U.S. courts hit right balance on foreign misdeeds 30 Apr 2013 Tough rulings make sense only when American interests are at stake. Judges acted wisely in pushing Arab Bank and others to answer charges of funding terrorism while letting Royal Dutch Shell off the hook on human rights. The law loses credibility if its reach exceeds its grasp.
Kodak shows rusty side of "gold-plated" pensions 30 Apr 2013 The bust U.S. firm synonymous with camera film is selling a bunch of assets to its UK pension fund. The deal should avoid a regulator-led bailout. It also shows how defined-benefit pensions can betray their gilt-edged reputation. Such schemes are only as good as their backers.
Unilever defies buyback vigilantes 30 Apr 2013 The consumer goods group will spend $5.4 bln to raise its stake in an Indian subsidiary. Corporate finance says it should have bought its own, cheaper shares. But better to use a strong balance sheet to support the business than to use a strong business to weaken a balance sheet.
Carphone Warehouse gets better of Best Buy deal 30 Apr 2013 The mobile phone retailer is buying the U.S. consumer chain out of their European joint venture. The $730 mln price looks cheap, and promises a big boost to the UK group’s earnings. With full control of the JV, Carphone Warehouse may also appeal to a wider range of investors.
Apple, Fed and IRS conspire to set debt records 30 Apr 2013 The U.S. tech giant may borrow over $15 bln, the most in one shot by any non-bank. The bonds could carry record low yields. And Apple only needs the money because U.S. tax rules make repatriating cash costly. Eager investors should be alert to the perfect storm behind the deal.
Euro zone stuck in economic suspended animation 30 Apr 2013 Inflation is surprisingly low, unemployment is depressingly high and GDP remains frustratingly flat. There are ways to make the economy more dynamic, but they are either too revolutionary to be politically acceptable or too slow to matter for years. Expect more of the same.
SoftBank beating all comers in race for Sprint 30 Apr 2013 Dish’s $25.5 bln bid may look better on paper, but it actually falls short of SoftBank’s $20.1 bln proposal. The Dish pitch would pump up Sprint debt to levels so high that they could weaken the combined company - and leave investors holding a pay TV business poised for decline.
Germany’s Spanish initiative sends right message 30 Apr 2013 Germany says it has a plan to help fund Spain’s small and mid-sized businesses. This won’t lead to massive north-south fiscal transfers. But a signal from Berlin that Madrid has done its reform homework would be a powerful message to investors - and stragglers like Italy.
New UBS is starting to work 30 Apr 2013 The first full quarter of the new strategy answered the critics. The Swiss bank shone in trading and capital markets financing, returning to its traditional strength in equities. Investment bank stability helped wealth management too. But risks remain and turnaround is priced in.
BP’s Russian honeymoon isn’t the end of the story 30 Apr 2013 The UK major’s results show a turnaround strategy that is gaining momentum. The first profitable days as 20 percent owner of Russian oil giant Rosneft are welcome. How boss Bob Dudley’s manages the new relationship is key to whether BP can shrink to greatness, or just mediocrity.
Alibaba spots pricey treasure in Weibo’s network 30 Apr 2013 The e-commerce giant has paid a punchy price for an 18 pct stake in the Chinese microblogging phenomenon. A $3 bln valuation is a lot for a business without much in the way of revenue. Alibaba may lure some Weibo users to its stores, but its thinking looks mainly defensive.
Letta fails to impress on first outing 30 Apr 2013 Growth is good, austerity is bad and let’s cut taxes. The new Italian prime minister offered little more than platitudes in his initial speech to parliament. That’s not enough. The necessary reforms are well known. Letta hasn’t yet shown that he will provide them.
Deutsche capital capitulation goes just far enough 29 Apr 2013 Anshu Jain has seen sense: the German bank is raising 4.8 bln euros in equity and junior debt. That helps plug U.S. weakness. But it’s not decisive, and the U-turn from “organic” capital-raising dents management credibility. With Libor still hanging, Jain isn’t out of the woods.
Oxy gets religion only after boss has had his fun 29 Apr 2013 Allowing ex-CEO Irani to remain chairman at $46 mln a year caused turmoil at oil firm Occidental. In future, the board says, outgoing chiefs will be shown the door. Shareholders may cheer. But oil executives are often only willing to do the right thing as they prepare to leave.
Cronyism wins out with Obama’s pick for Commerce 29 Apr 2013 Critics have long argued the White House needs more business acumen. But billionaire heiress and campaign mega-donor Penny Pritzker probably isn’t what they had in mind. Her record suggests other candidates could better elevate the nearly dispensable Commerce Department.
Web’s creative retail destruction has room to run 29 Apr 2013 The Internet is the economy’s Shiva – destroying multitudes of companies and enabling the creation of new ones. The 10 fastest-growing industries all rely on the Web, according to a new report. This god of annihilation and conception is just getting started.
Santander CEO exit clarifies Botin succession 29 Apr 2013 Spain’s biggest bank has settled one succession issue by replacing Chief Executive Alfredo Saenz. The more important call - whether UK head Ana Botin succeeds her father Emilio as chairman - remains an open question. But Saenz’s departure makes her elevation look more likely.
Chrysler value spat may offer Fiat silver lining 29 Apr 2013 The Italian automaker and a union trust are $3 bln apart on the value of the 41.5 pct of the Motown manufacturer Fiat doesn’t already own. Yet the outcome – full integration – isn’t in doubt. In the end, an urgent need to raise equity may hasten Fiat’s move from Italy to America.
Political heat endangers no-brainer ECB rate cut 29 Apr 2013 The European Central Bank last cut its main rate in July 2012. Since then the economy has worsened, inflation has declined, and the Bank of Japan’s actions are propping up the euro. The need for a cut is obvious, even if it’s not a miracle cure. But politics stand in the way.
Hugo Dixon: Austerity debate misses half the point 29 Apr 2013 It is true that governments, especially in the euro zone, shouldn’t chase an austerity spiral ever downwards. But they can’t just sit on their hands. They must drive even harder for structural reforms.
Euro zone spread monster is only half-dead 29 Apr 2013 The euro zone crisis has tuned to a slow burn. Government bond spreads now discipline, rather than terrorize governments. However they hurt local economies and, by several measures, are still higher than they should be. It shows the success, and limits, of ECB policy.
Get ready for three-digit gold 26 Apr 2013 Bullion’s recent bounce doesn’t mean investor demand has returned. And gold remains expensive for jewellery buyers, whose interest has been weak since 2009. Central bank purchases will offer some support. But in a one-sided market, gold could fall below $1,000.
Apple iOUs may need to be as desirable as iPhones 26 Apr 2013 Right now, money managers are gaga for the company’s bonds even though they are sure to deliver stingy returns. But up to $55 bln of issuance over three years is on a par with huge borrowers like banks. To be sustainable, that would call for Apple’s category-creating magic.
Battle-tested Lazard faces fight on another front 26 Apr 2013 The bank has endured all manner of upheaval in its 165 years, most recently the looming presence of activist investor Nelson Peltz. First-quarter results suggest a new threat: competition. Lazard suffered worse in M&A than rivals big and small. History supports a comeback.
Hot Aussie economy could tarnish Chevron’s future 26 Apr 2013 The oil giant is poised for better output growth than rival Exxon. But it is more active Down Under, where a strong currency and a crowded market have pushed the cost of its shared Gorgon LNG project up 40 pct to $52 bln. Runaway capex is a risk to an otherwise bright outlook.
Japan lifts Nomura from its lost half decade 26 Apr 2013 A booming home market and cost-cutting helped the investment bank to its best year since 2007. Yet return on equity of 4.9 percent is still well below where it should be. The shares, which have doubled in less than four months, are asking a lot of Nomura - and of Abenomics.
Permira should tough out relegation 26 Apr 2013 Choosy investors have made private equity fundraising a real slog. But Permira is having an especially hard time, taking 19 months to pull in the first 2.2 bln euros for a new fund. That’s despite swearing off identikit, debt-driven buyouts. Blame a few duff deals and bad timing.
Review: China, luxury and unfashionable economics 26 Apr 2013 Useless things bring social honour. So argued Thorstein Veblen in his “Theory of the Leisure Class”. His century-old ideas, now out of place in the West, explain China’s craving for luxury goods. There’s a warning too: “conspicuous consumption” breeds conspicuous inequality.
BBVA is bank of choice for Spanish bulls 26 Apr 2013 Spain’s second-largest lender saw net profit rise in the first quarter. The poor economic environment and topline revenue are reasons to fret. Yet BBVA’s greater domestic gearing and overseas health make it a better bet than Santander whenever the country returns to growth.
Britain’s economy needs a real boost, not a blip 26 Apr 2013 The UK has dodged a triple-dip recession, but the real economy is still four years into a Great Stagnation. Austerity or stimulus may help, but sustainable GDP growth requires structural changes. Focus on immigration, investment and infrastructure would be a good place to start.