LSE’s neat Russell buy leaves one loose end 26 Jun 2014 The UK exchange’s $2.7 bln purchase of the U.S. index provider is complementary and brings welcome new geographical reach. That justifies the market’s relaxed reaction to an accompanying $1.6 bln cash call. But Russell’s fund business doesn’t fit. Its future needs to be resolved.
Barclays dark pool rap suggests little has changed 26 Jun 2014 New York’s top lawyer has brought a juicy lawsuit against the UK bank. Relying on whistleblowers, he alleges equity e-traders lied to clients to boost revenue, status and bonuses – all since 2011. It’s as if the hubris and poor ethics that led to the 2008 crisis never happened.
China’s subway splurge only half on right track 26 Jun 2014 Building more tube lines is a good idea. Asking international investors to fund them is not. Beijing’s $190 mln subway bond may be an exception. But given the positive externalities, urban transport is one thing China needn’t be coy about funding from the public purse.
Supreme Court gets message on smartphone privacy 25 Jun 2014 The top U.S. tribunal has ruled the devices contain so much personal data that cops can’t search them without a warrant. It’s a huge victory for individual rights in an era of ubiquitous snooping. The graying justices have again defied doubts about their technological chops.
America oil export boost barely scratches surface 25 Jun 2014 The Obama administration is relaxing a decades-long ban on selling black gold abroad. But the move only affects ultra-light crude, a sliver of U.S. output. Allowing sales overseas of all oil would narrow the trade deficit and foster jobs. That, though, requires Congress to act.
Monsanto wisely picks introspection over inversion 25 Jun 2014 The $67 bln biotech seed company wants to increase investment and R&D, double profit by 2019 and is borrowing to buy back up to $10 bln in stock. M&A may still factor in its plans, but a tax-inspired mega-deal seems off the table. Monsanto has found a smarter way to grow.
AbbVie hints it can afford to pay more for Shire 25 Jun 2014 The U.S. drugmaker is marketing its $46 bln bid proposal direct to Shire investors. As bear hugs go, it’s soft. A price increase would have put more pressure on the target. AbbVie’s talk of material earnings gains in a deal implies a raise is possible – and may scare interlopers.
Five years is a long time for U.S. economy 25 Jun 2014 First-quarter GDP contracted at a surprisingly high 2.9 pct annualized rate in the final accounting, the biggest drop since early 2009. Back then, output, jobs, investment, trade and the markets were heading in a different direction. Rhyming economic declines aren’t all the same.
Edward Hadas: Housing, the ultimate momentum trade 25 Jun 2014 Supply and demand influence house prices. Monetary and lending policies are more important still. But psychology is the biggest factor. What pushes up prices most is the belief that land values can keep rising. What pushes them down is the realisation that this belief is false.
Aereo is dead, long live TV disruption 25 Jun 2014 The U.S. Supreme Court says the Barry Diller-backed streaming startup violates copyright law. Legal loopholes abound, however, and investors and viewers will reward those who find ways to exploit them. The likes of CBS and Disney can’t afford to spend much time celebrating.
English soccer protectionism would be an own goal 25 Jun 2014 Even before England’s latest World Cup woes, its ruling body was mulling curbs on foreign players to nurture homegrown talent. That type of “import substitution” could hobble home markets. Financial subsidies for English players to play abroad would work better.
Rebalancing “Made in Germany” looks real 25 Jun 2014 Rising real wages and strong consumer confidence confirm that Europe’s biggest economy has changed gears. Gone are the days of a purely export-driven boom and poor domestic consumption. The new minimum wage will only reinforce the trend, to the benefit of the whole euro zone.
BoE boss gives market salutary lesson 25 Jun 2014 Traders find Mark Carney unreliable. That’s fair - he has changed his message more than once. But he has acquired the virtue of responding to doubtful data with policy uncertainty. That used to be standard practice for central banks. It’s time markets got used to it again.
Japan’s corporate tax cut could harm Abenomics 25 Jun 2014 Prime Minister Shinzo Abe wants to prove his reform credentials by slashing the levy below 30 pct. But Japan’s tax-to-GDP ratio is low, and public debt is high. A concession for companies could mean a bigger levy for consumers. That would undermine Abe’s anti-deflation campaign.
Wall Street titans miss climate change opportunity 24 Jun 2014 Ex-Mayor Mike Bloomberg, former Treasury boss Hank Paulson and financier Tom Steyer have made a big splash with their Risky Business report on how environmental havoc may hurt U.S. prosperity. But the research so far lacks the financial heft to sway corporate bosses to act.
UK hacking verdicts could embolden Murdoch 24 Jun 2014 One of Rupert Murdoch’s key lieutenants, Rebekah Brooks, has been cleared of phone hacking. Another editor was convicted of conspiracy to hack phones, and he awaits verdicts on other significant counts. For now, Murdoch can savour the symbolic resonance of the outcome.
Rob Cox: Hollywood’s hopes in China rest on Youku 24 Jun 2014 The Chinese website streams 400 mln videos a day, making it Netflix, YouTube and Comcast stuffed into one dumpling. For all that, Youku loses money. Yet the interests of Tinseltown and the Chinese Communist Party may be converging around its business model.
Vertex offers niche prescription for pharma profit 24 Jun 2014 Proof that the biotech firm’s cystic fibrosis drug can help thousands of patients added more than $6 bln to its valuation. There’s no real alternative treatment, so insurers will pay. It’s another reminder that pharma’s future is in high-priced medicines for uncommon diseases.
Next stop: Siemens-Alstom train merger 24 Jun 2014 Losing the competition for Alstom’s power assets was a blessing in disguise for the German engineering group. It can now focus fully on its internal restructuring. Fixing the ailing train unit is crucial. Hiving it off to Alstom itself could well be the best solution.
Russian rally has deceptive momentum 24 Jun 2014 Moscow stocks have recouped this year’s losses as Vladimir Putin sends signals of a more conciliatory policy toward Ukraine. The annexation of Crimea is fading from investors’ memory. But Russia still has its problems, which limit its scope to outshine other emerging markets.
Syngenta can yield extra value for shareholders 24 Jun 2014 Shares leapt on a report Syngenta had held abortive talks with rival Monsanto, in the latest tax-driven push by a U.S. acquirer. There would be big antitrust obstacles. Even if no deal emerges, the bid talk should pressure the Swiss agribusiness giant to tend to its own garden.
Iraq troubles are unlikely to bring new oil crisis 24 Jun 2014 The continued violence looks like a harbinger of a sharp cutback from one of the world’s major oil producers. But the bulk of Iraq’s production is still secure. The Middle East is clearly becoming less stable, but it would take a cascade of problems to create a big price shock.
Woolworths pays too-steep ransom in Aussie battle 24 Jun 2014 The South African group is buying billionaire Solomon Lew’s stake in an Australian unit in return for his support in its $2 bln takeover of retailer David Jones. The $201 mln side deal lifts the effective takeover premium – raising the pressure on Woolworths to realise synergies.
China’s e-commerce shift puts malls under pressure 24 Jun 2014 Stores have closed as customers move online. If internet shopping keeps growing at the same pace, it could account for a quarter of retail sales by 2020. Yet while growth in malls will peak this year, China’s urbanising population means well-planned plazas can still find success.
Target for fixing Argentine bond mess looks small 23 Jun 2014 Handing $1.5 bln to leading holdouts from last decade’s restructuring is one thing, but repaying all remaining old bondholders could cost half Argentina’s $29 bln official reserves and upset creditors who took a haircut. Paying in bonds may help, but there’s limited wiggle room.
Aggrieved investors win by efficient market fail 23 Jun 2014 Halliburton and others can block group stock-fraud cases by showing a lie didn’t hurt prices, the U.S. Supreme Court ruled. That defies assumptions about how share value reflects public information and will curb some stockholder suits. Stronger cases, though, should deter deceit.
Shire’s case for resisting AbbVie is good enough 23 Jun 2014 The UK pharma group’s target of $10 bln of sales in 2020 is aggressive but not outlandish. Meanwhile, near-term revenue is growing. That leaves AbbVie’s recent $46 bln bid proposal looking insufficiently tempting. Factor in scarcity value and Shire can afford to sit tight.
Oracle deal provides partly cloudy forecast 23 Jun 2014 In a way the $5.3 bln deal for Micros is a relief for shareholders. Even if it’s the start of an M&A binge, it’s not at a crazy valuation. Then again, longtime partner Micros is more an add-on than a way to supercharge Oracle’s effort in the cloud. That challenge remains for now.
Midwestern utility keeps cool in hot M&A summer 23 Jun 2014 Wisconsin Energy’s $5.7 bln takeover of overlapping Integrys will justify the 17 pct premium with cost cuts of only around 6 pct. More should easily be doable. The market-wide surge in mergers may have encouraged the deal, but no one in the Badger State is losing their head.
Investors beware: France will get more erratic 23 Jun 2014 Paris is to buy most of Bouygues’ stake in Alstom in an expensive concession by François Hollande to his protectionist economy minister. Weakened by his unpopularity, the president seems increasingly unable to bring cohesion to his own cabinet. It can only get worse.