Periphery can aspire to Irish-style stagnation 6 Aug 2013 Ireland has long been stuck with an in-and-out mild recession. Tentative green shoots are now sprouting, but Dublin’s dependence on external demand will keep the recovery slow and bumpy. Still, such relative stability is a fair aspiration for the rest of the euro zone periphery.
Qatar could benefit from dual-track SWF model 6 Aug 2013 The world’s flashiest sovereign wealth fund is under the watch of a new emir and changes in the way Doha manages its money may follow. The Qatar Investment Authority is young and looks messy. Dividing investment between two levels of risk – like other SWFs – might make sense.
Wash Post shows NY Times way to trophy status 5 Aug 2013 The $250 mln purchase of the famed D.C. daily by Amazon founder Jeff Bezos confirms what investors already knew. U.S. newspapers are no longer businesses – they’re toys for today’s plutocrats. The deal offers a template for the last of a breed, the Times’ Sulzberger family.
Disney magic hasn’t exactly worked on Pixar 5 Aug 2013 “Monsters University” should enhance the company’s latest earnings, but a Breakingviews analysis suggests the animation studio’s value falls short of the $7.4 bln Disney boss Bob Iger paid in 2006. Pricey deals for Marvel and Lucasfilm may also disappoint investors over time.
EADS should play long game with Dassault stake 5 Aug 2013 Hedge fund TCI has done EADS a favour by calling on the aerospace group to sell its stake in French subsidiary Dassault Aviation - EADS already wants to exit non-strategic minority stakes. A market placing would be ideal. But if Paris meddles, no deal is better than a bad deal.
Apax shows how a clean leveraged buyout works 5 Aug 2013 The private equity firm is selling insurance broker Hub in a $4.4 bln deal for a tidy profit six years after taking it private. Apax used a big slug of equity and doubled EBITDA without siphoning off any special payouts for itself. Over to Hellman & Friedman to repeat the feat.
New-look HSBC beginning to emerge from fog 5 Aug 2013 Lower costs and fewer bad debts in the first half showed the benefits of CEO Stuart Gulliver’s strategy. The absence of regulatory fines also helped. Low interest rates continue to drag on revenue. But the biggest uncertainty concerns the severity of the emerging-market slowdown.
Markets, central bankers face strange new world 5 Aug 2013 GDP growth is picking up in most of the developed world, but too slowly for the conventional economic model. Inflation is staying low too, which is theoretically confusing. Stock markets are up, oddly. Non-conventional times make any predictions difficult. Expect the unexpected.
Milk scare exposes New Zealand’s dairy dependency 5 Aug 2013 A contamination warning from the country’s largest producer has triggered recalls and import bans worldwide. The fallout may be limited, and substitutes in short supply. But with milk products generating a quarter of exports, New Zealand can ill afford a sustained backlash.
U.S. jobs data entrench slow-growth economy 2 Aug 2013 July’s unemployment rate may have fallen, but the share of the population actually employed was flat. Moreover, the latest numbers confirm too many new jobs are either temporary, low paid or both. With growth and incomes also sluggish, an anemic recovery looks here to stay.
Flawed Dell compromise saves faces all round 2 Aug 2013 Letting the $24 bln buyout fade away would have hurt most shareholders, the board and the founder. But the PC maker’s worsening prospects left little room. A 2 pct hike in the offer price in return for a tweaked voting procedure won’t delight anyone but should seal the deal.
Boutiques, bulge bracket hit the other’s weak spot 2 Aug 2013 Moelis and Rothschild scooped the big bragging rights to this week’s $35 bln Publicis-Omnicom deal. But BofA, Morgan Stanley and others can at least feast on the bigger payday financing the $2.5 bln Saks takeover. That’s money the boutiques are leaving on the table – for now.
Mad Men bring the negative campaign to M&A 2 Aug 2013 WPP boss Martin Sorrell says Publicis-Omnicom is a lopsided merger that will lose staff and clients. Publicis’ CEO deplores “anxious” rivals. The unusual public sniping is entertaining. But as in advertising, that’s not really the point. Both sides have something to sell.
Review: Venezuela’s revolutionary leaves chaos behind 2 Aug 2013 “Comandante” isn’t a tribute to the late Venezuelan leader, Hugo Chavez. Rather, it’s a realistic account of his follies and chaotic governance. The profile of Nicolas Maduro, his successor, bodes ill. What the book lacks is atmosphere, depth and drama.
RBS should aim to be more than just a Lloyds copy 2 Aug 2013 New boss Ross McEwan will come under pressure to make RBS look like Lloyds, its retail banking focused domestic peer. But given RBS is a big corporate lender and needs an investment bank, HSBC’s UK business is the better model. That could mean McEwan cutting markets further.
New RBS boss gives mixed message on pay 2 Aug 2013 The CEO is waiving his next two bonuses, and his 1.35 mln stg annual reward is about one third of the FTSE 100 median. The package fits the job and is politically necessary. But it doesn’t set a good precedent. It reinforces the government’s status as an inferior employer.
Berlusconi verdict weakens Italian reform drive 2 Aug 2013 The former prime minister’s conviction for tax fraud will exacerbate tensions within Rome’s fraught ruling coalition. Yet neither party is ready to face their electorate. That means a crisis isn’t imminent – but the political unity needed for reform is still remote.
Lufthansa restructure puts it on right flight path 2 Aug 2013 Europe’s largest airline is in the midst of a painful reformation. It could be a long haul, but despite dismal headline figures for the first half, it has made headway in bringing costs down. Much hinges on a success of Lufthansa’s revamped no-frills airline Germanwings.
Eni’s credit rating shows shifting oil sands 2 Aug 2013 The Africa-focused oil major’s debt sits three notches above Italy’s after S&P’s recent downgrade of the country. If the gap closes, it would probably be due more to Eni’s exposure to its home base’s weak economy than to risky operations in Nigeria and North Africa.
A Goldman minnow finally lands in the SEC’s net 1 Aug 2013 The jury verdict against Fabrice “Fabulous Fab” Tourre ends a losing streak at trial for the U.S. regulator. But the former trader played a minuscule role in Wall Street’s machinations during the financial crisis. The SEC’s win won’t absolve it from letting big fish get away.
U.S. Treasury fills watchdog hole, creates another 1 Aug 2013 Federal Reserve Governor Sarah Bloom Raskin is set to become Jack Lew’s right hand. Her regulatory chops make up for some of his deficiencies in the area. But her move will widen the gender gap on the central bank’s board just as President Obama is mulling chairman candidates.
Nothing sweet about charity as a legal penalty 1 Aug 2013 Allowing the likes of Facebook, Google and now Halliburton to settle cases by making non-profit donations doesn’t serve justice. Victims are denied compensation, while companies gain tax breaks and a do-gooder’s aura. U.S. courts shouldn’t let alleged wrongdoers off so easily.
Chesapeake’s new boss hits all the right notes 1 Aug 2013 Just weeks after replacing the energy group’s ousted founder, CEO Doug Lawler is off to a great start. He can’t take credit for beating Q2 earnings estimates or rising oil output. But his vision of simplifying the fiendishly complex creation of Aubrey McClendon merited applause.
Greece needs a new debt deal 1 Aug 2013 Last year’s restructuring left Athens with a Sisyphean debt burden. The euro zone’s current policy of dangling modest relief in exchange for good behaviour won’t work for ever. Debt is stifling the economy and making austerity untenable. Greece needs more debt relief, without delay.
U.S. GDP revisions flatter to deceive 1 Aug 2013 New accounting rules, mostly around R&D, have increased the estimated size of the country’s economy by 3.6 pct. Sort of. Among the many reasons not to use GDP as an indicator of prosperity is that it excludes depreciation. National income, which includes it, has hardly changed.
BMW showcases beauty of long-term strategies 1 Aug 2013 The German carmaker is revving up R&D and capital investment. Spending 12 pct of revenue hurts short-term earnings, but it has ramped up expenditure before to great effect: it now outperforms its premium-brand rivals. Investors should be as farsighted as BMW’s management.
UK’s forward guidance could end with rate spike 1 Aug 2013 Another no-action month doesn’t make the Bank of England do-nothing. It’s expected to start making policy commitments. Bad idea. Not only could these prove misleading and ineffective, but if above-target inflation is ignored too long, rate hikes might be fast and unguided.
Exxon buyback cut deserves two cheers at best 1 Aug 2013 The oil giant is slashing its favorite method of returning cash to investors. That’s smart considering a 19 pct drop in Q2 profit and rising capex. But Exxon’s habit of buying back stock at peak prices suggests this is temporary. It’s an irrational policy the company should drop.
Shell faces reality: it’s not about the barrels 1 Aug 2013 Disappointing results at the Anglo-Dutch energy giant partly reflect an outdated way of thinking. Oil majors have long obsessed simultaneously over reserve replacement, production growth and profit. Shell’s decision to ditch medium-term production targets shows it’s wising up.
Lloyds poses front-running risk for Barclays 1 Aug 2013 Results show Lloyds ahead on its targets. Its shares are circling the government’s in-price. A quick placing of some of the state’s holding looks doable. The snag? Barclays’ $9 bln rights issue could suck up investor demand. That’s a reason for Lloyds to move first.