U.S. trustbusting would make a great monopoly 25 Nov 2013 The Justice Department is beating the pants off the Federal Trade Commission with pushback on AT&T, US Airways and AB InBev deals. The FTC has scored points protecting consumers. Leaving antitrust to DoJ would reduce costly overlap and let the agencies play to their strengths.
YPF’s expropriation rebound threatened by Apache 25 Nov 2013 The energy group has surprisingly rebounded since Argentina confiscated Repsol’s stake 18 months ago. The shares have doubled and output is rising. But that doesn’t justify going shopping. YPF needs capital for its $37 bln shale project more than it needs additional wells.
Peugeot picks right time to switch CEOs 25 Nov 2013 The ailing French carmaker is about to hire Renault’s former No. 2, Carlos Tavares, as its next CEO. A fresh face was needed to drive the company’s strategy forward, and to liaise with new shareholders. Tavares’ experience of the Nissan alliance will be useful.
Chrysler IPO delay edges Fiat into driver’s seat 25 Nov 2013 The union fund that owns 42 pct of the Detroit automaker needs an $18 bln total valuation to make a public listing worthwhile. Recent price talk has been considerably lower. Pushing the stock sale into next year suggests majority owner Fiat is in a better negotiating position.
Wal-Mart CEO choice acknowledges glum reality 25 Nov 2013 Replacing Mike Duke with international boss Doug McMillon is a safe pick for the $260 bln retailer. It avoids the upheaval that rivals have invited by hiring outsiders and yet heralds nothing radical in the fight with Amazon. Wal-Mart looks resigned to play the plodding behemoth.
Moment of truth looms for Britain’s payday lenders 25 Nov 2013 Britain will cap the rates Wonga and rivals can charge borrowers for short-term loans. At present, annualised rates can top 5,000 pct. Payday lenders argue that reflects default risk; regulators worry about limited competition. What happens next should show who’s right.
Iran deal offers the world a ray of hope 25 Nov 2013 Turning the accord to curb nuclear activities into a lasting solution won’t be easy, but diplomatic goodwill makes it harder to go backwards. Reintegrating Iran into the global economy would have profound consequences. For now, the agreement reduces geopolitical risk.
Sub-zero ECB rates could be made to work 25 Nov 2013 The European Central Bank has discussed charging banks for overnight deposits as a way of spurring them to lend. There are risks: banks may pass the cost on to the weakest customers. Still, a tiny negative interest rate would limit the harm - and have a positive symbolic effect.
China bad bank emerges as not-so-bad IPO 25 Nov 2013 Cinda was created to bail out banks; now it mostly bails out companies. A boom in corporate indebtedness helped it expand earnings by 35 percent in the first half. If the economy worsens, there’s more to buy – but the prospects for its $21 billion portfolio would worsen too.
RBS stake sale recedes further into the distance 25 Nov 2013 The UK bank is in the dock again, this time for pushing apparently sound firms into default. The irony is that RBS’ progress in cutting bad assets pleased regulators. Pressure to pay penance via more lending could depress its share price and further delay full privatisation.
Time Warner Cable deal requires Malone magic 22 Nov 2013 Charter wants to buy its larger $60 bln rival, which probably means larding the combined company with debt. Obvious synergies are worth only about $3 bln today. That implies crafty cable magnate John Malone, Charter’s minority owner, may have other ideas to make a merger work.
U.S. retailers reveal monetary easing divide 22 Nov 2013 Recent results show high-end stores like Williams-Sonoma and those catering to DIYers like Home Depot are thriving. Sales at Wal-Mart and other discount retailers, though, are flat or barely growing. The gulf is another sign of how the Fed has created an asset-inflation economy.
Fracking fortunes put naysayers on back foot 22 Nov 2013 The number of million-dollar earners in oil-rich North Dakota has almost doubled in a year. Average incomes are booming, too. Such wealth makes it easier to brush aside ecological worries over fracking. But smart policy doesn’t need to choose between regulation and profit.
Spain should be ready to axe latest bank auction 22 Nov 2013 Madrid has kicked off the bidding for NCG, one of its nationalised lenders. Beginning the process to unwind its mega bank bailout is a laudable aim. But Spain shouldn’t use this goal as an excuse for generous buyer guarantees that leave the state on the hook for further losses.
Global deflation – not quite Marx’s prophecy 22 Nov 2013 Profit shares in the economy are too high, wage shares too low. That’s a recipe for creeping, Japan-style deflation. Karl Marx had warned that capitalism would turn on itself with rates of profit collapsing. The irony is that ennui is setting in even with high returns on capital.
Apollo-Cooper fight puts bankers in the spotlight 22 Nov 2013 Emails shown in court reveal that lenders pressured the Indian tyre maker to renegotiate the $2.3 bln takeover of its U.S. rival. Labour woes make the leveraged deal more risky. While banks want to avoid the blame for pulling the plug, they appear keen to limit their exposure.
Bad banks give low returns but high rewards 22 Nov 2013 State support for UBS and ING has made just 9 pct and 3 pct internal rates of return respectively. That’s not a commercial success. But the governments’ actions prevented a far worse outcome. That taxpayers are back in the black is an added bonus.
Deutsche Telekom doubly lucky with online ad sale 21 Nov 2013 The German telco is selling most of its Scout24 unit to Hellman & Friedman. A 2 bln euro enterprise value is a hefty 20 times EBITDA, though the buyer has ways to mitigate this. DT is fortunate that private equity firms are hungry for carve-outs - and property portals so hot.
U.S. consumer watchdog doesn’t deserve GOP’s wrath 21 Nov 2013 Republicans are again trying to dismantle the financial regulator set up under Dodd-Frank to protect Joe Public. So far, the CFPB is demystifying loans and punishing deceivers while taking heed of industry concerns. That kind of success is something to celebrate, not curtail.
U.S. Senate foists partisan watchdogs on markets 21 Nov 2013 Democratic lawmakers tweaked a procedure to make it easier to approve presidential nominees. With several confirmations stuck, that might sound like a good solution. But it removes a check on power by handing too much to one party. That’s bad news for independent regulators.
Venezuela’s cursed rule prolonged by resources 21 Nov 2013 Some lucky Venezuelan shoppers got soldier-enforced 70 pct discounts this week until shelves emptied. Now President Maduro has decreed a cap on retailer profit margins and a new commission to ration dollars. Shortages and inflation will persist – but the money won’t run out soon.
Markets may one day notice depth of French funk 21 Nov 2013 France’s stalled economy is a drag on Europe. But the government doesn’t seem to care about the bad numbers, and can point to the financial markets’ insouciance. That could change when the Fed moves - or when investors discover the renewed charms of Europe’s periphery.
Gold hasn’t melted down to its base yet 21 Nov 2013 Investor demand for gold is likely to continue falling as Fed tapering pushes up market interest rates. That may in turn affect demand from central banks in emerging markets. Asian jewellery demand offers gold an eventual salvation – but probably below $1,000 per ounce.
Metro cashes in on Russia before it’s too late 21 Nov 2013 The German retail giant is mulling a partial listing of its Russian business. Selling a minority stake in that attractive asset looks like a smart move. It could reduce the group’s debt and finance growth. But investors beware: the Russian economy is headed for a major slowdown.
Qualcomm Toq is more Trojan horse than Dick Tracy 21 Nov 2013 The $120 bln group’s mobile chips and patents power a huge chunk of the world’s smartphones. Now it’s rolling out a wearable device. Apple et al have little to fear. This is more about showcasing a new display to prospective tech clients than an attempt to win over consumers.
Credit Suisse shows resolution has some way to go 21 Nov 2013 The bank is rearranging itself so it can deal with crises by issuing loss-absorbing debt from its Swiss holding company. In theory, that should mean fewer geographical silos. But nationally focused regulators mean Credit Suisse is also becoming more compartmentalised.
Banks need to lop another quarter off costs 21 Nov 2013 Though investment banks’ costs are down over the past five years, revenue has fallen faster. With legal and regulatory expenses rising, big banks will have to swing the axe harder to satisfy shareholders, reckons McKinsey. The full-service model looks increasingly unsustainable.
Asia’s fear of Fed is now infecting more economies 21 Nov 2013 The fragilities revealed by last summer’s market wobble are spreading beyond India and Indonesia. Growth has stalled in Thailand. Malaysian public finances look shaky. Debt is piling up everywhere. Asian assets will feel a jolt as the Fed starts to turn off the tap of dollars.
Open Bernanke converging with opaque Greenspan 20 Nov 2013 The former Fed chairman used to quip that if he seemed clear, he was being misunderstood. The sitting chairman has said much more in an effort to be transparent. The latest FOMC minutes, however, reveal stark disagreements and a muddled message. The Fed is as cryptic as ever.
Blackstone’s $6 bln oil deal signals another peak 20 Nov 2013 The sale of private equity-backed GeoSouthern to Devon comes at a toppy per-acre price. Blackstone has a knack for timing, evidenced by its own IPO and a record real estate transaction. The glut of undeveloped land owned by oil companies suggests finding buyers will get tougher.