Bank synchrony hints at right kind of collusion 31 Oct 2014 In recent days, Barclays, Citi, Credit Suisse, Deutsche and RBS have socked away big sums for legal expenses, much of it related to forex rate manipulation. That suggests many U.S. and UK regulators are working together on a rare single settlement. It’d be good for all concerned.
Unfazed oil kings could make crude bulls bolt 31 Oct 2014 Exxon, Chevron and Conoco reported solid earnings and remained optimistic despite falling prices. Shale drilling, for example, is profitable at current rates. But investment cuts won’t hit other projects for a few years, making price rises unlikely. Investors may get antsy.
BoE leverage rule is complex, kind and incomplete 31 Oct 2014 UK bank shares rallied after the regulator published requirements for equity-to-assets of up to 4.95 pct, but not until 2019. The BoE’s move to peg gross leverage to risk-weighted thresholds should prevent arbitrage, but fails the simplicity test. It is also a work in progress.
Review: No bets on Berkshire after Warren Buffett 31 Oct 2014 Lawrence Cunningham’s “Berkshire Beyond Buffett” argues the Oracle of Omaha has built a corporate culture that will ensure success after his departure. The book does a good job of cataloging Buffett’s portfolio. But it doesn’t make a strong enough case for investors to follow.
Draghi can only dream of moving like BOJ’s Kuroda 31 Oct 2014 The ECB chief might fantasise about taking big decisions with a one-vote margin, as the Bank of Japan leader just did. But realpolitik requires a goodly majority. The euro zone’s inevitable compromises complicate Draghi’s fight against stubbornly low inflation.
BNP’s U.S. demons repelled but not quite banished 31 Oct 2014 France’s largest listed bank rebounded from a U.S. mega-fine with an 11 pct rise in Q3 profit. A big drop in volatility helped everything but trading. Now, though, volatility is up and the upcoming temporary dollar-clearing ban for U.S. sanctions breaches may cause more pain.
AB InBev miss pushes dividends to the fore 31 Oct 2014 Latest earnings suggest the once-fizzy beer company is becoming ordinary. AB InBev’s valuation reflects its history of M&A-fuelled growth. More big deals may come. But even if future revenue growth is flatter, its dividend ambitions will support the share price.
Spain’s $10 bln airports IPO is just shambolic 31 Oct 2014 Auditor-related technicalities have grounded one of the largest European share issues this year. The Aena airports sale will probably go ahead in early 2015. But the IPO process will be easier to re-rail if the government makes its commitment unequivocal.
APEC summit shows value of calm and platitudes 31 Oct 2014 Obama, Xi, Putin and Abe will have much to disagree about when they meet with other national leaders in Beijing next week. The host city’s odd theatrics add to the awkwardness. But the fact that top people from around the Pacific want to show a united front helps keep the peace.
Japan’s bulked-up bazooka is last chance for QE 31 Oct 2014 The Bank of Japan is cranking up its bond-buying just as the Federal Reserve winds down. But even the Japanese central bank is becoming more sceptical of quantitative easing. If 2 percent inflation proves elusive, the BOJ will need even bolder policies - or to throw in the towel.
Hong Kong protests lay minefield for business 31 Oct 2014 The democracy debate is dividing the city. For companies, keeping quiet is less risky than expressing an opinion that could irk customers, staff, or Beijing. It’s even harder for employees who must tread the blurry line between free speech and representing corporate interests.
China index: Home truths upset economy 31 Oct 2014 Our alternative growth index hit its lowest levels since April 2009 last month. Housing investment is leading the downturn with the slowest pace of growth in over two years. In the past, more bank lending was seen as the answer. This time, it doesn’t seem to be helping at all.
Citi’s legal misery better have some company 30 Oct 2014 Having to slash $600 mln from recently disclosed earnings because of new regulatory developments is an unwelcome surprise for investors. The bank blames fast-moving investigations. If rivals don’t follow suit, though, the excuse may not be enough cover for Citi’s top brass.
Starbucks Venti cup is half full 30 Oct 2014 Sales at the $60 bln coffee chain’s established locations increased less than expected. Even so, 10 pct revenue growth is a problem the likes of McDonald’s would love to have. Savvy marketing and smart acquisitions should help Starbucks keep pace with changing consumer tastes.
Regal movie chain could follow competitor’s script 30 Oct 2014 The largest U.S. theater group is considering a sale. Rival AMC is flush after being acquired by China’s Wanda in September 2012 and relisting in late 2013. For Regal, keeping up may cost more than 47 pct owner Philip Anschutz is willing to spend. It needs its own AMC sequel.
Friends of finance put to U.S. election test 30 Oct 2014 Two Republicans face unexpected threats this midterm season. As a Democrat narrows the gap against New Jersey’s Scott Garrett, a moderate is challenging Jeb Hensarling’s spot atop the financial services committee. Six years post-crisis, Wall Street’s taint may not have worn off.
Tim Cook’s pride may expand corporate talent pool 30 Oct 2014 The Apple CEO’s decision to speak publicly about being gay should help advance the march toward acceptance. As boss of the world’s biggest company by market value, Cook could inspire others, giving C-suites and boardrooms more choice. They could use it.
Sub-$100 oil will inflame geopolitical tempers 30 Oct 2014 Even with sharply lower crude prices, OPEC may not cut supply. Saudi Arabia, the lynchpin, can afford to run deficits. Not so Venezuela. Less pricey crude is painful for Russia, too. Oil at $80-plus per barrel will boost world growth, but it could make global tensions worse.
Edward Hadas: Robots can be our best friends 30 Oct 2014 If the cult of economic efficiency is not abandoned, then machines which can emulate and sometimes surpass human thinking are likely to bring lower wages and more unemployment. But robots provide a wonderful opportunity to combine low labour productivity with high prosperity.
New Shell chairman has a tough job on his hands 30 Oct 2014 Charles Holliday arrives at the Anglo-Dutch major as oil prices slump towards $85 a barrel. After a dismal 2013, Shell is making good progress. But while Holliday has sound experience at DuPont and Bank of America, he will need to learn the tricks of his new trade quickly.
Shell pipeline IPO blowout heralds more shrinkage 30 Oct 2014 The $230 bln oil giant’s tax-advantaged U.S. pipeline spinoff popped 46 pct on its debut on Wednesday. With an enterprise value of $4.6 bln, it trades on eight times the valuation ratio its parent gets. That kind of uplift makes it a no-brainer for Shell to offload more assets.
Barclays rebirth hinges on leverage ratio clarity 30 Oct 2014 The UK lender has beaten consensus despite enduring a ropey quarter for the investment bank and taking a 500 mln stg provision for forex issues. But it needs regulators not to fast-track leverage targets, as happened last year. Good news will make its revamp look more secure.
UK upturn offers NAB escape from banking purgatory 30 Oct 2014 The Australian lender plans to offload its Clydesdale unit after years of disappointing results. The improving British economy makes that a possibility. Even then, NAB needs stock markets – or prospective buyers – to play ball. And it will remain on the hook for past misconduct.
Alcatel shifts up a gear despite U.S. worries 30 Oct 2014 Surprisingly good news on profit margins lifted the telecoms equipment firm’s shares. The stock is volatile and still down sharply this year. But Alcatel looks to be coping with a U.S. spending slowdown better than some rivals. Its sweeping restructuring remains on track.
QE gave emerging markets brief gains, lasting pain 30 Oct 2014 Six years of money-printing in the United States have ended. The $4 trillion splurge may have averted a deeper slump. But for developing countries it fueled a credit binge while bringing only a fleeting boost to growth. Many will now struggle to boost output and repay the debt.
China’s missing bank deposits bode ill for growth 30 Oct 2014 Most of the country’s big lenders have reported shrinking savings. That’s partly because new rules prevent them from window-dressing their balance sheets. But there are also signs that cash is leaking out of banks, which makes it harder for them to prop up the economy.
Samsung looks stuck in a dynastic value trap 30 Oct 2014 After a miserable year, the South Korean conglomerate’s shares trade at just eight times trailing earnings. Though that’s probably overdone, a smartphone revival is far from guaranteed. The Lee family’s succession plans also mean hopes for a bigger dividend may be premature.
Baidu must spend money to make money 30 Oct 2014 Mobile now accounts for half of its search traffic, but the Chinese search giant is grappling with how to turn users into revenue. Baidu has defied skeptics who thought it had missed the smartphone boom. But to deliver profit, it will need to keep sacrificing margins.
Fed has little to show for QE experiment 29 Oct 2014 Three rounds of bond purchases worth nearly $4 trln over six years just ended. Critics’ feared inflation hasn’t arrived. Yet despite the stimulus, U.S. GDP growth has been stuck at just over 2 pct. The only clear effect may have been to boost asset prices, particularly stocks.
Exploding rocket lights up obscure M&A curse 29 Oct 2014 Orbital, the company behind the doomed Antares launch, is trying to seal a merger using the rare Morris Trust structure. P&G, NetScout, and Nabors also have run into trouble while trying versions of the arrangement. Maybe it’s bedeviled by more than just tax-saving complexity.