Tesco’s strategic reinvention is incomplete 8 Jan 2015 Britain’s top grocer will cut 1.35 bln stg of capex and head-office costs, ditch its dividend and close some stores. Price cuts will help it take on discounters. Yet there is still no chairman, no property revaluation, and no firm promise to retreat from Asia or Eastern Europe.
Merkel subjects Greece to risky tough love 8 Jan 2015 The German chancellor wishes to keep the euro zone intact – while playing up her indifference to the prospect of Greece leaving it. She just wants to make sure the next government in Athens will back reforms. That’s the only way to make a deal politically acceptable in Berlin.
StanChart equities closure is overdue but welcome 8 Jan 2015 The emerging markets bank has pulled the plug on its share trading and underwriting arm, cutting 200 jobs. It’s a rational but still-rare step for a business that suffers from chronic overcapacity. Rivals will feel extra pressure to justify their decision to soldier on.
Sovereign fund "debt crisis" is stain on Malaysia 8 Jan 2015 1Malaysia Development has missed repaying a $558 mln bank loan. Its cash pile and a guarantee from a local billionaire suggest commercial brinkmanship more than financial distress. Yet the lack of transparency around the indebted government vehicle hurts the country’s reputation.
Response to Paris attacks caught between two risks 7 Jan 2015 The killings at the Charlie Hebdo weekly put French and European authorities at the confluence of two dangers – individual acts of violence and excessive countermeasures. Fringe parties may benefit if the response is too weak. Media freedom might suffer if it is too strong.
Dick’s buyout has financially sporting chance 7 Jan 2015 The $6 bln U.S. golf-to-guns vendor is mulling a sale to private equity. Low debt at Dick’s Sporting Goods means even with a chunky premium, attractive returns look possible. It would, however, require healthy growth when stiff online competition is challenging many retailers.
Sony studio damage assessment misses big picture 7 Jan 2015 Boss Kazuo Hirai’s claim that “The Interview”-linked cyberattack won’t hurt the company financially may be funnier than the movie itself. Repeated and successful breaches keep damaging Sony’s brand. It’s a vicious circle that makes more hacks likely.
Help wanted: New top U.S. number cruncher 7 Jan 2015 Republicans, who will control Congress in 2015, are seeking an experienced wonk to lead its budget office. The ideal candidate adores dynamic scoring and private competition and can endure work being scrutinized by the public. Position’s existence subject to political whims.
Sliding sterling set for more turbulence 7 Jan 2015 The pound is falling against a broadly strong dollar but also against a less-than-mighty euro. There are reasons to be pessimistic about the British currency. UK rate rises are expected to start later, political uncertainty is rife. But it’s even safer to bet on high volatility.
MAUs chase puffs up Snapchat’s value 7 Jan 2015 The disappearing-message service has 100 mln monthly active users, is growing fast and just raised $486 mln. It’s now worth more than $10 bln, thanks to the idea that large social networks are inherently precious and should reap cash from ads and apps. Those are big assumptions.
Falling prices show ECB failed at its only mandate 7 Jan 2015 Euro zone inflation is now negative. Sinking oil prices played a part, but market expectations were falling well before. The European Central Bank has long been seen as doing too little, too late. No wonder investors have lost faith in the bank’s ability to fulfill its mission.
Overseeing the Bank of England will never be easy 7 Jan 2015 Newly released minutes show the UK central bank’s supervisory Court did little in the 2007-9 crisis. No surprise there. Subsequent reforms have brought private board standards to this public institution. The changes may help, but no board can take politics out of monetary policy.
Sainsbury defies the gloom in UK retail 7 Jan 2015 The British grocer had a relatively happy Christmas. Like-for-like sales fell 1.7 pct in its third quarter – a surprisingly strong performance in a brutal market. Much depends on the recovery plans of bigger rival Tesco. But Sainsbury’s shares look oversold.
Asia’s central banks are behind rate-cutting curve 7 Jan 2015 Bond investors are pushing down long-term yields because they think cheaper commodities will lead to pernicious disinflation. Asian monetary authorities have room to cut short-term rates. By not doing so, they may be imperilling both growth and financial stability.
Dismantling a Chinese developer could get ugly 7 Jan 2015 Stricken housebuilder Kaisa denies it has decided to wind itself up after defaulting on a loan. Even so, a debt restructuring looks inevitable. That will pit bondholders against banks and homebuyers who paid up front, and expose the flimsy structures foreign investors rely on.
Fed pick gives Bank of Hawaii even bigger splash 6 Jan 2015 Allan Landon, Obama’s nominee for the U.S. central bank board, ran the local lender from 2004 to 2010. His BOH predecessor, Mike O’Neill, hasn’t been shy about rocking the boat at Citigroup, ousting former CEO Vikram Pandit. Maybe Landon will make some helpful waves at the Fed.
MSCI and ValueAct both need help on activism 6 Jan 2015 The data company’s rejection of 8.3 pct investor Jeff Ubben’s request for a board seat looks cack-handed. MSCI could use a shareholder-focused director. Yet Ubben’s ValueAct, with success at Microsoft under its belt, also seems tactically challenged now that the fight is public.
114th U.S. Congress can easily surpass very low bar 6 Jan 2015 The past few groups of federal lawmakers redefined dysfunction. They created debt crises and set record lows for approval and productivity. With Republicans in control, deal-making may be easier. Even incremental steps on issues like taxes and infrastructure would be progress.
No-yield world removes some of gold’s tarnish 6 Jan 2015 One good reason not to buy the yellow metal used to be that alternative safe investments had much higher yields. That disadvantage is dwindling with negative yields and deferred rate rise expectations. The price of gold may still fall, but it has become a less expensive haven.
Clunky conglomerates put on high breakup alert 6 Jan 2015 Billionaire Carl Icahn wants to separate Manitowoc’s construction cranes from its ice machines. Companies with such head-scratching pairings make easy targets for freshly invigorated uppity investors. Pitney Bowes and JBT are among those that may want to keep vigilant guard.
Coach tries LVMH model on for size with shoe buy 6 Jan 2015 The U.S. leather-goods purveyor is paying $574 mln for Stuart Weitzman, the first acquisition since its 1941 founding. While this looks like an admission its core brand has maxed out, Coach is betting it can use its know-how to expand other marques like LVMH and Kering have.
Guest view: Banks need to lead on cultural change 6 Jan 2015 While lenders have boosted capital, reduced leverage and added liquidity, they have not shown the same commitment to adjusting their core behaviors, including their risk cultures, argues former Citigroup executive and author William Rhodes.
Petrodollar drought is new risk for markets 6 Jan 2015 Low oil prices are not only a blight for energy producers. They could hurt global financial markets too. After years of surplus petro-earnings gushing into a range of assets, notably fixed income, the flows are at risk of reversing. The sharp equity market fall may be a first sign.
Greece debt compromise not as hard as it looks 6 Jan 2015 The country looks set to elect a left-wing government intent on a debt haircut. Germany could not stomach that. Yet neither side will want a disorderly Grexit. If agreement can be reached on reform, financial engineering could help disguise debt reduction and save face for all.
UK bank firewalls need pragmatism not dogmatism 6 Jan 2015 Lloyds is questioning why it needs a separate board to oversee non-retail activities. If ring-fencing could cure all ills, carve-outs would merit short shrift. But the UK can act tough in better ways – especially by demanding adherence to global bail-in rules.
AirAsia’s minority structure clouds crash impact 6 Jan 2015 The Malaysian carrier owns just 49 percent of the tragedy-hit Indonesian unit. Accounting rules partly insulate the parent from profit fluctuations. But a shared brand, intercompany loans, and leasing agreements mean the woes of its minority partners aren’t neatly contained.
China’s innovators could use a patent war 6 Jan 2015 Conflict could breed creativity for China’s tech industry. New patents are being minted, but companies rarely go to court to protect them. There may be political reasons, but more discord would show Beijing is serious about enforcement, and not just against foreigners.
Animal spirits and crisis ghosts will shape 2015 5 Jan 2015 Breakingviews’ annual compendium of financial and economic predictions for the year ahead is out. From the UK election to IBM via the global economy and geopolitics, our columnists offer insightful, entertaining, provocative and – we hope – profitable ideas for the year ahead.
Detroit’s Vegas bet signals wider industry shift 5 Jan 2015 A record 10 carmakers are at the Consumer Electronics Show as gadgetry from connectivity to self-driving shifts into high gear. Regular car shindigs like Detroit’s are bigger. But the stakes in Vegas are higher as tech giants like Google threaten to upend the automotive future.
Edward Hadas: The oil price is just plain wrong 5 Jan 2015 At $55 a barrel, crude is still too expensive for the industry to be rational about development. But after the big price drop, some consumers will pay too little for a rational economy. And the market drama wastes resources. The right goals are a weak cartel and high user taxes.