Fear of currency busts stems from bungled booms 4 Feb 2014 Why are plunging currencies “crises” for developing nations when steep falls in the Aussie dollar or the yen are mere “adjustments”? Emerging markets’ financial fragility is the standard answer. But the phobia has its root in the countries’ failure to tame prices in good times.
BP starts to shine next to Shell 4 Feb 2014 It’s all relative: BP’s profit fell almost a third in the fourth quarter, but it was no worse than expected. Russia and mounting Gulf of Mexico spill costs make its earnings hard to predict. But, unlike Shell, it has set more concrete targets to back up its promises.
Smog obscures looming water risk for China 4 Feb 2014 Bad air is visible, and vexes the urban rich. But recent attempts to fix China’s airpocalypse may exacerbate another acute risk: water. Thirsty energy companies and consumers may not see the threat just yet; they will if policy and price changes pull the plug on cheap supply.
Entrenched management stitches up suits deal 3 Feb 2014 Jos. A. Bank may buy Eddie Bauer to poison itself from the hostile advances of Men’s Wearhouse. The suitor pulled a similar stunt back when it was on defense. Both sides are showcasing a pathetic Corporate America proclivity for elevating the interests of bosses over owners.
BofA settlement rattles the trust in trustees 3 Feb 2014 The bank’s $8.5 bln payout over dodgy mortgage securities has finally won court approval. Evidence of conflicts and weak oversight, however, suggests BNY Mellon in its guardian role struck a lousy deal for bond investors. Trustees really ought to be watchdogs, not lapdogs.
Smith & Nephew jumps on a wounded rival 3 Feb 2014 Treating injured athletes is a faster-growing business than selling artificial joints to a greying world. So the UK medtech giant is paying $1.5 bln including cash for U.S.-listed ArthroCare. A share price premium of just 6 pct reflects the target’s own self-inflicted wounds.
KKR needs lucky goals to win in German soccer 3 Feb 2014 The buyout group is investing 61 mln euros in Berlin-based team Hertha BSC. The club is struggling financially and mediocre on the pitch. A thriving Bundesliga tournament and a booming Berlin suggests potential. But turning Hertha round looks a long shot for private equity.
Emerging markets’ big danger is financial markets 3 Feb 2014 Investors are right to shun the worst emerging markets. But some poor countries are doing well. They don’t deserve to be shut out of global capital markets by panicky investors. Of course, folly creates opportunities. Smart investors will be able to find some emerging bargains.
Retail bankers outdo casino peers on misconduct 3 Feb 2014 Even before the latest provisions for selling bogus mortgage insurance, UK retail bank fines outstripped those caused by their trader colleagues as a proportion of earnings. That makes it harder to judge the true profitability of the supposedly safer consumer business.
Paul Allen scores another sentimental win 3 Feb 2014 After parting ways with childhood friend Bill Gates, the Microsoft co-founder vaporized billions in poorly conceived cable and tech bets. Allen later bought the now Super Bowl champion Seahawks to keep them from leaving Seattle. On occasion, good investing can have a heart.
Lloyds still looks best of a bad bunch of UK banks 3 Feb 2014 The past weighs on the UK lender, with charges for mis-selling up another 1.8 bln stg. Dividends will be smaller than hoped and the next stage of privatisation could be rocky. But given Lloyds’ durable strategy and market position, its premium valuation looks intact.
Ryanair’s loss highlights need to change 3 Feb 2014 Revenue at the low-cost airline has stalled, plunging the group to a heavy third-quarter loss. The shares, however, are up smartly. Investors are relieved that guidance is unchanged. But they are putting a lot of faith in the company’s new strategy to be nice to its customers.
German job miracle becomes ever harder to sustain 3 Feb 2014 The country’s long-lasting labour market revolution is half-kaput. New jobs are still appearing at an amazing rate. But this is no longer translating into falling unemployment. And an ill-considered labour market re-regulation is poised to worsen the deep structural problems.
Hugo Dixon: Independent Scotland won’t keep the pound 3 Feb 2014 The Scottish government wants to be part of a sterling zone if the people vote for independence, as alternatives to the pound aren’t attractive. But it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.
Thai poll leaves few options but monetary overkill 3 Feb 2014 Caretaker Prime Minister Yingluck Shinawatra almost certainly won the Feb. 2 vote, but the disrupted election will face legal hurdles. The central bank may have to cut already-low interest rates to compensate for political chaos. That’s a risky move in a debt-laden economy.