Germany finds pay balance that’s right for Europe 28 May 2013 The days of excessive German wage restraint are over, as the latest deal at Volkswagen shows. Wages are set to outpace inflation but not productivity. That’s enough to help consumer spending without harming employment. Germany’s European trading partners should cheer.
Brazil’s oil ambitions put squeeze on Petrobras 28 May 2013 The government is auctioning a 12 bln-barrel crude field to revive its goal of being a global player. Petrobras is guaranteed a 30 pct stake. That should be good news. But the project will add more debt and expenditure for the already struggling and overleveraged state oil giant.
Valeant shows how some M&A favors the brave 28 May 2013 The $8.7 bln Bausch & Lomb deal is the biggest yet for the acquisitive pharmaceuticals group, but it comes with cost savings worth at least $5.6 bln. Investors added about as much to Valeant’s market value, giving it firepower to seek new targets. CEOs elsewhere should take note.
Even African laggards can hope to kickstart growth 28 May 2013 The war-torn DRC still needs World Bank help. But Ghana is tapping capital markets again, and nearby countries are close behind. One, Rwanda, shows how in favorable conditions even brief stability can open the door to financial investment. The DRC and others should pay heed.
Rumors of credit bubble only partially exaggerated 28 May 2013 Some risky forms of debt have made a dramatic comeback, but few investors seem panicked that another credit crisis is about to erupt. Breakingviews offers its own bubble-meter for the credit market. The reading: frothy, but not yet in the danger zone.
Europe rightly throws shade on solar tariffs plan 28 May 2013 Why would Germany and other EU countries reject punitive tariffs on Chinese solar panel makers? After all, they are the ones who suffer. But European companies in other industries producing in China have more to lose. Fairness may not prevail, but rationality should.
Breakup looks timely for Kleinwort Benson owner 28 May 2013 Activists have found a vulnerable target in RHJ. A previous attempt to unlock the value of its esteemed Kleinwort private bank failed. But RHJ’s stubborn share price weakness, combined with its ill-judged bid for Germany’s BHF, gives the latest assault more chance of success.
How capital controls are prolonging Cypriots’ pain 27 May 2013 After March’s brutal haircut on bank deposits, the island state’s economy will shrink this year whatever happens. But punitive controls on Cypriots’ access to their own money are making things worse. Efforts to stop the rot clash with the need to avoid financial instability.
HK art boom rests on sketchy foundations 27 May 2013 The city’s blockbuster art fair showed it has the infrastructure and location to draw crowds of rich Asian buyers. But Hong Kong also benefits from other drivers, like cheap money and the financial controls stunting mainland China’s own art scene. Those look less sustainable.
German carmakers should beef up R&D, not lobbying 27 May 2013 The country’s manufacturers are fighting tougher European emission guidelines. The attack may serve short-term profit but is misguided from a broader perspective. Rather than lobbying for the status quo, the industry should invest more in low-emission mobility.
Hugo Dixon: Why Draghi likes London 27 May 2013 The ECB President said last week that Europe needs a more European UK as much as the UK needs a more British Europe. Draghi is a man of the markets and, as such, is sympathetic to the British way of doing things. No wonder he’d prefer Britain to get stuck in than opt out.
A.G. Lafley will be more proctor than gamble 24 May 2013 Bringing back the former P&G boss won’t ensure the Pampers-to-Scope giant reclaims former glory. His last decision – of a successor – flopped. But unlike the turnaround facing J.C. Penney’s returning ex-CEO, Lafley’s job is somewhat simpler: oversee cost cuts and brand building.
Frackers ignore German beer angst at their peril 24 May 2013 Germany’s brewers want to make fracking verboten. In the U.S., the gas drilling technique’s economic benefits trump environmental concerns. Whether it’s the British countryside or German lager, threats to cultural touchstones will hold back a similar boom in Europe.
Global inflation slide stirs the bogeyman 24 May 2013 In theory, inflation should have picked up when central banks cranked up the printing presses. Instead, it’s slowing down. In the U.S., it’s nearly 1 percentage point below target. Policymakers now have to start worrying about their worst enemy – deflation.
Spanish banks get spruced up for banking union 24 May 2013 The Bank of Spain says the country’s lenders face up to 10 bln euros of new provisions against ropey restructured loans. They may not need extra euro zone capital, but it will make them better placed to pass rigorous stress tests before they get supervised by the ECB.
Soccer success mirrors Germany’s secret strengths 24 May 2013 For the first time ever, both teams in Europe’s biggest championship will be German. In 2000, the country was the sick man of the pitch. The sport’s resurgence, like the economic renaissance, relied on the social market economy and the ability to push through structural reforms.
Yamal LNG set to inflict pain on Gazprom 24 May 2013 A gas project in Russia’s far north could crack the state giant’s export monopoly. The Kremlin is expected to decide soon whether to allow Yamal LNG’s backers to ship its production abroad. It may only approve sales to Asia. But even limited exports would hurt Gazprom.
Microsoft stages nebulous Chinese comeback 24 May 2013 The software titan has for years been stuck in a piracy trap in China - many use its products, and few pay. Cloud-based services like Windows Azure are less prone to misuse. This time there are new problems: fierce competition, and politicians that favour domestic rivals.
China-U.S. audit truce wisely avoids big issues 24 May 2013 Auditors in China can no longer claim that “state secrets” prohibit disclosure to the U.S. watchdog. That should keep Chinese companies from being banned in U.S. markets. There are open questions about sovereignty and state capitalism, but those are fights for another day.
Bank governance stigma can be fixed lickety-split 23 May 2013 It’s easy to see how Jamie Dimon would consider an independent chairman at JPMorgan a demotion for him. If peers like Lloyd Blankfein hold both top jobs, CEOs only may feel like second-class citizens. U.S. financial regulators could turn the division of labor into a virtue.
Goldman gives itself near-clean bill of health 23 May 2013 The Wall Street firm has made all the changes business-standards enforcers wanted. An activist investor even dispensed praise at its annual confab. Lloyd Blankfein still has to show the new approach can last. But with results improving, some of the old luster may be returning.
Security is diversion in $20 bln-plus Sprint fight 23 May 2013 SoftBank and Dish Network have pulled out the stops in their battle to control the U.S. cellphone operator. But SoftBank has the edge. The claim that Japanese ownership of Sprint is a risk to national security is half-baked and shows Dish boss Charlie Ergen’s desperation.
Apax buyout tailored to avoid J Crew lapses 23 May 2013 A $1.1 bln deal to take rue21 private is rife with conflicts. An Apax-affiliated fund owns 30 pct of the U.S. teen clothier while two Apax partners also sit on the rue21 board. But safeguards put in place suggest the lessons from TPG’s raggedy purchase of J Crew have stuck.
The Great Stagnation spawns Great Confusion 23 May 2013 After years of slow growth and ineffective policy responses, experts are stumped and investors are jittery. Bernanke’s two-sided talk and the Japanese market’s exaggerated response were all too typical. Barring recovery, crisis or revolution, there will be much more of the same.
Nomura shows second tier isn’t always second rate 23 May 2013 While similar-sized peers pare back in fixed income, the Japanese bank has actually doubled its global market share since 2010. It’s even hiring. Success is part luck, part strategy. Nomura dodged much of the subprime crisis, and Japanese strength has suddenly come into its own.
Slovenia can delay its bailout for another year 23 May 2013 Ljubljana’s ambitious privatisation plan, still-low borrowing costs and upcoming “bad bank” will ease calls for external help this year. But Slovenia’s fragile politics, weak banks and deteriorating finances, if not fixed, will force it into a bailout in 2014.
Jonathan needs good luck to keep Nigeria moving 23 May 2013 The budget is under control, bad banks are being sold, the sovereign wealth fund opens soon and growth is over 6 pct. But a rebellion could hinder President Goodluck Jonathan’s progress. Combining careful anti-insurgent activity with solid economic management is a tall order.
Japanese stocks join the global risk parade 23 May 2013 The Nikkei’s 7 pct drop is an overdue correction: the index had risen by two-thirds in six months. What’s striking is that the selloff was sparked by concerns over U.S. interest rates and Chinese growth, not Abenomics. Being a haven for risk-hungry investors has its drawbacks.
SABMiller faces expectations on a daunting scale 23 May 2013 The CEO reins at the global brewing house are changing hands with a commendable lack of fuss. The evolving strategic objectives are also sound and the company is delivering financially. But expectations, as measured by the equity valuation, leave precious little room for error.
Blame Japan’s debt on companies, not the state 23 May 2013 Perennial budget deficits have helped to offset corporate deleveraging. That explains why public debt is so high. If Prime Minister Abe’s policies revive private investment, the government’s track record suggests it will tighten its belt by raising taxes. Tokyo won’t go bust.