Draghi can afford to just keep talking 3 Jul 2013 The mooted end of the Fed’s bond buying could still push euro zone rates higher, hurting weak economies. For the moment yields aren’t scary, and they help keep governments focused on reform. The ECB needn’t take drastic measures, as long as just talking about them works.
U.S. Basel embrace puts foreign watchdogs on spot 2 Jul 2013 The Fed is giving a thumbs-up to the Swiss-sanctioned global bank capital rules. The FDIC and OCC should follow suit soon. That quiets overseas critics skeptical that America would play ball. It should also coax Europe and Asia to show a similar team mentality on other issues.
Apple-Samsung patent clash more standoff than war 2 Jul 2013 As the iPhone maker waits for its rival to pay last year’s big verdict, the tech giants are inching toward another trial next year, and maybe even a third. Such judicial delay pushes patent holders to sue overseas or sell their rights to trolls. Swifter U.S. justice is needed.
Investment banks heart choppy markets – for now 2 Jul 2013 The world’s biggest financial institutions may have weathered the recent bond market storm for a decent Q2 showing. Capital markets deals were vibrant, too, but have slowed. Hopes for revenue growth may rest on whether Wall Street and City traders can power through the volatility.
Zynga founder puts second set of hands on wheel 2 Jul 2013 Mark Pincus, who controls the flailing online gaming firm through super-voting stock, has replaced himself as CEO with Microsoft’s Don Mattrick. That sounds good for regular shareholders. But Pincus will still hover in the corner office, which could make Zynga harder to fix.
Obama’s African power plan echoes 1930s U.S. moves 2 Jul 2013 The president is providing $7 bln to boost access to electricity in a continent where only 31 pct of people can plug in and charge up at present. President Roosevelt’s electrification projects eliminated much rural poverty in America. Obama’s initiative is similarly well aimed.
Bitcoin ETF signals time to make market in cash 2 Jul 2013 A virtual currency fund IPO means there will now be an index tracker for almost everything. Except that financial engineers have ignored the most important asset class of all. No more. Say hello to the Breakingviews Dollar Trust. It makes holding cash as easy as trading a stock.
Cyprus bond swap is good publicity, bad economics 2 Jul 2013 The creditor banks of Cyprus “voluntarily” exchanged 1 bln euros worth of sovereign debt at cheap rates. That lowers the bailout bill for the euro zone, but the burden falls unevenly on the country’s banks. Exchanging all creditors’ debt would have been fairer - but messier.
German property IPO is in danger of falling flat 2 Jul 2013 Deutsche Annington, the largest residential real estate landlord in Europe’s strongest economy, is preparing to float. The company, which will have equity worth about 4.3 bln euros, specialises in small flats at the budget end of the market. Shares, however, look pricey.
India’s aspiring banking moguls fail to impress 2 Jul 2013 A few strong contenders aside, the 26 applicants for a handful of new banking licenses are local finance companies. Giving these shadow lenders access to retail deposits while saddling them with harsh licensing rules could backfire. India needs more banks, but not more weak ones.
China index: Weaker growth on weaker foundations 2 Jul 2013 China’s economy remains gloomier than this time last year as lower export growth and rail freight volumes make a grim follow-up to poor PMI readings. Sales of property, luxury liquor and posh cars prevent a steeper fall, but these are not the bright spots China needs or wants.
Third time lucky looks a stretch for Eike Batista 1 Jul 2013 The Brazilian billionaire’s EBX group may soon crash. He bounced back from financial disaster before. But now he’s wiped out $50 bln of value in three years after borrowing oodles to expand quickly. Investors share some blame. But now they’ll surely be too wary of Batista.
Tribune’s TV deal should spawn repeats 1 Jul 2013 The $2.7 bln acquisition of 19 U.S. stations comes fast on the heels of Gannett’s plan to buy Belo. Such combinations offer healthy revenue synergies and often, as for Tribune, tax benefits, too. The industry’s programming thrives on copycats. It’ll be the same for TV M&A.
Student loan rate hike is a D.C. dysfunction bonus 1 Jul 2013 Congressional inaction means Uncle Sam-backed college borrowing costs double to 6.8 pct. That should curb the rapid rise of such debt, now at nearly $1 trln. It might even slow education inflation. It’s a rare case of useful policy that doesn’t require waiting for the Fed.
CDS probe gives banks new reason to fret 1 Jul 2013 The EU says the industry colluded to keep exchanges out of the lucrative credit default swaps market. Derivatives body ISDA, data provider Markit and 13 banks may not pay the large potential fines, but the industry will struggle to avoid damaging an already terrible image.
Hostile $10 bln biotech bid set to go far higher 1 Jul 2013 Partners Pfizer and Bayer are natural buyers of Onyx. But Amgen has jumped in first, sending the cancer drug specialist’s shares up more than 50 pct. Onyx’s position in the hot field, rights over multiple potential blockbusters and a wide field of bidders suggest a rowdy auction.
Mursi faces choice between compromise and chaos 1 Jul 2013 One year into his term, Egyptian President Mohamed Mursi is facing turmoil in the streets. The Muslim Brotherhood’s failures are many - chief of which is its inability to work with other political forces. It may not be too late. The alternative is real chaos.
EU pipeline dream dies of natural causes 1 Jul 2013 Nabucco, Europe’s pet pipeline project, is dead. Conceived as a way around the continent’s Russian gas dependency, it was unable to adapt fast enough to changing gaspolitik and lost to a smaller, cheaper challenger competing to bring Caspian gas to the continent.
Policymakers who see no bubble might still get wet 1 Jul 2013 Central bankers don’t think QE has pushed asset prices well past fair values. One argument is that asset prices are lower now than in 2007. True, but that was a great big bubble. Even if today’s excesses are more modest, QE is probably doing more harm than good.
Nokia gets options with cheap NSN buyout 1 Jul 2013 The Finnish mobile-phone maker is buying Siemens out of their equipment joint venture for a bargain 1.7 bln euros. Nokia could later float or sell NSN at a better price. Meanwhile, owning all of this restructured, profitable unit shores up Nokia as it struggles in smartphones.
ThyssenKrupp’s pride well worth 1 billion euros 1 Jul 2013 That’s how much new capital the German steelmaker may need. The RAG foundation, a local rival to the one that controls Thyssen, seems willing to buy a stake. While hurting vanities, this would be an elegant fix to the company’s woes. Pride is a luxury Thyssen can’t afford.
Croatia makes awkward EU entry 1 Jul 2013 Zagreb joins Brussels at an unfortunate time. Its economy is struggling and its democracy needs improving. The hope is that Croatia takes accession as an incentive to reform, bringing political stability to the troubled Western Balkan region. The risk is that it doesn’t.
Hugo Dixon: Financial reform must carry on 1 Jul 2013 After six years of crisis, progress has been made in fixing the financial system: for example, a landmark EU deal last week to make creditors not taxpayers foot the bill for bust banks. But there’s a huge job still to do. Policymakers must not flag.