Tea Leaf Index: China growth slows down, cleans up 26 Apr 2013 Our index showed the economy a tad weaker in March - but that’s good news. The smog receded, and it seems Beijing’s curbs on luxury are having some effect: premium liquor prices are falling and Audi, maker of the elites’ favourite ride, also saw sales growth drop down a gear.
Corporate America lamely blames U.S. budget cuts 25 Apr 2013 This earnings season, forced deficit reduction is filling a role previously held by the weather, China and other spurious scapegoats. Delta and IBM are among the culprits, but Washington-inflicted damage is trivial. Even so, lawmakers could all but end any financial disruption.
Flawed Mexican banking revamp deserves a shot 25 Apr 2013 The delayed reforms include a universal credit registry and easier foreclosure, both big improvements to the system that could boost consumer borrowing and spending. But they also allow the regulator to force banks to lend. That leaves the risk of a Brazil-style hangover.
Exxon Mobil running hard just to stand still 25 Apr 2013 The world’s biggest company is pumping just 3 pct more oil than it was 12 years ago. Yet Q1 results show capital spending rising fast. Only buybacks are making earnings per share growth look decent. Justifying Exxon’s valuation premium to peers is getting harder.
KPN rights issue is just start of fightback 25 Apr 2013 The Dutch telco is asking shareholders for 3 bln euros of fresh funds. A sizeable 35 percent discount is justified by the deal’s size. KPN is moving decisively to shore up its balance sheet. But it still cannot breathe easily: brutal competition will continue at home and abroad.
Europe’s austerity remorse brings long-term lesson 25 Apr 2013 European Commission leaders admit that they pushed austerity too hard. The policy’s blunt application has caused great harm. It’s not too late for pragmatism. The Commission must be less of a short-term disciplinarian and more of a long-term hawk.
Cyprus punishes the Russians and the prudent 25 Apr 2013 Nicosia wants to shield domestic depositors in the banks where uninsured savings will be haircut. The levy will only hit after loans have been deducted. Foreign customers - mostly Russian - will be penalised. That will also hurt those Cypriots who chose to stay frugal.
NY Times shows why digital news won’t rescue print 25 Apr 2013 The U.S. newspaper company’s advertising woes aren’t just a print problem. Digital ad sales fell again in the first quarter even though more readers signed up for virtual subscriptions. Apps on iPads help, but they won’t stop the rot for the Gray Lady or ink-stained rivals.
Pressure builds on Vodafone to make U.S. exit 25 Apr 2013 Verizon has hired advisers to help it buy Vodafone out of the duo’s mobile JV, Reuters says. Vodafone shares rose, although the mooted $100 bln price looks low. Vodafone is staying silent, but with the markets lapping up a string of stories, momentum is building for a deal.
Why Alibaba could be China’s next $100 bln IPO 25 Apr 2013 It already dominates the country’s online retail market, and holds a trove of consumer data. Alibaba has yet to reveal detailed finances, but if it can time stock market, technology and China cycles, number-crunching suggests a twelve-digit valuation isn’t out of the question.
UK’s growth supports Osborne’s austerity plan 25 Apr 2013 Rather than the feared triple-dip recession, the UK’s GDP rose 0.3 percent in the first quarter. That’s not much, but does help vindicate the Chancellor’s austerity policies. The pound could strengthen more and forecasts of 0.7 percent growth this year may prove too pessimistic.
Evonik’s fundamental strengths come at a full price 25 Apr 2013 The listing of the speciality chemicals company marks the largest German IPO since 2007. Evonik supplies compounds for an array of uses from biodiesel and chicken feed to Plexiglas. It has a solid sales and profit record - but a share price at the rich end of fair value.
BOJ’s Greek role model: Delphi or Odysseus? 25 Apr 2013 The Bank of Japan may raise its inflation forecast closer to its 2 percent goal. But wrong prophecies can bring discredit. Rather than trying to be Delphi’s oracle, the BOJ could mimic the Greek hero by tying its hands until the temptation to tighten policy too soon has passed.
Unleashing job hoppers could give economy a bounce 24 Apr 2013 U.S. legislators may be naive to think that outlawing non-compete contracts, which can block even laid-off workers from joining rival firms, will lower unemployment. But a ban could boost economic performance, studies suggest. That’s reason enough to give the proposals a shot.
Oxy could take value-creation lessons from Conoco 24 Apr 2013 The move by Conoco to break in two a year ago is being vindicated. Shares in its two components have beaten peers by nearly 20 pct since the separation. Occidental, hit by rising costs and an executive feud, should take note. Matching Conoco’s lift would unlock a $12 bln gain.
Music fest Coachella rocks a sustainable business 24 Apr 2013 After 14 years, the world’s top-grossing festival officially transcended the brands of the artists it coaxed to the California desert. Careful, if not bold, musical curation and a security apparatus suited to a post-Boston world will ensure Coachella thrives for years to come.
Italian stasis ends, mission impossible begins 24 Apr 2013 Two months after the parliamentary election, Italy’s parties are close to forming a governing coalition at last. The mission is to clean up politics and reform the economy. The new government’s first challenge will be to find a consensus on what’s really needed to move forward.
German push to green power is brave but risky 24 Apr 2013 Europe’s industrial leader wants to wean itself off nuclear power and fossil fuels, so Germany will become the world’s test laboratory for renewable energy. The policy is farsighted, but in urgent need of more German efficiency to keep costs under control.
Etihad bets on India in pricey Jet Airways deal 24 Apr 2013 The Abu Dhabi carrier is throwing indebted Jet Airways a $600 mln lifeline for a 24 pct stake and control of its loyalty programme. But the generous 32 pct premium suggests Etihad will expect more than a minority role at the Indian airline.
Caesars deal blinds market with science 24 Apr 2013 The U.S. casino empire’s private equity owners Apollo and TPG are following last year’s microscopic IPO with a spinoff and rights issue concoction. Aiming to raise $1.2 bln, the transaction mostly seems like a complex financial experiment to buy time for the ailing $31 bln LBO.
Edward Hadas: Debt debate in need of upgrade 24 Apr 2013 The 90 percent debt-to-GDP threshold has been debunked, but the Rogoff-Reinhart thesis should never have gained any traction. An ideological conviction that governments distort economies encouraged weak thinking. Pro-stimulus arguments are equally fervent, and no more convincing.
European banks turn tables on Wall Street 24 Apr 2013 Credit Suisse and Barclays had a good first quarter in investment banking, holding up well against Wall St peers. Barclays still lags its Swiss rival in restructuring the business. But Credit Suisse is showing how it is possible to reshape, resize and still make good returns.
UK lending superchargers may still misfire 24 Apr 2013 The Bank of England’s reworked Funding for Lending Scheme may finally be aimed at the right target: credit-starved small firms. Yet if the companies don’t want to borrow, it still won’t work. And it looks too easy for FLS cash to leach out into less deserving sectors.
Bond vigilantes succumb to unlikely complacency 24 Apr 2013 Euro zone bond investors are shrugging off rising national debts, missed growth targets and political uncertainty. Having first terrorized policymakers into austerity, they now seem to think they will be reflated to safety. The relaxed approach leaves a lot to trust.
Return to glory days may elude Japan’s automakers 24 Apr 2013 The falling yen will boost earnings and market share. But compared to 2006, Japan ships fewer cars abroad, margins are narrower, and U.S. rivals are no longer in a mess. Toyota’s market value is unlikely to overtake that of its eight main western competitors combined again.
$50 bln buyback hike one sign of Apple middle age 23 Apr 2013 The company is slowing down a bit, with margins slipping as rivals’ gadgets catch up. But Apple still has plenty of spring in its step, selling 65 pct more iPads in the March quarter than a year ago. And its absurd financial comfort means it can give much more back to investors.
Online sales tax may be only U.S. loophole closed 23 Apr 2013 There’s tough talk in Washington these days about unfair tax escapes. One that lets states collect on goods sold over the Internet could finally be set to pass. Despite a dire need for revenue, however, it’s hard to see this one clearing the way to cross others off a long list.
House finance chief puts politics over governing 23 Apr 2013 Jeb Hensarling, head of the U.S. House finance committee, has shunned the new consumer bureau’s chief. He complains Obama appointed Richard Cordray without congressional consent. The lawmaker would better serve finance, and democracy, by making his case with tough questions.
Kazakh miner nears endgame with chairman’s exit 23 Apr 2013 The hapless 3.8 bln-pound ENRC is losing its board boss and two directors. That further dents its reputation and value. The onus is now on the board to wring a decent price from the founders - if a mooted buyout appears. If no bid arrives, ENRC has a huge repair job to do.
Thai tycoon rediscovers joy of debt in $6.6 bln bid 23 Apr 2013 Fresh from the leveraged purchase of a stake in insurer Ping An, Dhanin Chearavanont is borrowing $6 billion to buy cash-and-carry group Siam Makro. For Thailand’s richest man, a combination with his convenience stores makes sense – as long as Asia’s boom keeps the cash flowing.