Fickle shoppers put Mattel, Zynga in similar boat 31 Jan 2014 The world’s biggest toymaker and the online gamer both need to produce a steady parade of new hits to grow sales. The Barbie maker’s product lineup sputtered during the holidays, but it’s still a better bet than Zynga, whose pricey mobile gaming buy smacks of desperation.
Chevron looking cheap despite its big spending 31 Jan 2014 The oil giant’s Q4 profit slumped 32 pct as it splurged on capex at a pace that put bigger rivals to shame. The emphasis on mega-projects that have yet to produce is worrisome. But steely-nerved investors should eventually be rewarded with an output growth rate twice Exxon’s.
Chinese M&A rings in new year with Auld Lang Syne 31 Jan 2014 The $2.5 bln sale of Cooper Tire was undermined by its joint-venture partner in Rongsheng. The two sides have now agreed a deal that helps them part ways. Given what transpired, other foreigners may also fancy singing “should old acquaintance be forgot” in the Year of the Horse.
EU bank stress test can be saved from joke status 31 Jan 2014 The European Banking Authority’s stresses on lenders look too soft on capital and sovereign debt treatment. Fortunately, the EBA will allow national regulators to be tougher. That gives the ECB, as the head of the EU banking union, the chance to make the exercise credible.
ECB can live with near-deflation 31 Jan 2014 After a drop in January, euro zone inflation has been below 1 pct for four months. The region’s internal devaluations are a durable drag. But the central bank has run out of easy anti-deflation policies. As the zone returns to growth, the ECB can get away with doing nothing.
BT and BSkyB equality will be short-lived 31 Jan 2014 Both groups have produced market-pleasing results. Telco BT, once the poor relation, now trades on a comparable valuation to its satellite rival. Both offer similar earnings growth. However, a lot hinges on who wins what in the next major UK soccer-rights auction.
Spanish banks’ diversity no longer a trump card 31 Jan 2014 Santander and BBVA shrugged off Spain’s crisis thanks to their substantial operations abroad. The domestic economy remains weak, but Spanish bad debt provisions are easing. The problem now is that emerging stalwarts like Brazil are becoming a drag, not a benefit.
Amazon, investors in race to get earnings joke 31 Jan 2014 Founder Jeff Bezos long prioritized growth over profit. Yet the internet retailer’s Q4 results hint at how margins can improve as sales slow. Charging more for Prime membership could improve them further. Problem is, investors are counting on both growth and higher margins.
Emerging vacuum a harbinger of global downdraught 31 Jan 2014 Brazil’s central bank president complains that rising developed country rates are like a “vacuum cleaner.” But tighter global money is needed. Emerging economies must adapt and improve their own fundamentals. Their woes are a harbinger of the developed market pain to come.
Trustbusters give Obamacare a splitting headache 30 Jan 2014 Hospitals, doctors and bankers figured mergers would enhance efficiency, one of the president’s goals. Now a court says they can hurt competition and wants a deal undone. The troubled law could use a break from its many woes, but a dose of antitrust scrutiny might do some good.
Brazil’s banking bigwigs samba their way north 30 Jan 2014 Itaú is buying control of a Chilean bank just as investment bank BTG Pactual sallies into Mexico. With Brazil wobbly, regional diversification makes sense. But succeeding in new markets may require toning down Brazilian bravado, on display in Itaú’s treatment of Chilean investors.
Goldman shows commerce and governments don’t mix 30 Jan 2014 Danish politicians are angry the U.S. bank is lead investor in the recapitalisation of state-run Dong Energy. It shows that banks can’t be too commercial with government business. And Goldman’s reputation for always being on the better side of deals can backfire.
Vodafone has upper hand in Spanish cable fight 30 Jan 2014 The mobile giant is vying with the acquisitive Liberty Global for Ono, the 7 bln euro Spanish cable group. Financial heft, strategic need and synergies all point to Vodafone winning again, as it did in Germany. But Spain is a tougher market so Vodafone needs to stay disciplined.
U.S. GDP glass begins to look more than half full 30 Jan 2014 Output increased at a 3.2 pct rate in the fourth quarter. That’s decent, but the details look better than the headline. Exports rose sharply and the private sector more than compensated for shrinking government. Even low savings may now get a boost from Obama’s new MyRAs.
Market ructions mask underlying complacency 30 Jan 2014 Equity markets have given investors a scare in the past week. But options prices show they are pretty sure the selloff won’t snowball in coming months and market swings will subside. Confidence that very low volatility is here to stay may well turn out to be complacency.
Exxon outlays should pump up 2014 after down year 30 Jan 2014 The oil giant’s quarterly profit slid 16 pct to $8.4 bln due to sluggish oil and gas production and record capital spending. But output should pick up as mega-projects stop guzzling funds and go online. With cash beginning to flow, investors can look forward to brighter times.
Free weekends won’t restore Wall Street’s allure 30 Jan 2014 Investment banks used to offer juniors a simple tradeoff: long hours for future riches and prestige. Now they’re making up for shrunken bonuses and social cachet by easing workloads. But clients still demand round-the-clock service. A Wall Street career is no longer a no-brainer.
Markets give central bankers lessons in humility 30 Jan 2014 Monetary authorities should have already been chastened by the doubtful results of extreme policies in developed economies. Now they are learning how hard it is to switch direction. And emerging markets are showing that no policy rate is right when the economy is wrong.
Lenovo’s M&A spree challenges investors’ faith 30 Jan 2014 The Chinese group is buying Google’s Motorola phones just days after picking up IBM’s low-end server unit. The two loss-making divisions will cost up to $5.2 bln. Though there’s some strategic logic, shareholders have few details to help them work out whether the deals stack up.
Diageo’s sober ambitions are yet to find favour 30 Jan 2014 Shares in the global spirits giant fell sharply on Jan. 30 as it outlined the impact of exposure to weakening emerging markets. Diageo’s bigger challenge is to convince investors it can generate attractive long-term growth without recourse to big-ticket acquisitions.
ICBC takes slow-burn approach to global expansion 30 Jan 2014 The Chinese lender is buying 60 pct of Standard Bank’s UK trading business. Negotiations took over a year, and ICBC has over a decade to take full control. Slow decision making can mean missed opportunities, but caution may protect China’s banks from high-profile own goals.
Nintendo throws investors a Pokemon 30 Jan 2014 Fresh from a profit warning, the games maker says it will license its characters to new partners and use mobile devices to promote its products. Given Nintendo’s lack of internet savvy, sticking to its hardware-focused business model is probably the least bad option for now.
Google salvages insurance from its biggest deal 30 Jan 2014 Selling Motorola Mobility to Lenovo for $2.9 bln after buying it for $12.5 bln barely two years ago looks awful. The search giant extracted some value, however, and is keeping loads of patents. The deal was still costly, but it did find a kind of protection for the Android world.
Facebook has another mobile call to answer 29 Jan 2014 The $130 bln social network defied skeptics by generating over half its Q4 ad sales from portable devices, up from zero two years ago. The number of daily visitors is also quickly on the rise. Selling more ads is one thing, though. Making them targeted and unobtrusive is another.
Yellen’s unanimous Fed welcome may not last 29 Jan 2014 At Bernanke’s final FOMC meeting, all voters were for once agreed on cutting QE by another $10 bln to $65 bln a month. Despite emerging-market volatility, the U.S. economy seems to be normalizing fast. Consensus may again become harder to forge if the Fed has to catch up.
Men’s Wearhouse gets caught with its pants down 29 Jan 2014 The U.S. suit peddler rejected Jos. A. Bank’s approach partly because of “significant antitrust concerns.” Now, competition authorities are digging deeper into the table-turning offer made by Men’s Wearhouse. It’s an ominous sign for a deal that once looked tailor-made.
Forget WTI – Louisiana crude is the new spread bet 29 Jan 2014 With U.S. output surging, West Texas Intermediate oil costs less than global Brent crude by about $11 a barrel at present. Louisiana Light Sweet, though, still trades nearer the world price. With no sign of American production growth slowing, that discount will soon widen.
Obama’s retirement plan may start more than saving 29 Jan 2014 Making it easier for U.S. workers to sock away money for their golden years is admirable. Many won’t have a buck to invest now and real returns would be 0.4 pct. That’ll change, though. And the project may create a big Treasuries buyer and make Social Security easier to reform.
EM rate hikes aren’t enough to scare FX traders 29 Jan 2014 Turkey’s hefty rate rise gave the lira only fleeting respite. Traders scoffed at a smaller South African rate hike. Euro zone bond vigilantes folded at the ECB’s commitment to preserve the euro. But FX traders look set to test central banks’ capacity to defend EM currencies.
Fiat-Chrysler debut marred by Agnelli power grab 29 Jan 2014 The Italian carmaker not only bought its U.S. rival on the cheap. It’s also creating a “loyalty scheme” giving long-term holders extra voting rights. That may help ward off activist investors. But it could also boost the founding family’s control from 30 pct to more than 40 pct.