Facebook’s Instagram option less out-of-the-money 2 May 2013 The social network agreed to pay $1 bln for the revenue-free photo sharing app last year. Even paid for in overpriced stock, the deal looked pricey. Instagram’s growth spurt – it passed 100 mln monthly users in Q1 – suggests Facebook is turning a defensive move to its advantage.
Shell must hope Voser successor mimics his ways 2 May 2013 The outgoing CEO’s anti-bureaucratic style and distaste for corporate adventurism put the Anglo-Dutch major back on course after its 2004 reserves scandal. His tenure shows how the steady approach benefits resource shareholders. Too bad the board couldn’t keep him in post.
Siemens struggles to make strategy work 2 May 2013 The German industrial giant issued yet another profit warning, and disclosed an embarrassing delay in getting out of its cash-burning solar operations. Execution difficulties are tarnishing management’s credibility. CEO Peter Loescher can’t afford any more blunders.
Unsure voters could dim lure of Malaysian assets 2 May 2013 A less than decisive win for either of the two coalitions contesting the May 5 poll could worsen racial discord and damage the economy. A government unsure of survival may also be tempted to dump fiscal prudence to buy popularity. Malaysian stocks and bonds could suffer.
Fed running risk of re-inflating bubbles 1 May 2013 The U.S. central bank is sticking with loose monetary policy and hefty asset purchases. But with stocks at record levels and home prices up 9.4 pct in a year, asset values are heading higher even if growth isn’t. The Fed needs to counter bubbles as well as economic sluggishness.
U.S. debt bosses don’t need no stinkin’ Libor 1 May 2013 The Treasury wants to sell floating-rate debt, but the most common benchmark is discredited. Uncle Sam will use a new one based on government bill auctions. Treasuries are already the world’s touchstone for fixed-rate bonds. The new yardstick could credibly chip away at Libor.
Fannie/Freddie buyout plan needs killing off 1 May 2013 A few big hedgies, including Paulson & Co and a Carlyle fund, want Uncle Sam to sell Fannie Mae and Freddie Mac into private hands. Getting the bailout twins off the government’s books is appealing. But the plan would privatize short-term gains and leave taxpayers on the hook.
Apple debt shows revival of yield desperation 1 May 2013 The tech giant sold 30-year paper with a coupon under 4 pct. Markets have also seen a surge in dividend recaps, PIK toggles and other throwbacks to the pre-crisis leverage boom. One culprit is central banks sucking supply and squashing rates. Such distortions usually end badly.
"French YouTube" deemed as strategic as yoghurt 1 May 2013 Remember eight years ago when Paris moved to stop a bid for Danone? Now Yahoo has abandoned its friendly attempt to acquire Dailymotion, the French video web site, after a minister threatened to veto the deal. So much for François Hollande making peace with the business world.
Former junk bond king has more leverage than ever 1 May 2013 Three decades after Michael Milken mastered raising money he now trades mostly in intellectual capital. This year, the likes of Carlos Slim and Tony Blair joined old friends at his annual Beverly Hills jamboree. These growing networks are a better sort of crony capitalism.
Chesapeake’s revival hampered by fire-sale prices 1 May 2013 The U.S. energy explorer trimmed costs after ousting spendthrift boss Aubrey McClendon. That, along with strong oil output, helped it beat Q1 forecasts. But Chesapeake still piled on $1.3 bln more debt, which may necessitate selling more energy-rich land at not-so-awesome prices.
Edward Hadas: In favour of much less trading 1 May 2013 When the Chicago options exchange closed for three hours, traders were unnerved. No one else was, and a rationing of liquidity may bring economic benefits. Perhaps it is time to extend traders’ millisecond-long holidays and revert to once-daily price fixings for all markets.
Barclays in capital fog after Deutsche U-turn 1 May 2013 The UK bank is looking exposed after its German peer raised 3 bln stg in new capital. Like Deutsche, Barclays may need more capital for its U.S. operations. And it remains to be seen whether the bank can count on hybrid debt or its main Qatari investors to plug any capital hole.
BBVA’s hybrid hit is bet on health of Spanish bull 1 May 2013 A bank from a debt-challenged country was first to issue a new breed of loss-absorbing bonds. Central bank-whipped bondholders shrugging off the euro zone crisis are desperate for yield. A 9 percent coupon looks juicy, but pays investors less than equity, with no upside.
Google looks too clever on UK tax 1 May 2013 The tech giant pays little corporate tax in Britain, saying deals are actually struck in Ireland. Yet a Reuters report suggests London is a sales hub. That won’t impress politicians and papers. Austerity has upped the tax debate from “don’t be evil” to “don’t be underhand”.
Why China’s “Minsky moment” may be a long way off 1 May 2013 The country’s rising debt and slowing economy point to the kind of financial meltdown theorized by economist Hyman Minsky. But China’s closed, state-controlled system can delay such market panics. The bigger challenge is managing social tensions arising from slower growth.
ENRC is problem-free, by some standards 1 May 2013 Yes, it was a mistake for the London Stock Exchange to give the governance-challenged Kazakh miner its seal of approval. But the murky dealings at Russia’s Surgutneftegas make ENRC look like a model of transparency. And a few bad apples don’t drag down the whole London market.