EU bank stress-test winners still short of capital 27 Oct 2014 Most European banks passed the exam, at least on a headline level. But the accompanying disclosures make them look less robust up close. Investors can use the new clarity to push for extra capital buffers. These would help lenders cope with the risks of euro zone deflation.
Italy’s bank debacle could be useful for Renzi 27 Oct 2014 Italian banks’ poor showing in Europe’s stress test has sparked protest from the Bank of Italy. But for reforming Prime Minister Matteo Renzi, shocks to the system aren’t unhelpful. He can use the mess to reform ailing lenders so they can support the shaky economy.
Missed stock connection hurts China’s reform drive 27 Oct 2014 Regulators have delayed a flagship scheme to connect the Hong Kong and Shanghai exchanges. Protests, market jitters and tax issues may have been factors. The problem is that investors are in the dark. The uncertainty damages confidence in the plan, and in other Chinese reforms.
More Dilma Rousseff will be no carnival for Brazil 27 Oct 2014 Unless the re-elected president makes big policy changes, government bloat and meddling will bring stagnation and more inflation. The danger is that Brazil starts looking much more like near-defaulters Argentina and Venezuela than growth economies like Bolivia or Ecuador.
Alibaba fund discovers downside to disruption 27 Oct 2014 The e-commerce group’s innovative money-market fund shrank in the third quarter. Yet the arbitrage that made it attractive is still there. One problem may be that Alibaba’s efforts have given investors a taste for alternatives to bank deposits, enticing rivals to pile in.
Europe’s bank stress test warrants a narrow pass 26 Oct 2014 The analysis has enough nasties to avoid appearing a whitewash. And it has a big loser: Monte dei Paschi is a massive 2 bln euros short, amid other predicted failures. But while the bigger lenders passed and the air has been cleared, it may yet fail to spur credit supply.
World’s oldest bank faces radical treatment 26 Oct 2014 Monte dei Paschi will struggle to plug its 2 bln euro stress-test hole and stay independent. Investors in the last cash call got burned. The clean solution would be a takeover. But with buyers in short supply, a breakup may be required. It’s a big setback for the Bank of Italy.
Apple’s promise justifies return to old big self 24 Oct 2014 The iPhone maker’s $615 bln market capitalization is nearing its own record of two years ago, which eclipsed Microsoft’s peak valuation before the dot-com bust in 2000. This Apple share-price runup may not go far enough. But there’s no bubble fantasy math involved if it does.
Duracell jolt highlights the value of focus at P&G 24 Oct 2014 Investors were energized by the consumer-goods giant’s plan to offload its struggling batteries arm. Spinning off a low-growth commodity business won’t create much value on its own. But it’s a solid step in boss A.G. Lafley’s campaign to simplify the sprawling $225 bln firm.
Review: World needs agreed ground rules for peace 24 Oct 2014 Henry Kissinger’s “World Order” bemoans the lack of one, as the West’s prevailing approach of nation states with limited conflict isn’t reflected in non-Western traditions. However the Vienna Congress innovation allowing intervention only to protect stability might work better.
Most of the heavy lifting lies ahead for Volvo 24 Oct 2014 An unexpected earnings jump propelled shares in the Swedish truck maker up 10 pct. But Volvo is facing an uphill struggle. The outlook for its core European market is weak, and its new cost cutting targets are ambitious.
Gucci makeover still a work in progress 24 Oct 2014 The flagship brand of French luxury and lifestyle group Kering posted disappointing sales in the last quarter, sending the shares down. Gucci is struggling with an image problem. At least it can point to early signs that its new strategy is bearing fruit.
China’s new reform: rule of law for some 24 Oct 2014 The latest leadership pow-wow ended with a pledge to reduce political meddling in court cases, and fight legal graft. Yet foreign companies are unlikely to get a fairer hearing from regulators, and the ruling Party remains untouchable. It’s justice with Chinese characteristics.
Zuckerberg’s Chinese chat leaves CEOs tongue-tied 24 Oct 2014 The Facebook founder surprised and delighted a Beijing audience by answering questions in Mandarin. His linguistic skills probably won’t make the social network any more welcome in the People’s Republic. But other corporate chiefs could learn from his efforts to friend China.
Amazon’s ambition outruns its cash flow 23 Oct 2014 The online retailer’s 20 pct sales growth in its third quarter was slower than expected, and its $437 mln loss was an ugly record. The firm’s voracious need for investment is a problem. CEO Jeff Bezos’ vision may be limitless, but his company’s ability to finance it is not.
U.S. mortgages sputter on demand more than supply 23 Oct 2014 Plenty of home loans are available, industry data show. But a lukewarm economy has made potential borrowers skittish. With the likes of ex-Fed boss Bernanke complaining about getting turned down, blaming stingy banks is easy. It’s the other side of the equation that needs work.
Air-bag recall poses carmaker valuation challenge 23 Oct 2014 Supplier Takata’s faulty devices have sucked $6.5 bln from Honda’s market cap. Dodgy ignitions helped dent GM’s by $16 bln. Automakers can overcome such woes, as GM’s Q3 earnings imply. Increasing automation adds a new dimension to the risk, making it even harder to quantify.
EU bank tests: the good, the bad and the ugly 23 Oct 2014 The best European lenders will pass Sunday’s exercise outright based on their Dec. 31 balance sheet. Potentially some big names will fail that test, but pass on capital raised since. As for banks still deemed outright failures today, their bosses cannot expect to keep their jobs.
Bond markets nudge France towards periphery 23 Oct 2014 Investors want a growing yield premium to hold French bonds rather than Dutch, Belgian or Austrian ones and the cost of insuring against a Gallic default is inching up. Blame repeated budget misses and a sluggish economy. Still, a large, liquid debt market has some attractions.
M&A boom puts Lazard earnings goal in sight 23 Oct 2014 The Wall Street firm’s Q3 results show boss Ken Jacobs short of his 25 pct margin target for the year. Getting there requires a fair drop in pay in the final quarter. But rising revenue from the urge to merge should allow him to balance the interests of bankers and shareholders.
Tesco fails to answer key strategy questions 23 Oct 2014 The UK retailer’s accounting error is larger than originally flagged. Sales are falling faster than feared. News that the chairman is being replaced will help. But Tesco’s new CEO missed a big chance to articulate a turnaround plan – despite some obvious remedies.
Credit Suisse’s future is mid-table drabness 23 Oct 2014 The Swiss group’s investment bank trumped Wall Street in Q3. But it’s no longer a top-tier player in any standalone business line, and questions linger over its ability to maintain strong fixed income returns if rates rise. Muted expectations should apply to other divisions too.
Publicis better show it has a cure for "hiccup" 23 Oct 2014 The French advertising group says focus on the failed merger with Omnicom explains its weak performance in the last quarter. It also has excuses for different parts of the business. The pressure is on to show at its next strategy update how it intends to shake its growth problem.
Nokia shows there’s life after phones 23 Oct 2014 It’s six months since Microsoft closed the purchase of Nokia’s once-great handset business. A big earnings beat shows the Finnish group is now thriving in network equipment, even as rivals struggle. Still, questions remain over U.S. telco capex and profitability in mapping.
Daimler can turbo-charge its cash return 23 Oct 2014 The German carmaker is boasting of record sales, rising margins and rich proceeds from asset disposals. But its dividend has not grown in line with a recovery in performance. After years of parsimony, Daimler can afford to be more generous to shareholders.
Foxtons alert points at housing momentum reversal 23 Oct 2014 The London-focused real-estate agent says booming sales volumes have suddenly slowed. That fits with other evidence the market peaked earlier in the year. Foreign buyers may assist a soft landing. But, as Foxtons hints, UK political uncertainty could act as a powerful brake.
Mega Medibank IPO sets tone for Aussie sell-off 23 Oct 2014 A valuation of up to $4.8 bln for the state-owned private health insurer rests on the potential for cutting costs. But not being too greedy now will make it easier to flog some of the huge pipeline of Australian assets lined up for privatisation to stock market investors.
Robots may spell "Control-Alt-Delete" for workers 23 Oct 2014 Researchers think automatons could displace half of all existing U.S. jobs. If that happens rapidly, it could push humans into a strife-torn future in which lack of wage income hobbles prosperity even in capable societies. Yet governments can make the transition less stressful.
U.S. central bank can do without higher inflation 22 Oct 2014 One regional Fed boss worries CPI is below the institution’s 2 pct target. Yet EU-like deflation fears don’t travel. American prices are up an average of almost 2 pct a year since the crisis. And measures of future inflation expectations are still close to the target, too.
Drones and lawyers could give each other a buzz 22 Oct 2014 Unmanned aircraft need help navigating rules that have grounded commercial flights. Law firms could use a boost against earnings headwinds. With Morrison Foerster and others touting drone expertise, the two industries’ potential for mutual assistance may be more than hot air.