Edward Hadas: An early obituary for bitcoin 8 Jan 2014 Bitcoin mania is not over yet. But the pseudo-currency’s recent volatility is probably the start of its collapse. A retrospective would teach a lot about speculative fever, financial ignorance and the ease with which entrepreneurial time and energy can be wasted.
Boss-napping shows need for stronger French unions 8 Jan 2014 The kidnapping of two Goodyear executives is a sign not of strength, but of weakness, in French employee groups. That explains why labour relations are among the poorest in the OECD. The country badly needs constructive private-sector unions along German or Nordic lines.
Draghi is playing with fire on deflation risk 8 Jan 2014 Euro zone inflation remains at a worryingly low rate, with some countries at risk of falling into debilitating deflation. The ECB shouldn’t consider only the whole zone. Nor should the central bank let German opposition hold it back. It should act now, before it’s too late.
Flat sales at Sainsbury set high bar for Tesco 8 Jan 2014 It may appear an easy task to emulate a rival that is standing still. For UK supermarket retailers, hemmed in by intense competition, no growth is actually quite an achievement. Sainsbury’s shares trade at a discount to the inherent, if constrained, strengths being shown.
China conducts monetary policy in the shadows 8 Jan 2014 Recent tinkering looks designed to raise rates in the frothiest parts of the non-bank lending sector. Overstretched, unproductive borrowers will feel the heat most. The question is whether China will let them fail – and whether it can shield good borrowers from the impact.
Abe’s “wage surprise” hopes lack reform push 8 Jan 2014 The Japanese prime minister argues a new national consensus on boosting workers’ pay will help to fire up the economy. He’s being too optimistic. Tough labour reforms are needed to reverse a 15-year slide in Japanese wages. But those don’t seem to be Abe’s priority.
Portugal better choose stability over sovereignty 8 Jan 2014 Lisbon’s bond yields are falling. That raises the possibility it could follow Ireland in exiting its euro zone bailout. Yet markets may not stay gentle, and the challenges are tougher than in Dublin. Forget pride: a credit line from euro zone peers is still the best bet.
U.S. consumer stocks set for growth shakeout 7 Jan 2014 With investors chasing dividend yield, companies like Procter & Gamble and Colgate have sported high and similar valuation multiples. Now that the economy is gaining steam, the focus may swing back to growth – or the lack of it. Some in the sector could face a bumpy ride.
Madoff leaves Jamie Dimon nowhere to hide 7 Jan 2014 JPMorgan has agreed to a criminal settlement and a $2.4 bln payout for years of failing to spot its client was a huge Ponzi schemer. Most banking transgressions and big resulting penalties have exposed a culture of greed across the industry. This, though, is unique to JPMorgan.
Altice IPO asks cable investors to get bolder 7 Jan 2014 The cable and telecoms operator wants help to de-gear and then buy more assets. Good job Europe’s IPO market is hot, as is the sector. Owner and Chairman Patrick Drahi has a good track record. But an odd mix of businesses makes Altice a harder sell than rivals.
Euro zone "deflation" little worse than America’s 7 Jan 2014 A euro zone inflation rate of 0.8 percent will prompt calls for action. But the U.S. has had more stimulus and growth - and has only slightly higher inflation. Besides, wage cuts help weaker euro members and serious deflation isn’t yet a threat. But serious reforms are needed.
Rhetoric on higher U.S. minimum wage misses point 7 Jan 2014 Hiking bottom-end pay would barely increase the jobless rate, despite complaints to the contrary. Equally, it wouldn’t much reduce inequality. What it would do is bump up living standards for millions of low-wage workers. That would help them – and, at the margin, the economy.
Samsung woes strengthen case for cash handout 7 Jan 2014 The South Korean giant’s fourth-quarter operating profit disappointed after it paid a one-off bonus to employees. The strong currency and competition from arch-rival Apple are concerns. But with net cash of $40 billion, Samsung can afford to show investors some generosity too.
Turkey caught in vicious politico-financial circle 7 Jan 2014 The country’s economic stability depends on foreign money while international investors are running scared of political instability. For now, Turkey’s in-fighting elite can ignore high inflation and a falling currency. But uneasy calm could quickly turn to dangerous upheaval.
Europe could live with Italian deficit heresy 7 Jan 2014 Matteo Renzi, Italy’s likely next leader, has suggested Rome could break euro zone fiscal rules. Higher deficits could be good economics and shrewd politics. But to keep markets and euro zone peers from panic, he has to offer lower public spending and faster privatisations.
Europe risks Volcker-Vickers banking fudge 7 Jan 2014 The latest thinking in the European Commission is for an outright ban on prop trading, emulating America’s Volcker rule, with ring-fencing for other trading, imitating the UK’s Vickers proposals. The compromise has the single market in mind. But it will need careful calibration.
HTC revival may rest on return to no-brand roots 7 Jan 2014 The Taiwanese handset maker’s full-year loss raises fears it is following rivals into a downward spiral. HTC’s old strength was to focus on design and let others worry about marketing. A possible deal to make China Mobile-branded smartphones may be its best hope of a turnaround.
Even free marketers can get behind U.S. wage hike 6 Jan 2014 The matter of raising minimum hourly pay from a stagnant $7.25 is due a fresh hearing in Congress. One issue often lost in the debate is how retail and fast-food jobs can’t move offshore. Boosting incomes for such low-skilled workers would offset harmful effects of globalization.
Hard to find phoenix in ashes of Batista’s empire 6 Jan 2014 Despite the real assets buried under the collapsed EBX Group, the flagship oil explorer will emerge from bankruptcy with poor growth prospects. Investors already have priced in big things for the port and electricity arms. And too much depends on a resurgent Brazilian economy.
Bondholders may be forced to fix liquidity crisis 6 Jan 2014 Investor appetite for owning, buying and selling debt is growing while Wall Street’s shrinks. Tapering and rate hikes will make corporate credit volatile and vulnerable. Investors need to support nascent e-trading platforms – or accept routinely being stuck with unwanted bonds.
John Malone deploys same old tricks against Sirius 6 Jan 2014 Liberty Media is offering $10 bln-plus to squeeze out the satellite radio company’s minority investors. They’d get a derisory 3 pct premium and perhaps better liquidity in return for non-voting Liberty stock with inferior prospects. Sirius shareholders should hit back.
Rise of e-payments leaves old guard in charge 6 Jan 2014 Square, Stripe and other startups are changing how Americans move money. They compete with many incumbents, but largely avoid fighting Visa and MasterCard. Using these networks is easier than replicating them. As cash use declines, the payment giants should be the biggest winners.
Monetary policy similarity outweighs divergence 6 Jan 2014 It looks like monetary policy is splintering around the world. The Fed will taper, while the ECB may have to add stimulus. Japan and the UK plan to stay where they are. But the variations hide a greater similarity: they are all still trying to push up growth with easy money.
Politics become less of a threat for investors 6 Jan 2014 In 2013, political news in the world’s big economies was basically positive for markets. The euro zone and U.S. budget crises waned, Abenomics trundled forward and China’s new leaders offered comfortable reforms. But the trend isn’t universal, and not firmly established anywhere.
Asia is ripe for a brewers M&A brawl 6 Jan 2014 It’s a seller’s market in the last frontier for beer. The coming year may see new owners for Philippine brewer San Miguel, and South Korea’s Oriental Brewery. Carlsberg and Beijing Yanjing could make great partners too, if China’s rulers let market forces flow more freely.
Commodities set to distinguish themselves 3 Jan 2014 From gold to grain, raw materials will in 2014 trade less in line not just with equities, but each other. That’ll continue a trend started in the summer. Thank a calm euro zone and the prospect of a Fed taper. Commodity costs set by fundamentals, not fear, would be good for many.
U.S. utilities face German-style solar burn 3 Jan 2014 Solar power accounts for just 1 pct of U.S. electricity production, against 10 pct in Germany. But generators stateside are already feeling the heat and pushing for levies on solar panels. They’re keen to avoid the scorched profit seen at traditional Teutonic utilities like E.ON.
Double logic of $1 bln cyber deal reveals hotspot 3 Jan 2014 FireEye’s stock jumped 33 pct after buying Mandiant, a takeover that marries computer protection with attack response capabilities. Snowden’s revelations and data theft like Target’s should fan investor enthusiasm in 2014. So too will the continued appeal of smart acquisitions.
Rail crash shows why Dakota oil boom hard to match 3 Jan 2014 With no casualties, the fiery derailment of a crude-laden train will soon fade from view. But North Dakota’s mix of huge reserves and low population is rare. The Bakken shale’s sevenfold output surge since 2007 isn’t easily reproducible in places where people actually live.
New target for UK: build 600,000 homes per year 3 Jan 2014 Britain’s biggest economic weakness is its dilapidated and inadequate stock of housing. GDP and inflation goals have their place but they miss this point. A five-fold increase in annual construction would bring stock up to snuff in a decade. All it needs is political will.