderate desires as a virtuous search for justice. A humble examination of the flaws in prosperous societies is required to find the truth.
U.S. government GM sale is more noise than motion 19 Dec 2012 The Detroit automaker’s bosses will be glad to lose the “Government Motors” moniker in a year or so – not to mention restrictions on their pay. But industry-wide worries, not Uncle Sam’s stake, are weighing on the stock. Treasury could have waited rather than take a $5 bln loss.
Jumbo fine isn’t the end of UBS reputation woes 19 Dec 2012 The Swiss bank’s $1.5 billion settlement for rigging interest rates encapsulates all that was wrong with the culture of investment banking. UBS says it changed its spots. But with the prospect of further litigation and client fallout, investors may fear the leopard’s still alive.
UBS shows banks must never think they’re well run 19 Dec 2012 The Libor fines widen the already gigantic gap between pre-crisis self-image and reality at the Swiss bank. Even after a big 2008 mea culpa, rates traders engaged in routine, casual wrongdoing. The bank was so convinced it was fundamentally boring that it couldn’t face reality.
Shanghai stocks set to catch Hong Kong peers 19 Dec 2012 A sharp jump in Shanghai’s index has narrowed the discount between mainland and Hong Kong-listed stocks. Increased quotas for foreign institutions have helped sentiment. If Chinese investors rediscover their enthusiasm for shares, Shanghai may regain its premium.
South Korea’s next leader will face a currency war 19 Dec 2012 Pyongyang’s provocations won’t be the only test awaiting the nation’s new president. The won’s five-year slide against the yen could reverse. The resulting export squeeze means the winner of today’s poll must be careful about clipping the wings of the country’s mighty chaebols.
Sulzbergers will make headlines in New York Times 18 Dec 2012 Next year will be pivotal for the family that controls the Gray Lady. The Ochs-Sulzbergers have loyally seen the paper through dark days. With the Times on sturdier financial ground, it’s time to find a safe custodian like New York’s billionaire mayor before the moment passes.
Mobile advertising will boom in 2013 18 Dec 2012 Internet firms moaned for years that users were spending lots of hours on the Web, but marketing dollars weren’t following from print and TV. Time and the growth of broadband have closed this gap. The boom in smartphones now provides similar fuel for mobile advertising.
Animal spirits will stir buyout barons before CEOs 18 Dec 2012 Megadeals have been in short supply for both since 2008. But corporate bosses keep getting rewarded for modest acquisitions while Glencore and HP are warnings against going big. For private equity, though, cash stockpiles and cheap money will be catalysts for a bolder 2013.