German carmakers tune up the basics of banking 5 Nov 2014 The in-house operations of VW, Daimler and BMW are all solidly profitable. They follow some basic rules that rivals and bigger institutions often forget. Lend to people who can repay, expand carefully and find secure and cheap funding. Successful owners also help.
Bank of Japan bond vault may resemble a black hole 5 Nov 2014 The central bank will suck more than 7 percent of outstanding government bonds into its gravitational pull next year. The longer this goes on, the stronger the investors’ belief that they will never see that debt again. Any dent in that confidence could be highly upsetting.
New-look U.S. Congress needs to think incrementally 5 Nov 2014 Big legislative efforts failed when Republicans nabbed the House in 2011. With a slim Senate majority they’ll set the agenda next year. To tackle big issues like infrastructure, immigration and taxes, they’ll need Democrats. They shouldn’t fear taking small steps to govern.
China affair may test Italy’s protectionist reflex 5 Nov 2014 Chinese state and private firms are piling into Italy. The country is a tough market for outsiders to crack, but offers value and technology. Italy is also desperate for cash. A political backlash could sour this love-in, but China has so far been a courteous suitor.
Alibaba delivers chunky growth, but at a cost 5 Nov 2014 The Chinese e-commerce giant pulled off a 54 pct revenue increase for the second quarter, its first results since listing in New York. But earnings slipped, only in part because of big IPO payouts to staff. Alibaba also says it targets sales, not margins. That’s not reassuring.
UBS trial shows emptiness of "jail bankers" talk 4 Nov 2014 A jury acquitted the Swiss bank’s ex-wealth management boss of cheating the U.S. taxman. It’s the latest case of failing to tie finance industry chiefs to underlings’ misconduct. Yet Attorney General Eric Holder keeps hinting at Wall Street prosecutions. He’s wasting his breath.
U.S. trustbusters put the rage in arbitrage 4 Nov 2014 The DoJ sued to stop the country’s top two cinema advertisers from merging. Ensuing stock drops suggest M&A bettors were caught off guard in another blow to the business. Growing market doubts over other deals, like Comcast’s with Time Warner Cable, may reflect unjustified fear.
JPMorgan makes Citi’s forex excuse look a tad lame 4 Nov 2014 The bank run by Jamie Dimon revealed that U.S. prosecutors are investigating its currency business and that possible legal costs rose $1.3 billion over the summer. But unlike its rival, the lender hasn’t given reserves an emergency boost. That suggests Citi was playing catch-up.
Berlin Wall fall reaped mixed economic harvest 4 Nov 2014 It’s hard to judge how well ex-Communist economies have done since the system collapsed in 1989. The Soviet empire was terrible and the transition was rough. But a quarter-century later, only a few small post-Communist states are unequivocal successes.
End of U.S. QE is actually good for world economy 4 Nov 2014 Investors worry about the end of America’s quantitative easing but global consumers, especially the poor, can welcome it. The halt has helped make oil and food cheaper, lowering inflation. That will also keep interest rates down. In all, it may be more stimulating.
BMW extends lead over Daimler 4 Nov 2014 Quarterly results show the Munich carmaker is growing profitably across the world. That makes life harder for arch-rival Daimler, which wants to overtake BMW as the top premium carmaker by 2020. BMW’s share price does not fully reflect that strength.
Virgin Galactic business model could still work 4 Nov 2014 After Friday’s fatal crash, Virgin will need to make new investments in its space programme. The start date for paid flights has been deferred. But if the safety issues can be overcome, the project might yet stack up commercially.
Xiaomi’s upward valuation hike hard to justify 4 Nov 2014 A new funding round could give the Chinese smartphone group a valuation of $50 billion - five times its mooted price last August. That suggests a valuation comparable to tech giant Apple. While Xiaomi is growing fast, it lacks its U.S. rival’s dominance or innovation.
China winning battle over wayward banks 4 Nov 2014 Lenders have scaled back their involvement in the shadow banking sector. It’s a victory of red tape rather than good sense, but still cuts down the risk of a crisis. The next battle is dealing with borrowers for whom this kind of creative credit has become a lifeline.
The U.S. could use a long-term marketing plan 3 Nov 2014 The tax code alienates companies and American expats, the legal system is turning off foreigners, and immigration policy is a mess. Yet the economic power of the United States is waning. It needs to start giving good reasons for others to stick with dollars and U.S. standards.
Music rally can shake off discordant Taylor Swift 3 Nov 2014 The 24-year-old pop star yanked her latest album and catalog from Spotify. The digital streaming service and its ilk offer low per-song royalties but subscriptions give labels higher margins than CDs or downloads. Buyer habits are also changing, even if Swift is stuck in 1989.
Rob Cox: Don’t blame the messenger, Jefferies 3 Nov 2014 Top brass at the $45 bln Wall Street firm peed in cups and chastised the press for writing about salacious charges against one of its rainmakers. The response is not exactly confidence-inducing behavior for a business built as much on trust as the assets on the balance sheet.
Emerging bidders still hungry for Western food 3 Nov 2014 Yildiz, a group backed by Turkey’s richest man, is buying Britain’s United Biscuits for a reported 2 bln pounds. It’s a striking instance of an emerging markets buyer bulking up in the West. Sellers Blackstone and PAI will be relieved to have cleared UB out of their cupboard.
LabCorp deal tests positive for value destruction 3 Nov 2014 The firm that checks patients’ blood is paying $6.1 bln for clinical trial outsourcer Covance. The strategic logic is hazy. Shareholders’ financial diagnosis is damning, too. They swabbed some $700 mln off LabCorp as cost cuts fell far short of the 32 pct premium paid.
Publicis overpays with $3.7 bln digital takeover 3 Nov 2014 The French ad giant is buying U.S. digital specialist Sapient. The all-cash takeover comes at a big premium and with limited scope for synergies. This looks a value-destructive attempt to distract from Publicis’ faltering performance after its failed merger with Omnicom.
HSBC illustrates the burden of being a global bank 3 Nov 2014 New fines and rising compliance costs weighed on the lender’s third-quarter earnings, offsetting the gain from higher revenue and lower bad debts. HSBC reckons that the benefits of scale outweigh the costs. It’s an argument that other banks will find harder to make.
MPS shareholders presented with unappealing choice 3 Nov 2014 The Italian bank may get away with a 2.1 bln euro rights issue. Monte dei Paschi’s investors know the money is needed to satisfy regulators, and cash now prevents severe dilution later. But any hope that a merger will bring a quick exit looks optimistic.
Hugo Dixon: Cameron mustn’t say “quotas” 3 Nov 2014 The UK prime minister is agonising over whether to impose quotas on EU immigrants. But it wouldn’t be possible to do this without quitting the 28-country bloc. Allies at home and abroad should put pressure on Cameron not to make such a move. They need to act fast.
Ryanair can get more from its be-nice strategy 3 Nov 2014 A policy to improve customer service helped stimulate demand at Europe’s largest low-cost carrier, prompting raised guidance. Ryanair has also benefitted from rivals’ woes. Historically strained labour relations are a risk. But the airline could try a new approach here too.
Macau’s casinos worryingly reliant on high-rollers 3 Nov 2014 A drop in big spenders could push Macau gambling revenue to its first annual drop on record. Forecasts for next year still seem too optimistic. If VIP gamblers shrink in number, the likes of Galaxy Entertainment and Wynn Macau would be especially hard hit.
Myanmar ruling dents Thai tycoon’s beer ambitions 3 Nov 2014 A Singapore arbitrator has ruled Charoen Sirivadhanabhakdi must sell his fast-growing business in the country to a minority partner linked to the military. A cash payout, even at a higher valuation, would be poor compensation for losing an attractive growth asset.