New Treasury boss Lew faces steep learning curve 22 May 2013 America’s new finance chief’s key expertise on budgets now looks less useful. Instead, he’s facing challenges in global diplomacy, regulatory implementation and scandal fallout management. He’ll need to get up to speed quickly or risk his predecessor’s progress.
The refining business may yet pay off for Delta 22 May 2013 The biggest U.S. airline’s decision to buy a refinery a year ago looked barmy. Yet there are signs that for the price of a Boeing 777, the deal is helping reduce Delta’s $12 bln fuel bill in meaningful ways. Just shaving a nickel off jet fuel prices justifies the purchase.
Even second-rate IMF waffle could help UK economy 22 May 2013 The supposed international experts can hardly be wrong with advice like adding stimulus without disrupting austerity, or privatising banks quickly while building up capital and increasing competition. It’s not much, but there are some good ideas mixed in with the banality.
Solar subsidies don’t merit costly trade war 22 May 2013 Solar panel prices are depressed, but irate Western manufacturers probably exaggerate the role of Chinese government support. While punitive EU tariffs and tit-for-tat Chinese retaliation might help profit, they would almost certainly make solar energy less competitive.
Edward Hadas: Apple, hypocrisy and stakeholder tax 22 May 2013 Politicians are hypocrites when they complain about the cross-border tax strategies of Apple and other multinationals. But “hypocrisy is the tribute vice pays to virtue”. It’s high time that companies admit taxes on profit are fair payments for the help that governments give them.
U.S. mortgage dysfunction demands action, not talk 22 May 2013 Uncle Sam’s seizing of Fannie Mae and Freddie Mac in 2008 marked one more failure in a sorry decades-long history. Their misdeeds ranged from strong-arming politicians to cooking the books. They shouldn’t now get a pass just because their profits are again helping Washington.
Buoyant markets too sanguine on end-of-QE threat 22 May 2013 The bursting of the gold bubble is just the harbinger. Other asset classes are vulnerable to the U.S. central bank dialling down its money-printing programme. Safe-haven bonds are already easing. Commodities look next in line. Stocks are the best bet but they too may suffer.
UK’s bank capital tsar all bark and no bite 22 May 2013 In November, the Bank of England said lenders faced a 50 bln stg capital hole. Now Lloyds doesn’t even have to raise new capital. Assuming soft treatment for RBS, UK banks are getting an easy ride compared to continental peers.
Goldman trumps HSBC in financial Chinese chequers 22 May 2013 Selling its final stake in lender ICBC leaves Goldman Sachs with an annual return on its investment of around 36 percent. HSBC, which just sold out of insurer Ping An after ten years, notched up a lesser 23 percent. The reason: the UK lender put strategic value before profit.
Temasek’s Indonesian bank bid still stuck in limbo 22 May 2013 DBS can buy 40 percent of local lender Danamon, says Indonesia’s central bank, but no more. That’s of little use to the Singaporean bank, which is seeking control, or to the sovereign wealth fund which has stakes in both groups. Only political intervention can break the deadlock.
Apple’s design ethos would help fix U.S. tax code 21 May 2013 When barraged with tough questions from senators, CEO Tim Cook held the line. He admitted the company needed a complex tax strategy to remain globally competitive, but also offered a sensible compromise. Why not make the American tax code as minimalist as the iPhone?
Temasek’s $500 mln investment times Markit just so 21 May 2013 Financial “Big Data” is a running theme and the Singapore investor can open doors across Asia for Markit any time. But with Bloomberg on the defensive, it’s a good moment to suggest there’s potential for another competitor – perhaps, before long, another publicly traded one.
Economic asymmetry curses costly al Qaeda fight 21 May 2013 The Pentagon’s estimate of at least 10-20 more years of post-9/11 fighting layers extra gloom on already restrained U.S. and world GDPs. Military and related expenses all weigh on growth. The rewards look unbalanced for all but the defense industry compared to the combat tab.
Pyrrhic victory for Dimon is defeat for governance 21 May 2013 JPMorgan chairman and CEO Jamie Dimon spent months focused on preserving a title when he should have been totally dedicated to running the largest U.S. bank. The episode perfectly illustrates the common sense behind separating the chairman and CEO roles.
Qatar’s leverage over banks is on the wane 21 May 2013 Doha still has an appetite for financial investments but its targets no longer depend on the Qatari bankroll. Capital is plentiful. The terms of the sovereign fund’s punts on Russia’s VTB and Deutsche Bank suggest the emirate may have to lower its return expectations.
Property investors take pitiful governance cake 21 May 2013 Shareholders ousted directors at two U.S. real estate investment trusts managed by the same family company, only to have the boards reappoint them. It’s just the latest example of the wretched practices plaguing a sector that deserves the same activist treatment as the oil patch.
Bribery law bogeyman scares up new legal clients 21 May 2013 To hear some law firms tell it, the U.S. Foreign Corrupt Practices Act is a Freddy Krueger-like nightmare for multinational companies. But despite costly probes of Wal-Mart and others, cases are rare and often dubious. Warnings to the contrary are just campfire ghost tales.
Apple tax fight needs global response 21 May 2013 The tech giant followed the law, but its aggressive use of Irish subsidiaries to reduce tax payments fails the smell test. Ireland comes off as an unscrupulous tax haven, while the U.S. government looked the other way. It’s time for a new international deal on corporate taxes.
Vodafone’s drab results are a sideshow 21 May 2013 Analysts expected little from the mobile giant’s results. They got it. EBITDA is under pressure, an annual dividend increase is gone, and Southern Europe is hurting badly. The main driver of the share price remains hopes of action at U.S. joint venture Verizon Wireless.
Securitisation may have found a way to rehab 21 May 2013 Can one crisis solve another? Securitisation could help small companies. That slicing and dicing of credit risk also caused the last credit boom. Getting it moving fast would require support from the ECB and governments, and the belief that past mistakes won’t be repeated.
Erdogan keeps keys to Turkey’s long-term future 21 May 2013 The economy is shining after a decade of stability and reform under Prime Minister Tayyip Erdogan and his Islamist-rooted AK Party. A peace deal with Kurdish militants could be the key to ensuring that he stays in power beyond his current term, while Turkey continues to rise.
India in depth: A costly flirtation with “linkers” 21 May 2013 Inflation-linked bonds will give gold-addled savers a safer investment option. But limited initial issuance means New Delhi will have to pay up to lure investors until the securities become more liquid. A bolder commitment to the new asset class can save the government money.
Loyalty even to Steven Cohen has its limits 20 May 2013 An intensifying legal onslaught at the hedge fund manager’s $15 bln SAC probably will force the remaining outside investors to run. Even Cohen’s legendary 25 pct annual returns at some point aren’t worth the risk. The firm’s most optimistic future looks to be as a family office.
Chesapeake’s new broom CEO also needs to sweep 20 May 2013 Replacing ousted co-founder Aubrey McClendon with an outsider is a good start. And Doug Lawler, from more successful rival Anadarko, looks a solid choice. But neither driller is known for especially tight cost control. The incoming Chesapeake boss will have to change that.
Wall Street lobbyist finally gets with the program 20 May 2013 The securities industry’s top advocacy group, SIFMA, is to be run by two ex-members of Congress. The previous leadership scored some successes battling new regulations. But baby-kissers should be better at persuading Main Street – and Washington – of finance’s worth than bankers.
Marissa Mayer puts exclamation point back in Yahoo 20 May 2013 Her $1.1 bln deal to buy blogging site Tumblr bolsters the website’s firepower in the mobile arms race. It’s the latest sign that Mayer has confidence from her board and shareholders to take risks. In less than a year, she has turned Yahoo from a purple joke to part of the buzz.
Dimon has little to lose in shareholder vote 20 May 2013 If JPMorgan’s owners want the top roles split he could quit, or the board could delay. Alternatively, Dimon could trade a sliver of ego for shareholder support and chair the firm with new CEO blood or run it with a new chairman. Either would be better for the company.
"Balance of shame" holds key to ENRC fate 20 May 2013 An independent board committee has rightly rejected a lowball bid for the miner from its three founding oligarchs and the Kazakh government. Whether a higher price can be extracted depends less on ENRC’s prospects than on how much the bidders are willing to pay to save face.
Even losers win from $5 bln Actavis deal 20 May 2013 Investors loved it when the generic drug firm was the subject of buyout talks. Now they’re just as pleased that Actavis is buying smaller Warner Chilcott instead. The sector is so ripe for consolidation that it’s hard to come up with any combination that investors won’t embrace.
Alibaba’s next superlative: China’s top fee payer 20 May 2013 The e-commerce giant is already a big generator of investment banking revenue. Factor in a potential IPO, and for global banks Alibaba could be the biggest client to come out of China in a decade. In a weak market, the battle lines are already being drawn.