Punished credit rater kinda misses the point 22 Jan 2013 The SEC has barred Sean Egan and his scrapper of a firm from some sanctioned ratings after they wrongly asserted experience with asset-backed deals. Of course, familiarity hasn’t necessarily helped Moody’s, S&P or Fitch produce smarter ratings. Neither does a government blessing.
Bailout babies could give ECB target practice 22 Jan 2013 Ireland and Portugal are slowly regaining market access and may soon be able to ask the ECB to buy their debt. The bank would then have to put its money where its mouth is. But it could use the opportunity to show the benefits of its still-untested programme at a limited cost.
Global currency war would lack euro fighter 22 Jan 2013 Jens Weidmann is afraid that major central banks are bowing to their governments’ pressures to push down currencies. The Bundesbank head wants Europe to stay above the fray. For once, he and Mario Draghi agree. Japan’s new policies won’t tempt the ECB to take up arms.
Goodwill is accounting at its most confused 22 Jan 2013 A European regulator has complained that goodwill writeoffs are inadequate. Inconsistency is one issue. The main problem is that the rules make no sense. They rely on a melange of traditional cost-based record-keeping, doubtful financial theory and blind trust in markets.
Siemens needs corporate governance overhaul 22 Jan 2013 Shareholders of the German group will give short shrift to corporate principles when they re-elect Gerhard Cromme as chairman. Rules had to be changed to allow the man who also chairs ThyssenKrupp to run again. But Siemens badly needs fresh faces to cope with its many challenges.
BOJ must now make its bold inflation goal credible 22 Jan 2013 By adopting an aggressive 2 pct target for annual price rises, Japan’s central bank has joined Prime Minister Abe’s war on deflation. The open-ended promise of asset-buying will help. The next challenge is to convince markets that policy won’t be reversed abruptly in future.
Fog of Bumi’s battles may be just too tiresome 22 Jan 2013 Bumi minorities are ill-served by open conflict between the coal miner’s board, its founder Nat Rothschild and Indonesia’s Bakrie clan. News on a probe into Bumi’s Indonesian operations does nothing to clear the air. With shares well up on the nadir, the exit beckons.
Third airport sale may give London a lift 22 Jan 2013 Manchester airport’s owners are paying a surprisingly lofty $2.4 bln for Stansted, Heathrow’s neglected little sister. The bet hinges on utilising spare capacity. If passenger numbers double, as they could, the transformation would also ease London’s air traffic squeeze.
The miracle of China’s disappearing dividend 22 Jan 2013 The country’s economic boom has not been matched by its stock markets. State-owned companies only grow by accumulating more assets. Both are signs that China’s investment splurge is generating poor returns. But while real interest rates remain negative, change may prove elusive.
F&N takeover saga reaches mostly happy ending 22 Jan 2013 The bid battle for the Singaporean conglomerate ended without fireworks. Even so, the $11.2 bln valuation leaves investors with a 40 pct return over seven months, and loser OUE with a $41 mln break fee. The pressure is now on the victorious Thai bidder to prove the numbers work.
Big Oil will struggle to buy more security 21 Jan 2013 The deadly attack on a BP and Statoil-operated gas field in Algeria underscores oil majors’ impotence. The companies would happily throw money at the problem, but corporate cash cannot buy safety. Tackling militant threats is an issue for governments, no matter how ill-equipped.
Cyprus bailout delay is justified, but risky 21 Jan 2013 The bailout of the island state would not cost its lenders much. But concerns over money laundering and debt sustainability have made its approval a thorny issue. Withholding the aid for a few months makes sense. But a longer delay can be risky both for both Cyprus and its peers.
Heathrow needs decisive capacity fix 21 Jan 2013 Snow has exposed the London airport’s lack of slack when problems arise. Passengers’ expectations of a zero-failure service are hard to shift. But if Heathrow can’t build another runway, it needs to be radical. That may mean operating its infrastructure at lower capacity.
Merkel will cope with regional election defeat 21 Jan 2013 The German Chancellor’s CDU party has lost an important regional vote. This gives her challengers a psychological boost, but shouldn’t prevent her from winning next fall’s national ballot. And she will be relieved to see that anti-euro parties aren’t gaining ground in Germany.
Hugo Dixon: When is it OK to avoid tax? 21 Jan 2013 It is clearly wrong to infringe the letter of the law as, for example, many Greeks do. It is also wrong to infringe the spirit of the law. But, as last week’s Goldman Sachs UK bonus row shows, it is also important to take account of the spirit of the times.
Which weapon will BOJ choose to slay deflation? 21 Jan 2013 Japan’s central bank is poised to transform itself into a hyper-unorthodox monetary warrior. Whether its new role is convincing or not will depend on its choice of a clever battle plan. The BOJ has a number of choices in its arsenal, but some are more lethal than others.
Abu Dhabi property merger mixed bag for minorities 21 Jan 2013 Factoring in a surprise cash sweetener from Abu Dhabi, it looks like well-run Sorouh is paying a premium to troubled state-controlled rival Aldar. But the $2.9 bln state-backed merger of Abu Dhabi’s leading developers will help smooth the emirate’s property mess.
Caterpillar’s Chinese lesson: dig below top line 21 Jan 2013 Getting stung by accounting fraud is unfortunate. But Caterpillar’s $580 mln write-down - three-quarters of the price it paid for ERA Mining just last year - suggests a bigger misjudgment. The Chinese machine maker’s potential was clear, but so was the low quality of its growth.
James Gorman must shine or resign in 2013 18 Jan 2013 The Morgan Stanley boss presided over a poor Q4. Even so, there are some encouraging signs. The trouble is, investors have seen them before and not yet reaped the benefits. Success requires cutting pay and other costs and improving FICC. This year Gorman needs to make it happen.
JPMorgan flaws should ring alarms everywhere 18 Jan 2013 The huge U.S. bank is supposed to be among the top risk managers. If the conflicting mandates, discredited theory, inadequate checks and primitive technology behind its $6.2 bln trading losses in 2012 are really as good as it gets, plenty of regulators and investors should worry.
McMoRan flop makes Freeport bid more like bailout 18 Jan 2013 The U.S. explorer is bleeding cash after plowing $1 bln into a failing deep gas well. That makes the 74 pct premium offered by miner Freeport, whose chairman also runs McMoRan, look even richer - especially with gas cheap and abundant. Freeport’s shareholders are the losers.
Crises reveal post-Arab Spring instability 18 Jan 2013 The Arab Spring and Western mistakes have made North Africa more fragile politically and economically, leading to the French intervention in Mali and the Algerian hostage crisis. But investors who want to pull out now really shouldn’t have been there in the first place.
Review: Latin America needs more Uribes 18 Jan 2013 Former Colombian President Alvaro Uribe’s book “No Lost Causes” may be self-serving. But it shows how he helped turn war-torn Colombia from near-failed state into an investment destination. Uribe’s security gains are frail, but his successes dwarf those of his leftist peers.
What Nokia needs to do in 2013 18 Jan 2013 Shares in the ailing handset maker have bounced, but the market is rightly wary. CEO Stephen Elop must now take sales of the flagship Lumia smartphone to another level. His strategy for cheaper phones needs a rethink. And floating NSN, the network-equipment unit, would help too.
Lloyds should change CEO bonus vesting, not size 18 Jan 2013 A storm is brewing over Antonio Horta-Osorio’s bonus. Like banking peers, Lloyds was shamed in 2012 for past mis-selling of mortgage insurance. Yet there was progress in restructuring and the boss deserves any payout due. To become palatable, the award could be deferred not cut.
China’s role in Rio Tinto chief’s downfall 18 Jan 2013 Tom Albanese’s $38 bln Alcan deal was a bet China would use more aluminium and close down its unprofitable producers. Instead, it has propped them up, helping push prices down and the CEO out of his job. It’s a reminder that China’s state capitalism plays by different rules.
U.S. trade arbiter is wrong referee in patent wars 17 Jan 2013 The ITC is supposed to stop foreign infringers. But the speed of its process and a fuzzy remit are making it a popular place to sue American firms, too. While patent trolls benefit, so do companies seeking to block rivals in a hurry. The losers may be investors and innovation.
Carbon tax would beat green energy credits 17 Jan 2013 A new bill to end U.S. energy tax handouts doesn’t go far enough. Washington’s problem is an excess of expenses over revenue. Replacing preferential treatment for government darlings with a tax on discouraged emissions could help fix that while also reducing market distortions.
Cameron’s speech could leave Europe indifferent 17 Jan 2013 The UK prime minister will explain his European strategy at last on Friday. He’s expected to demand reforms and threaten to leave the EU if he can’t get a deal. Other member governments may just yawn. They are losing interest in the possibility of a “Brexit”.
AT&T should beware a value trap across the pond 17 Jan 2013 The U.S. telco is reportedly eyeing deals in Europe. With valuations at their current low, running numbers makes sense. But cross-border tie-ups offer limited cost savings, and operators are only cheap because markets are tough. AT&T would need to spot some serious hidden value.