JPMorgan hits U.S. back in its weak spot 18 Dec 2013 There’s a lot of bluster in the bank’s $1 bln-plus lawsuit against the FDIC’s WaMu receivership. But JPMorgan has a good case that the watchdog has engaged in some Scrooge-like antics. And if anyone needs a morale-boosting victory, it’s Chief Executive Jamie Dimon.
Edward Hadas: a Christmas message for lenders 18 Dec 2013 This is the season for racking up debts in the provision of seasonal goodwill. It should also be a time to think about debt forgiveness. Excessive borrowing brought five years of global suffering. Obligations shouldn’t be sacrosanct; generosity to borrowers makes economic sense.
Ford slows down into the middle lane 18 Dec 2013 The Detroit automaker’s profit warning sent the stock down 7 pct. The reasons make sense – expensive new U.S. product launches and economic weakness in Europe and Latin America. But the timing is odd. Ford is still looking strong, but it takes a bit of shine off CEO Alan Mulally.
Ukraine’s Russian lifeline means European pain 18 Dec 2013 Vladimir Putin has agreed to buy $15 billion worth of Ukrainian bonds and to sell gas to Kiev at a discount. The deal gives relief to Russia’s troubled neighbour but costs Moscow little and buys valuable influence. Pro-EU demonstrators in Kiev and other cites won’t go home soon.
Meet China’s private corporate giants in waiting 18 Dec 2013 Squaring off with state-owned companies and national champions demands grit and efficiency. Xiaomi, Spring Airlines and Great Wall Motor are three whose labours may be starting to pay off. Strong products, helpful reforms and fearsome ambition make them worth watching in 2014.
Bean-counters plant question for next Lloyds sale 18 Dec 2013 The UK’s National Audit Office says British taxpayers made a small loss on the recent sale of shares in Lloyds Banking Group. In itself, that’s no big deal. But it is a setback that could have been avoided – and made the next part of the privatisation easier.
Bitcoin mania heads into the end game 18 Dec 2013 The electronic pseudo-currency had a good run. Ideologues, speculators and scammers enjoyed it while it lasted. Now Chinese authorities are determined on a strict clamp down, maybe an outright ban. Common sense prevails. Bitcoin’s price is down 50 pct. It will fall much more.
Swift bad loan clean-up will beef up Indian banks 18 Dec 2013 Lenders should be better at dealing with bad credit, if new rules stick. That should make state-run banks more resilient. They’re not quite investment-ready yet though – there’s still the matter of pouring in capital to deal with the 10 percent of loans that have already turned.
100 years of Fed competence led to cursed workload 17 Dec 2013 After humble beginnings, lawmakers heaped more and more responsibility on the U.S. central bank. Though it hasn’t always been perfect, its increasing power came from screwing up least. But some worry those many mandates may become too much to manage – if they aren’t already.
Boeing needs to push hard to keep defying gravity 17 Dec 2013 A big dividend hike and fresh buybacks show the jet maker in high spirits after its shares nearly doubled this year. Investors should keep their feet on the ground. Despite strong deliveries, aerospace remains a cyclical business. And there are structural clouds on the horizon.
Australia nudges dairy saga toward a finish 17 Dec 2013 Saputo has raised its offer for cheesemaker Warrnambool to A$537 million, at a regulator’s prompting. It could prove higher than a rival bid by Murray Goulburn, and looks more deliverable. Barring a knockout counterbid, investors would do well to take Saputo’s cash.
Globalisation’s demise is greatly exaggerated 17 Dec 2013 Sceptics warn an iron law of economics has been broken. A long-standing link between global GDP growth and world trade appears to have weakened since the 2008 crisis. But a closer look shows the recession that followed can explain most of the trade slowdown.
KKR spends $2.6 bln on high-yield savings account 17 Dec 2013 The private equity firm is buying KKR Financial, its separately listed, mostly credit-oriented investment fund. The deal will boost cash flow and dividends. But it also brings KKR ready-made capital that will earn a far better return than on money parked in a bank.
Business investment is miscast as panacea 17 Dec 2013 Will companies invest more in the coming year? Equity bulls are relying on hikes in capital expenditure to boost shares while policymakers are hoping it will help growth, employment and productivity. Capex could well pick up yet still manage to disappoint.
Shale energy deficit will hit Europe hard 17 Dec 2013 American companies have a big advantage over European counterparts: abundant, cheap gas. Fracking is more difficult in Europe and requires a step-change in public perception. Cheaper energy could provide the old continent with the fillip it needs. But it’s a pipedream.
China web giants take the fight offline in 2014 17 Dec 2013 Chinese tech firms are leaving their comfort zones to win consumers. TV shows, logistics and electronics are all part of the arsenal for companies like Tencent, Baidu and Alibaba. These forays are as disruptive as they are risky, particularly for the sector’s high margins.
Australia’s mini-deal flurry belies gloomy 2014 17 Dec 2013 A late burst of activity led by the carve up of mall operator Westfield lifted M&A volumes 13 pct above 2012. But they are still well below a good year. A gaping budget deficit and recent political meddling suggest Australia won’t raise Asia-Pacific from its deal-making gloom.
India in depth: Three quick fixes for Modi 17 Dec 2013 The opposition politician Narendra Modi is likely to win the mid-2014 election. The new prime minister will need time to set his agenda for economic reconstruction. In the interim, he should focus on repair jobs that do not require new laws and will pay quick dividends.
McClendon IPO plan is echo of bad old Chesapeake 16 Dec 2013 He lost his job as CEO of the energy firm over spending and conflicts. A new $2 bln venture would allow him to cherry-pick assets ahead of his investors and reward him generously. Despite McClendon’s knack for buying oil and gas properties, investor skepticism is in order.
Fed needs 100-year inspection and tune-up 16 Dec 2013 A U.S. federal commission led to the central bank’s creation in 1913. Its structure and mandate have evolved, and since 2008 novel activities have enlarged its balance sheet to $4 trln. A fresh commission reviewing the past century and the Fed mandate would renew its legitimacy.
Asmussen’s ECB exit will hurt Draghi 16 Dec 2013 Mario Draghi will lose an ally when ECB board member Jorg Asmussen quits to join Germany’s new government. The central bank boss will miss Asmussen’s loyal support - against German hostility, including from Bundesbank chief Jens Weidmann. Draghi may become more timid.
AIG settles for connecting flights to exit ILFC 16 Dec 2013 The insurer is getting $5.4 bln for its aircraft-leasing arm - just 75 pct of book value. AIG gets two-fifths of the price in rival AerCap’s stock, and is providing a $1 bln line of credit. CEO Bob Benmosche hasn’t found the cleanest deal, but it is a glide path to independence.
Silver Lake takes a second juicy bite of Avago 16 Dec 2013 The U.S. private equity firm quintupled its money on the initial carve-out of the chip company from HP. Now it’s back, underwriting Avago’s $6.6 bln purchase of rival LSI. The market’s warm embrace of the deal means Silver Lake’s $1 bln convertible loan is already in the money.
U.S. and China will set global growth pace in 2014 16 Dec 2013 America produces a quarter of world GDP, China less than a tenth. But between them they will generate almost half the growth in global output next year. With Europe in the doldrums, Japan recovering and emerging markets subdued, the planet heavily depends on its twin engines.
Hugo Dixon: Europe’s post-crisis challenge 16 Dec 2013 The hot phase of the euro crisis may be over. But the zone will limp on for years with low growth and high unemployment unless further action is taken on three fronts: bank balance sheets must be cleaned up, monetary policy loosened and more free-market reforms adopted.
New German government to take chances on growth 16 Dec 2013 With Wolfgang Schaeuble still in charge of Finance and the pro-European Social Democrats in a position of influence, Angela Merkel’s new cabinet brings continuity for Europe. But the SPD will control social policy. Its plans for welfare reforms may hurt long-term growth.
Hedgie merger of weakness shows funds transition 16 Dec 2013 Swiss funds group Gottex is merging with EIM in a deal valuing Arpad Busson’s firm at $35 mln. It’s a reminder of where troubled funds of funds are heading: clients want scale and smart solutions; small firms drown in regulation. Survival means having $10 bln under management.
Coca-Cola shakeup should help it preserve the fizz 13 Dec 2013 A reorganization of the $175 bln beverage giant’s North America unit could herald a separation of the bottling business it bought in 2010. Cost-cutting may be on tap, too. That would keep investors sweet on Coke as rival Pepsi nurses strategic plans and contends with an activist.
Animal health carve-ups to come two by two 13 Dec 2013 The business is pharma’s secret cash cow: R&D costs are lower, scrutiny’s gentler and growth faster than human care. Shareholder pressure is forcing firms from Novartis to Merck to explore sales, JVs or IPOs. The risk of seller’s remorse means buyers may have to pay top dollar.
How Deutsche, Barclays can ease U.S. capital pain 13 Dec 2013 The two banks are most at risk if U.S. regulators force foreign lenders to hold more capital. But if Barclays and Deutsche restructured their businesses into subsidiaries, they might be allowed to shift cheaper capital from their HQs. Credit Suisse’s revamp provides a blueprint.