ECB enters era when virtual tools do not suffice 29 Jul 2013 A year ago Mario Draghi’s mere pledge to save the euro prevented chaos. But his great bond-buying promise hasn’t delivered a sustainable recovery or restored true faith in peripheral debt. “Virtual” intervention has its limits. The ECB must use its other tools - or invent them.
Elan acquisition contains possible side effect 29 Jul 2013 Over-the-counter drugmaker Perrigo isn’t a natural buyer for the Irish biotech. Elan is largely a shell company with cash and royalty rights to a blockbuster treatment. Tax savings dominate the logic of the $8.6 bln deal. Relying on a practice under growing scrutiny is risky.
"Equality" in Big Ad merger may be hard to sustain 29 Jul 2013 Publicis and Omnicom have formed a neat merger of equals, with co-CEOs, a balanced board, parallel listings and head offices. As a combination of autonomous units, no single culture can dominate. Day one will be fine. There is still a risk that paralysis or conflict comes later.
Piecemeal may be best for JPMorgan commodity sale 29 Jul 2013 The U.S. bank has good reasons to offload its physical electricity-to-metals business, but rival banks also have good reasons not to bulk up. Glencore might be tempted, but Ivan Glasenberg isn’t known as a generous bidder. JPMorgan may choose to sell in bits and pieces.
ECB in thorny dilemma over Cypriot capital controls 29 Jul 2013 Bank of Cyprus depositors are about to know their fate. At below 50 percent, the likely haircut on their holdings could have been worse, and means the island state can think about easing capital controls. But that can only happen if the ECB agrees to fund a wave of withdrawals.
Alibaba may be worth $100 bln – but not to Yahoo 29 Jul 2013 The U.S. internet group’s 24 pct stake in China’s biggest online retailer may be worth as much as all Yahoo’s booked assets, but investors shouldn’t bank on anything near that. Alibaba’s interests are unlikely to match Yahoo’s, and the Chinese company holds most of the cards.
Hugo Dixon: EU ripe for single-market push 29 Jul 2013 Deepening the single market would do a lot for the EU’s sagging competitiveness. Vested interests, especially in Germany and France, may be opposed. But a new push would help the euro periphery and could keep Britain in the EU - killing two birds with one stone.
Ad men’s $35 bln bet: size matters in digital age 28 Jul 2013 Publicis and Omnicom are merging to create the world’s largest advertising group. Cost savings look modest. Some clients could defect. But this is a way to adapt to the digital revolution: the Franco-U.S. duo will be better equipped to stand up to giants like Facebook and Google.
SAC charges challenge hedge fund model 26 Jul 2013 The U.S. government’s indictment suggests recruitment should focus on compliance over money-making ability, turns investment “edge” into a dirty word, and implicitly questions the “mosaic” technique of information-gathering. It’s a worry for Steve Cohen’s industry peers.
UBS $885 mln payout is big win for FHFA’s DeMarco 26 Jul 2013 Among the most reviled regulators inside the beltway, Fannie Mae and Freddie Mac overseer Edward DeMarco merits Washington’s respect. One of the 18 suits filed under his watch against lenders who sold the agencies dodgy mortgages hit pay dirt. And there’s probably more to come.
Siemens needs a new chief executive 26 Jul 2013 Once again, Peter Loescher is unable to deliver on his promises. He has been forced to admit that his 2014 targets are out of reach. This chronic inability to execute puts the future of Germany’s second-largest company at risk. It’s time for Siemens to find a new head.
Vivendi compromises to get shot of Activision 26 Jul 2013 The French conglomerate is selling most of its stake in the video games maker for $8.2 bln. With this and the sale of Maroc Telecom, Vivendi’s promised reinvention is finally underway. But in neither case do its shareholders get the premium that usually comes with ceding control.
New Anglo American mantra: be boring 26 Jul 2013 The miner’s departed boss Cynthia Carroll was big on vision, but Mark Cutifani, her replacement, wants to improve performance asset by asset. The new strategic plan is appropriately dull. If a more disciplined Anglo makes fewer mistakes, it’ll finally be getting somewhere.
Nomura surge not all Abenomics 26 Jul 2013 New management deserves credit for a year of cost cuts, but the Japanese investment bank has certainly been helped by the huge monetary and fiscal stimulus in its home market. With such favourable tailwinds, it’s too early to tell whether Nomura is truly a changed beast.
China’s next reform: more central planning 26 Jul 2013 The central government wants to cut excess capacity in basic industries by telling 1,400 companies to shut factories. It has to overcome the free-market instincts of local governments and entrepreneurs. But if the plan works, China will be more efficient - and less polluted.
Exploiting the poor will remain a good business 26 Jul 2013 British “payday lenders” gouge feckless borrowers with four-digit interest rates. The new head of the Church of the England wants to take them on with compassionate community banks. Those institutions can do good, but not by being just slightly less rapacious than rivals.
India seeks diaspora bailout without strings 26 Jul 2013 For the fourth time in 22 years, India may ask its expats in other countries for a rescue loan. The practice has its uses. Jewish emigrants have been a cheaper source of financing for Israel than global bond markets. And lenders won’t demand IMF-type fiscal austerity.
Latest US mortgage kickstarter’s clever but costly 25 Jul 2013 Freddie Mac is selling the first agency home-loan bond that offloads some risk from taxpayers to investors. Such innovations are crucial for reducing Uncle Sam’s exposure to the housing market. But at current rates, investors are getting most of the benefits at Freddie’s expense.
Opening oil sector could spur other Mexico reforms 25 Jul 2013 The nation’s ban on foreign investment in crude is almost a sacred cow. Overturning it might boost output while creating momentum for fundamental change in the telecom and power industries as well. That could lead to faster economic growth and attract big money from abroad.
SAC staffers take the bullet meant for Cohen 25 Jul 2013 Unable to nail the billionaire hedge fund boss, the U.S. has charged his firm instead. SAC may be culpable, but the allegations largely involve actions years ago by ex-employees. That leaves current staff to suffer the fallout. There’s too much spite mixed in with the justice.
UK’s "operation credit bubble" ripe for rethink 25 Jul 2013 The government’s plan to subsidise high-risk mortgages is bad economics and foolish policy. A nascent economic recovery makes it look redundant. The reasonably strong GDP number provides an opportunity for an almost dignified retreat.
Lazard shows M&A rankings have few clothes 25 Jul 2013 The Wall Street firm ended this year’s first half in ninth place for its share of completed deals, yet it was in the top five for revenue. Business mix explains some discrepancies like this. Others result from rival banks grabbing credit even when they haven’t done much work.
Axel Springer gets top euros for dead trees 25 Jul 2013 It’s easy to see why Germany’s largest publisher wanted to sell a third of a declining domestic print business. It speeds up the move to digital. It’s harder to know why a buyer was willing to pay 920 mln euros, 9.7 times 2012 EBITDA. Springer shareholders should be happy.
Merkel a collateral victim of U.S. spying scandal 25 Jul 2013 Widespread U.S. spying on German Internet and mobile-phone users is angering voters. Angela Merkel doesn’t seem to take the debate seriously. It’s unclear what she knew about possible German involvement. Her battered credibility could have electoral consequences.
Credit Suisse checks out of the capital doghouse 25 Jul 2013 The Swiss bank grew its core equity sharply in the second quarter. That’s a welcome change from a year ago, when its own regulator publicly fretted about its capital under new Basel III rules. The challenge is to keep a strong base amid the uncertainty of rising interest rates.
Hooray! Euro zone economy is almost stagnant 25 Jul 2013 The latest numbers point to minuscule GDP growth, although the pace isn’t fast enough to curb unemployment or make a dent in fiscal deficits. Still, stability is far better than decline. And in rich, ageing and sluggish Europe, it may be as good as it gets.
Baidu digs deeper trench in China’s mobile wars 25 Jul 2013 More than 10 pct of the search engine’s revenue now comes from mobile. Google and Facebook show how heavy investments can pay off over time. Yet the cost is high and margins get squeezed. In China, competitive lines are more blurred. Returns may be even longer in coming.
Facebook answers questions rivals can’t 24 Jul 2013 Big tech firms have reported subpar Q2 earnings, with Microsoft the leading victim of the shift to mobile computing. By contrast, Mark Zuckerberg’s social network is thriving on portable gadgets, and Facebook’s revenue growth was the fastest since its IPO. There’s more fuel here.
Carlos Slim needs more than pique to stop KPN 24 Jul 2013 The biggest investor in the Dutch telco has failed to bless its $11 bln German selloff. That’s awkward. Whether strategic or financial, the depth of the Mexican mogul’s misgivings is unclear. Still, blocking the sale would be hard unless Slim can offer a sound alternative deal.
Banks needn’t always eat their mortgage cooking 24 Jul 2013 Making them retain risk sounds logical. But U.S. lenders had lots of home loan exposure before the crisis, without such rules. Higher standards and the obligation to take back bad loans bring similar incentives. And cautious flexibility from regulators may revive securitization.