German utilities are living on borrowed time 21 May 2015 Berlin is likely to water down a proposed levy on carbon-rich lignite coal plants. But that’s just a short reprieve for stricken legacy utilities like RWE and Vattenfall. Germany’s ambitious climate policies still mean many coal-fired plants will have to go off the grid early.
Mystery sell-offs test Hong Kong at crucial point 21 May 2015 Regulators are probing Hanergy, whose $40 bln value halved in a morning. Two once-hot stocks backed by Goldin Group have also plunged. Hong Kong wants to act as a gateway to China for global investors. So maintaining a transparent, orderly market is more important than ever.
Japan index: Time to take stock 21 May 2015 Our Abenomics Index hit its highest level since 2001 in March, while fresh GDP data showed Japan’s economy growing at the fastest pace in a year. A rising stock market and slight increases in wages and consumer prices overcame higher bond yields to pump up the reading.
Lawsky picks backdoor focus over revolving variety 20 May 2015 The scourge of misbehaving banks is leaving New York’s financial watchdog to start a firm advising on cybersecurity. Risks from malware, backdoors and the like are rising in prominence, taking top billing in the U.S. uber-regulator’s annual report. Lawsky’s timing may be spot on.
Target comeback making Wal-Mart look flat-footed 20 May 2015 The $50 bln U.S. retailer’s quarterly results show it has nimbly moved past a 2013 data breach and a failed foray into Canada. Snappy promotions also helped the firm grow existing-store sales twice as fast as its Arkansas-based rival did. It deserves a little more investor love.
Bank guilty pleas devalued amidst $10 bln FX fines 20 May 2015 Barclays, Citi, JPMorgan and RBS have admitted culpability for currency market-rigging, and UBS has done so for Libor. Admissions of criminal guilt used to be seen as death blows, but they’ve become almost pain-free tokens. No wonder bank shares rallied on the news.
Yahoo tax distraction accentuates bigger challenge 20 May 2015 Worries that the IRS may block the company’s mooted spinoff of a $34 bln stake in Alibaba sent Yahoo shares tumbling. The reaction suggests the U.S. internet grab-bag is still largely defined by the Chinese e-commerce giant, not what CEO Marissa Mayer is trying to build.
Computer Sciences’ split is good second choice 20 May 2015 The IT services firm’s shrinking market and already tight cost controls made it an improbable buyout candidate. Declaring a chunky special dividend and separating out its gem – the arm that does U.S. government business – is the next-best way to keep investors happy.
Edward Hadas: The uses and abuses of GDP 20 May 2015 The standard measure of output is a useful indicator of short-term trends. It can also help compare levels of development. In poor countries, faster GDP growth is a good policy goal. But in richer countries, GDP-think misses important economic changes and challenges.
Altice’s $9 bln U.S. foray shows controlled ambition 20 May 2015 Patrick Drahi’s telecoms group is paying 10.1 times EBITDA to enter the U.S. cable market. But cost-cutting should reduce the multiple, and it could be a springboard for further consolidation. It’s a more conservative step than another mooted deal: a tilt at Time Warner Cable.
Europe’s next banking headache: Basel IV 20 May 2015 A new set of Basel-originated rules for lenders could hike risk-weighted assets by over 10 pct. Institutions would then have to delever or find fresh capital. Brussels might find the effect on European banks clashes with its desire to rekindle economic growth.
Germany on course to waste 50 bln euro opportunity 20 May 2015 The country’s leaders have finally noticed the need for more infrastructure investment. But political inertia is set to delay for years any meaningful rise in outlays. By then, tough anti-debt rules may again restrict spending. Berlin would do better to spend now and worry later.
Asia’s consumption slump is newest growth hurdle 20 May 2015 The battle against weak foreign demand is already into its fourth year. Now domestic consumers, too, are going on strike. The fear that Asia may be unable or unwilling to spend its cheap-oil bonanza is coming true. Without bold monetary easing, economic growth might tank.
Takata’s future depends on carmakers’ clemency 20 May 2015 Under U.S. pressure, the Japanese car parts maker doubled its recall of vehicles with faulty air bags to almost 34 mln. Repairs, lawsuits, fines and lost business could overwhelm Takata. So shareholders must be counting on customers keeping it alive. That’s a bold bet.
Squeezing suppliers risks U.S. carmakers’ future 19 May 2015 A new study claims Chrysler, Ford and GM could have made $1.8 bln more last year if they hadn’t been so mean to parts makers. History shows haranguing suppliers is mutually damaging. It’s especially short-sighted when they’ll be the source of tech innovations for connected cars.
Jamie Dimon’s 10-year anniversary gift: vigilance 19 May 2015 More than a third of JPMorgan shares voted against his pay and in favor of splitting the chairman and CEO roles. After a mostly smooth year, it sends a strong message to Dimon as he nears a decade of running the bank. Investors are keeping a close watch on him and the board.
ECB can live with bankrolling Greece 19 May 2015 Athens’ borrowing from the European Central Bank has Germany’s Jens Weidmann fretting over euro zone rules that prohibit monetary financing. The ECB’s guilt depends on the severity of its judge. In the real world, its pragmatic approach looks defensible and effective.
Rob Cox: Why Remington’s investors shouldn’t sell 19 May 2015 Gun safety groups and Snoop Dogg pressured Cerberus to cleave the maker of a notorious assault rifle from its funds. Now Cerberus can get back to work raising money. Social activists need to behave more like their shareholder brethren to have any hope of changing this business.
Vodafone’s reinvention leaves German question 19 May 2015 At long last, the mobile telecoms giant is growing again. Its $30 bln splurge on network infrastructure seems to be paying off. The company is likely to return to organic EBITDA growth this year. The snag is that its biggest market, Germany, is still a work in progress.
UK taxpayers hurt more by EU split than HSBC exit 19 May 2015 Deutsche Bank and its rivals could move operations out of London if Britons vote to leave the EU. That would dent the main source of UK tax from the financial sector - income tax on bankers. It’s a bigger loss than reduced bank levy receipts from HSBC moving its head office.
UK deflation points to central bank impotence 19 May 2015 Blame the first annual decline in the British price index since 1960 on cheaper oil, a stronger pound, a lingering financial hangover or a changing labour market. Like global peers, the Bank of England has had little influence. It will also stand and watch if inflation rises.
Rio, BHP will show market trumps Aussie politics 19 May 2015 Prime Minister Tony Abbott might want to do something about the fiscal pain caused by slumping iron ore prices. But he won’t get far. He can’t tell the big miners to abandon their “saturate and dominate” strategy. The tactics are bang in line with Australia’s free-market ethos.
Mongols and miners bow to market reality 19 May 2015 Rio Tinto and Mongolia have ended a two-year stand-off on the giant Oyu Tolgoi mine by both giving ground. The nomad state now has a fix for plummeting investment inflows. While the miner’s hand looks stronger, falling metals prices have made civility the better part of valour.
SoftBank lives up to its name with Indian startup 19 May 2015 Housing.com CEO Rahul Yadav is a venture capital nightmare. The 26 year-old has slammed investors including the Japanese group as intellectually incapable and pledged to give away his shares. SoftBank may value a reputation for being founder-friendly, but being weak is worse.
Weibo investors should weigh life without Alibaba 19 May 2015 An alliance between the Chinese microblog and the country’s largest e-commerce group is set to expire in January. For the loss-making Weibo, the partnership hasn’t been as transformative as hoped. Instead, the microblog’s value relies ever more on factors beyond its control.
Economists could see less clearly than weathermen 18 May 2015 At least meteorologists can tell you if it rained yesterday. U.S. GDP forecasters can’t agree whether the 0.2 pct first stab at last quarter’s growth rate was right or wrong. There are too many hard-to-measure variables for any early number to be trusted. Caveat investor.
Tech unicorns galloping toward end of the rainbow 18 May 2015 Even an old financial wizard like Carl Icahn is buying into the private-market mythology with a $100 mln investment in Uber rival Lyft. Similar creatures have been finding it harder to find believers in public markets. The magic powering the valuation gap may be wearing off.
TPG’s $8 bln drug sale far from generic 18 May 2015 With the sale of Par Pharmaceutical, a maker of off-brand medicines, the buyout firm will generate an eight-fold return on its investment in three years. Though it’s a rare development, the eagerness of buyers like Endo International means more sellers are bound to benefit.
Plus-size M&A benefits strut their stuff again 18 May 2015 The owner of women’s clothing retailer Lane Bryant expects to cut $150 mln a year in costs from buying Ann Taylor’s parent. That easily covers the premium. Even in a bubbly deal market, value for money can be on trend. Financial fashions also can be fickle, as Ascena found out.
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