Italy gets its mojo back – at least in Davos 23 Jan 2015 After keeping a lower profile as its economy contracted, the actual sick man of Europe struck “la bella figura” at the WEF annual meeting. The youthful Renzi government’s disruptive style put a spring in the step of Italy’s business leaders. Real reform, however, is only beginning.
Review: The Mad Men are watching you 23 Jan 2015 A lot happens in a split second online, much of it good for the ad industry but worrying for privacy advocates. Instant auctions to push tailored ads to individuals are growing fast, says “Targeted” author Mike Smith. The ad men will need ever more personal data to fuel them.
Telefonica’s British Plan B comes good 23 Jan 2015 The Spanish telco will sell its O2 arm to Hutchison Whampoa for up to 10.3 bln pounds, or a solid 7.3 times 2015 EBITDA. That’s good for the debt-laden seller, left out when BT opted to buy the bigger EE instead. A stronger Hutchison and a bigger BT will shake up UK telecoms.
Putin, Piketty and Draghi hit Davos in spirit only 23 Jan 2015 Political and financial leaders attending the World Economic Forum’s 45th annual meeting are buzzing about rampant inequality, the ECB’s quantitative easing and Russia’s conflict with Ukraine. All that’s missing from the Alpine retreat are the three provocateurs of the debates.
Greek debt looks fine despite Syriza poll dangers 23 Jan 2015 The left-wing coalition may win the elections in Greece on Jan. 25. Its plans for debt relief and the end of austerity would put Athens on a collision course with its euro zone lenders. No one has interest in a messy “Grexit” - and the risks of a mess are fairly priced.
Swiss bank debt bonuses are worth copying 23 Jan 2015 UBS is to join Credit Suisse in paying bankers partly in high-risk bonds that implode if capital ratios weaken. Using debt is a spur to longer-term thinking, and is a check on recklessness. Those who still only pay in cash and stock – like Deutsche Bank – should follow suit.
Siemens faces big oil deal debacle 23 Jan 2015 The collapsing oil price turns the German engineer’s dash for shale into a costly blunder. Its $7.6 bln September bid for U.S. oilfield kit maker Dresser-Rand will stain CEO Joe Kaeser’s reputation. With shares of Dresser’s peers clobbered, a major impairment is looming.
ECB bazooka a water pistol for emerging markets 23 Jan 2015 Between Mario Draghi’s bond-buying plan and the Bank of Japan’s ongoing splurge, central banks are pumping out $1.5 trillion a year in cheap money. The surprise should boost emerging markets wary of rising rates. But fading growth and falling prices will overwhelm the stimulus.
Saudi succession could cast shadow over oil policy 23 Jan 2015 A clearly identified heir means the death of the Kingdom’s reformist ruler is unlikely to destabilise the world’s largest crude producer. Yet the new king may boost spending to smooth the transition. The change may weaken Saudi Arabia’s tolerance for cheaper oil.
China law gives investors relief but not control 23 Jan 2015 Regulators plan to close a loophole that allows companies like Alibaba to skirt foreign ownership rules. Investors will benefit from clarity on so-called VIE structures, commonly used by tech companies. But the new law may give founders and top executives even more influence.
Google fans flames of wireless price war 22 Jan 2015 The search giant plans to sell relabeled service from Sprint and T-Mobile US. This virtual carrier is a cheap way to intensify the battle for customers raging between these two, AT&T and Verizon. Consumers should benefit – Google, too, if it can avoid getting burned.
Fudge on loss-sharing weakens ECB’s massive attack 22 Jan 2015 At 1 trln euros or more, the European Central Bank’s long-expected bond-buying programme is powerful enough to impress markets and push down the euro. But partial nationalisation of any losses amounts to policy fragmentation. It risks undermining the euro zone’s foundations.
Markets give Mario Draghi instant reward 22 Jan 2015 The European Central Bank president gave anxious investors more monetary easing than they expected. They responded by giving the ECB’s asset purchase plan a head start. The euro and regional bond yields both fell. Draghi may be smug now, but he still has to push up inflation.
Oil billionaire pumps Kinder Morgan for tidy gain 22 Jan 2015 Continental boss Harold Hamm sold Hiland Partners, his private pipeline firm, to its giant rival for $3 bln. That ends a conflict arising from his initial stake in Hiland and covers his $1 bln divorce. Kinder, meanwhile, gets a prized – if pricey – foothold in the Bakken shale.
RBC’s foray south a pricey bet that two’s a charm 22 Jan 2015 The Canadian bank is paying $5.4 bln for U.S. lender City National, a 26 pct premium that planned cost cuts don’t justify. The so-called banker to Hollywood stars is growing well. But RBC’s last venture into American retail banking was a mess. It needs to prove it can do better.
Edward Hadas: Finance more worrying than politics 22 Jan 2015 It’s easy to see why the rich and powerful in Davos are concerned about geopolitical risk. The world looks more dangerous and violent than a year ago. But a financial system that’s so little changed since the crisis poses a closer threat to global order and prosperity.
Portuguese scandal breeds oddest of M&A activists 22 Jan 2015 The $9 bln sale of Portugal Telecom’s old domestic unit to France’s Altice is at risk. The unlikely foe? The lawyer who runs PT’s own investor meetings. Resistance to the deal is understandable after PT’s history of bad management. But halting the disposal would be self-sabotage.
Monitise woe a disruptive sign for bank disrupters 22 Jan 2015 The UK mobile payments company has guided for flat 2015 revenue and put itself up for sale, citing share price weakness. Visa’s stake sale and the launch of Apple Pay were catalysts. And a shift from a licence model to subscriptions is proving tricky for all software providers.
Spanish soccer scores by signing Chinese tycoon 22 Jan 2015 Wang Jianlin is the first mainland mogul to buy into a top European club, pumping 45 mln euros into Atletico de Madrid. It’s a high-value transfer for the indebted Spanish champions. For teams seeking cash and access to new fans, a Chinese billionaire strengthens the line-up.
China’s "new normal" masks old anxieties 22 Jan 2015 The latest meme, as heard in Davos, has caught on fast. As well as lower growth, it might mean an end to bad habits, a return to global greatness, or the start of a painful correction. Mostly it just disguises the fact that China’s economy is still far from normal.
Modicare may add to big pharma’s Indian gripes 22 Jan 2015 The Indian prime minister plans to launch a universal healthcare scheme on a tight budget. That bodes ill for efforts to improve patent protection. Despite pressure from Barack Obama and big drugmakers, it will be tough to shake India’s addiction to cheap generic pharmaceuticals.
Economic reality could upend Fed message, too 21 Jan 2015 Following last week’s Swiss upset, Canada’s central bank set investors spinning again. The oil price-inspired rate cut from Ottawa seems out of step with stable inflation. But it shows how changing conditions could yet make the Fed’s careful expectations management look futile.
SEC-Harvard board clash is music to investor ears 21 Jan 2015 A commissioner at the watchdog raised the stakes by calling the university’s shareholder-rights advocates deceptive. Dozens of professors howled, while former SEC lawyers jumped to the official’s defense. Catty tone aside, it’s a corporate governance debate that needs to happen.
Canada’s shock rate cut hurts global risk appetite 21 Jan 2015 First Zurich, now Ottawa. Days after the Swiss central bank abruptly reversed a cornerstone policy, the Bank of Canada upended market expectations with a 25 bps easing. The Canadian dollar plunged. Unpredictable policy generates volatility and fear, hurting economic prospects.
SpaceX satellite dream is throwback to 1990s 21 Jan 2015 Google is investing in Elon Musk’s company, which is planning a broadband network of 4,000 satellites. The pioneering Teledesic tried something similar two decades ago but failed. Falling costs and rising demand have changed the equation. But SpaceX could still be too early.
Rob Cox: Davos badly needs a Henry Ford moment 21 Jan 2015 The widening gap between the Capital Class and the rest threatens global prosperity. Ford was a pioneer at voluntarily paying employees more, as U.S. insurer Aetna did last week. The great American auto entrepreneur would also have applauded Obama’s plan to tax workers less.
Enjoy UK’s economic idyll while it lasts 21 Jan 2015 Britain seems to have reached the sunny uplands. Earnings are rising faster than prices, unemployment is falling and policy rate rises are off the agenda. But persistent disinflation casts a dark shadow. If prices stop rising, wage increases may also disappear.
One share, two votes is a step backwards for Italy 21 Jan 2015 The country’s long-term shareholders could soon enjoy extra voting rights. This may tempt family firms to float and enable more privatisations. Yet Italy’s markets need more dynamism, not less. The days when a few corporate powerbrokers called the shots were meant to be over.
BBVA hedges banking’s demise with bitcoin punt 21 Jan 2015 The Spanish bank’s ventures arm is backing Bitcoin marketplace Coinbase, alongside tech investors and a stock exchange. BBVA has been a pioneer in digital banking, but Bitcoin aims to disintermediate lenders. That suggests BBVA’s outlay is more hedge than long-term investment.
ASML shows benefits of market power 21 Jan 2015 Shares in the $46 bln chip equipment manufacturer hit record highs after full-year results showed soaring demand from memory chipmakers. At 25 times forward earnings, ASML’s valuation would be toppy in most sectors. But, like chip designer ARM, the Dutch firm dominates its market.