Sears investors too giddy about slow-mo breakup 7 Nov 2014 The stock jumped 35 pct on news its hedge fund boss Eddie Lampert might create a REIT for many of its stores and lease them back. It’d raise much-needed cash. But shareholders, Lampert included, would finance the deal. And the prospects for the rump retailer remain pretty dim.
Review: The secret cause of economic crises 7 Nov 2014 Trust, not self-interest, is the main support of market economies, says Geoffrey Hosking. He persuasively argues that widespread trust is crucial for growth. He explains how business cycles are propelled by mutual confidence, too little at the bottom and far too much at the top.
Only Putin can stop rouble’s fall 7 Nov 2014 Russia’s currency is sinking. The central bank is blameless. Neither intervention nor higher rates can support the rouble. The economy is deteriorating and reform hopes are fading as Moscow retreats into isolation. The situation will persist until the president changes policy.
Qatari bid highlights Canary Wharf’s potential 7 Nov 2014 Songbird, the majority owner of Canary Wharf Group, has rebuffed a 2.2 bln stg approach from the emirate’s sovereign fund. Eventual success or failure hinges on a few big shareholders. Either way, the interest reflects the east London financial district’s bright prospects.
Allianz divi hike is bold bet on life after Gross 7 Nov 2014 Europe’s top insurer is raising its payout ratio closer to peers’ and says this year’s dividend is a floor. For now, it’s an affordable signal of confidence that Allianz’s Pimco fund can thrive after the exit of founder Bill Gross. But the policy will be a challenge for the new CEO.
Aggressive tax planning is retreating, not beaten 7 Nov 2014 The details of Luxembourg’s “comfort letters” will add to the pressure on companies which push profits into low-tax jurisdictions. Personal tax havens are also looking much less safe. But national arbitrage will continue as long as countries have different tax rates and rules.
Japan’s banks may swap old nemesis for new foe 7 Nov 2014 The central bank’s bond-buying spree will relieve lenders of the burden of financing an overextended government. But if companies don’t invest, lenders may use cheap cash to stoke bubbles in stocks and property. Japanese banks may start living more dangerously than before.
Chip deal slots into China’s tech dominance plan 7 Nov 2014 Semiconductors have long been rival Taiwan’s forte, but the People’s Republic is muscling in. A $1.8 billion Chinese offer for a Singaporean chip-packager is the latest attempt to bring tech know-how to the mainland. More buys are likely to follow.
America: land of phantom job openings 6 Nov 2014 At 4.8 mln, it’s the most positions free since January 2001. Yet the hiring rate keeps falling. The largest gap is in low-wage roles. Comparatively high unemployment for less-educated workers suggests a skills deficit isn’t the problem. Companies just aren’t adding personnel.
UBS and Credit Agricole win small for simplifying 6 Nov 2014 The two are less globally significant than before. The FSB cut the extra capital each will need by 0.5 pct point. UBS seems to get credit for slashing fixed income trading and its French rival for exiting equities and some nations. But Swiss rules may make UBS’ gain irrelevant.
Divorcing oil baron braves market decoupling 6 Nov 2014 Billionaire Harold Hamm’s $14 bln fortune hangs in the balance of a spousal court battle. He is now scrapping hedges for his Continental Resources, betting on a reversal in the price of crude. Marital rifts can hurt investors, but in this case the business risk looks calculated.
UK’s academic bank probe can’t dodge politics 6 Nov 2014 Britain’s top antitrust watchdog has launched a full inquiry into insufficient competition in UK banking. The die-hard economist members are likely to find that free consumer banking is the source of most of the relevant evils. But abolishing that may still be politically taboo.
Hermes shows it is immune to luxury brand fatigue 6 Nov 2014 The French leather goods maker is riding high on strong sales, outpacing rivals LVMH and Kering in every region of the world. This can last as long as the group’s firm hand on expansion prevents the over-exposure now hurting the bottom line of its growth-hungry peers.
Edward Hadas: My career in the financial jungle 6 Nov 2014 It has been a decade since I left my last job in finance. Much has undoubtedly changed since then. But it is not clear that a basic contradiction has been resolved. The economic purposes of financial institutions are out of whack with the way they actually increase revenue.
Unrepentant Draghi rams message home 6 Nov 2014 The European Central Bank president has resisted hardliners’ efforts to rein him in and slow down monetary easing. His press conference comments were clear: other tools will be used if the euro zone economy needs them. The euro fell as soon as investors saw hawks in full retreat.
Gold bulls have precious little to cling to 6 Nov 2014 The asset was first to swoon when investors awoke to the end of U.S. money-printing. Coin sales, a recovering Indian rupee and declining supply offer some hope. But even after a near-40 pct fall, the price hasn’t adjusted to the end of speculative fervour. Sub-$1,000/oz looms.
SocGen investment bank stuck with revenue problem 6 Nov 2014 France’s second-largest listed bank had a poor third quarter in trading, with its top line falling faster than at peers. SG’s track record in cost control should help sustain returns in investment banking. Further out, the integration of broker Newedge may come to the rescue.
Cable M&A wave washes over the Caribbean 6 Nov 2014 Cable & Wireless Communications is buying Barbados-based Columbus Intl for $3 bln with debt. As with many European cable deals, the high price must be offset with cost savings and growth. CWC shares dived. That’s not all down to a big share placing in a smallish stock.
Siemens boss has 15 bln euros to play for 6 Nov 2014 In year one as CEO, Joe Kaeser has got more right than wrong. He has cut red tape, sold assets and taken to shale gas. Annual results show there’s more re-engineering to do. If Kaeser can persuade investors Siemens is more like GE or ABB, he’ll reap a big stock-market harvest.
Immigration economics looks in wrong direction 6 Nov 2014 A new study finds recent UK immigrants have helped government finances. The answer is clearly right, but the question may be wrong. No fiscal snapshot can give a clear picture of the future economic effect of a doubling of the immigrant share in the workforce in just 15 years.
China’s next GDP goal: trash the target 6 Nov 2014 The old model – pick a number, mould the economy to fit – is no longer helpful. But China doesn’t seem ready to abandon numerical goals. One way forward would be to set a range instead, say 6 to 7 pct. That could provide direction, with wiggle room for things China can’t control.
Malaysia’s $3 bln sovereign IPO faces many hurdles 6 Nov 2014 Listing the energy arm of 1MDB will be a test for the government. The state investment vehicle is a target for Malaysia’s opposition after overpaying for assets and forking out high fees for Goldman Sachs-led bond issues. It may be hard to win investors amid the political din.
Obama snub comes with a big fat asterisk 5 Nov 2014 Republicans won a U.S. Senate majority in elections seen as a rebuke of the president. Yet local voters said yes to minimum wage hikes and a tax on millionaires. Anti-abortion efforts failed and pro-marijuana ones passed. Keeping control will require the GOP to grasp the nuances.
U.S. telecom operators are eating themselves 5 Nov 2014 Prospects for M&A have all but disappeared and the smartphone market is largely saturated. As a result, AT&T, Verizon, Sprint and T-Mobile US have resorted mostly to stealing customers from each other. Their shrinking cash flow this quarter could be the start of a nasty trend.
Lawyer out of his league with banker-like brag 5 Nov 2014 A U.S. patent court has scolded an attorney for touting a judge’s praise to win business. Ethics rules, it seems, bar suggestions of having an in with jurists. Few such limits apply on Wall Street. Legal eagles may want to leave shameless self-promotion to the pros.
Endesa investment case warms up 5 Nov 2014 Up to 22 pct of the Spanish utility is being sold by Italy’s Enel. Disposals have left Endesa a pure-play Iberian utility with stable cashflow. A good dividend should help buck weak demand for Spanish issuance. And lowly geared Endesa could afford to be even more generous.
Saudis drop gavel on OPEC confab three weeks early 5 Nov 2014 Brent crude hit $82.55 a barrel, a four-year low, after the kingdom cut the price of U.S.-destined oil ahead of the cartel’s meeting later this month. Cash-strapped Venezuela may bray about cutting supply. But the market reaction underscores how OPEC has become a majority of one.
Carlyle buys a shovel-maker for deal gold rush 5 Nov 2014 The private equity firm is teaming up with publisher Euromoney for a $700 mln buyout of Dealogic, the financial data provider. With IPOs, debt issuance and M&A soaring, the acquisition will be a 2014 test of an old adage: in most booms it pays to sell the necessary tools.
Rising ECB opposition could be Draghi’s albatross 5 Nov 2014 Some members of the ECB’s governing council are frustrated at Mario Draghi’s policies and personal style, Reuters has revealed. Divergences are normal within central banks, and the ECB president is still backed by a solid majority. But from now on he’ll have to be more careful.
Marks & Spencer fashions a handsome step forward 5 Nov 2014 Marks is sparking at last. News that the UK retailer is making more profit per pound of revenue pushed shares up smartly. But delivering sustained sales growth will be tricky. The challenge is hardest in clothes given M&S’s fusty image and intense competition on the high street.