EU growth surprises hide clear pattern 13 May 2015 Recovering Spain was still the GDP star in the first quarter, but traditionally strong Germany did no better than perpetually stagnant Italy, while France defied gloomy predictions and the UK disappointed. Behind the mix-up, the recoveries are real, but mostly slow and unsteady.
SABMiller gives emerging markets thumbs up 13 May 2015 The $88 bln brewer is defying fears that Latin America, Africa and Asia are struggling. SABMiller’s constant currency operating profit rose 6 pct last year. Its position as a supplier of affordable luxury helps. The big question is what it will do with its prodigious cashflows.
Italy poses conundrum for bank investors 13 May 2015 While a weak state and economy have hurt Italian banks in recent years, first-quarter earnings are encouraging. Relative stability and a reforming government could allow lenders to earn their cost of capital. The snag is that betting on Italy means paying up, or taking a punt.
U.S. trade setback more diplomatic than economic 13 May 2015 Senators denied President Obama authority to negotiate a new Pacific trade pact. The squabbling contrasts with China’s success in organising its infrastructure bank. But the benefits of both projects are uncertain. The world economy can shrug off the blow to America’s leadership.
China debt swap lays ground for greater reckoning 13 May 2015 Officials are finalising a plan to replace local authority loans with bonds, which lenders can use to borrow from the central bank. It won’t shrink the 16 trln yuan ($2.6 trln) tower of local government debt, but should stop good loans getting in the way of dealing with the bad.
Rob Cox: Parsing the short life of Dave Goldberg 12 May 2015 The untimely death of the CEO of startup SurveyMonkey sparked an unusual outpouring of emotion from Silicon Valley. His age and marital affiliation can only explain part of the response. The worrisome message is that nice guys really are too rare a breed in the tech ecosystem.
Wall Street enforcers due reprieve from reversals 12 May 2015 A U.S. appeals court has embarrassed prosecutors by tossing guilty verdicts against insider traders and an ex-Goldman programmer. Former Jefferies broker and convicted fibber Jesse Litvak argues for similar treatment. His punishment may have been harsh, but it deserves to stick.
Pure play gets new spin in filter maker M&A 12 May 2015 Suitors may be willing to splash out $13 bln for Pall, the largest publicly traded air and water purification company. That’s punchy and cost cuts might not cover the premium. But Pall’s scarcity value, profitability and burgeoning biotech customer base make it a tempting target.
Sliding markets may just reflect a reality check 12 May 2015 There’s no unexpected bad news to blame for bond price falls and stock declines. Yet by historical standards, high-class sovereign debt is still expensive. Shares aren’t cheap either – and Picassos are at all-time highs. Investors can be forgiven if they’re having a rethink.
Verizon’s dumb pipes no smarter with $4.4 bln AOL 12 May 2015 Seeking refuge from a vicious wireless war, the telecom carrier is buying the owner of the Huffington Post and old internet dial-up customers. The video ad tech business may be the prize, but it faces threats from Google and others. This is just another silly deal involving AOL.
Resisting Exor’s $6.8 bln is futile for PartnerRe 12 May 2015 The Agnelli family vehicle sweetened its bid – and rattled a hostile sabre. The offer clearly outguns PartnerRe’s planned merger with Axis, and there are no interlopers so far. A parallel rise in Axis stock suggests that if Exor succeeds, bankers may get a bonus deal to work on.
Draghi is winning the main QE battle 12 May 2015 Had European Central Bank bond-buying aimed to depress yields, Mario Draghi would be in a bad way. Yields have risen since the ECB chief pushed the button. But inflation expectations are a more critical target, and they are up, albeit partly because of an oil price rebound.
Barclays approaches tolerable end to FX limbo 12 May 2015 The UK bank is nearing a deal with regulators for forex sins. When Barclays delayed settling in November, it raised fears of an outcome as bad as Libor. But it is forecast to get away with a 2 bln stg fine and a joint guilty plea with peers. That would be bearable.
Jumpy easyJet investors mix up short and long haul 12 May 2015 Shares in the 7 bln stg no-frills carrier lost 7 pct after it toned down its full-year outlook. But the caution is mainly due to temporary woes like an air traffic control strike. EasyJet’s long-term ascent, fuelled by growth, low costs and rivals’ weakness, looks set to go on.
$179 mln Picasso shows art and QE in fine fettle 12 May 2015 A high-quality sale straddling impressionist and contemporary works paid off for Christie’s to the tune of $706 mln. That makes Sotheby’s look leaden-footed, even before the regular Christie’s sales of both genres. Meanwhile, easy money means more new price records are likely.
SoftBank’s next boss more symbol than succession 12 May 2015 Chairman Masayoshi Son has no plans to retire but has named ex-Google executive Nikesh Arora as his likely successor. Appointing a foreigner to the role may be mainly a way for SoftBank to gild its international credentials, but the gesture is still a valuable one.
India’s sales tax could be another botched reform 12 May 2015 The country has spent more than a decade debating a goods and services levy that would unify 29 states into a single, billion-person market. But the bill that’s about to become law falls far short of the ideal. Fixing a flawed tax regime might cost the economy another 10 years.
Flipped mattress maker may keep boards up at night 11 May 2015 H Partners has succeeded in ousting Tempur Sealy’s CEO, independent chairman and another director - without proposing replacements. Now the fund is getting two board seats and leading the search for a new boss. Snagging that much power without much of a plan sets a big precedent.
Harvard’s shareholder advocate drops the mic 11 May 2015 A push led by Lucian Bebchuk to subject all board directors to annual votes has ended. Critics including attorney Marty Lipton blasted the program as deceptive and maybe illegal. Even so, it helped persuade some 100 big companies to overhaul elections. That sounds like success.
Tesco’s PwC switch shows poverty of audit choice 11 May 2015 Britain’s largest grocer has parted with its auditor of 32 years. Deloitte, which reviewed Tesco’s books after last year’s 263 mln stg accounting scandal, is stepping in. A break from PwC is good, but it’s not completely clean. Four big bean-counters don’t offer enough diversity.
UK vote hands banks golden lobbying opportunity 11 May 2015 The election of the business-friendly Conservatives should reduce state-endorsed bank-bashing. Better still for UK banks, there are good reasons as well as self-serving ones to rethink two key bugbears: ring-fencing and the bank levy. Industry advocates will be gunning for both.
British poll failures are applicable to finance 11 May 2015 David Cameron’s Conservative win last week brought the deepest pollster blushes since 1992. Even those who called the 2008 U.S. presidential election badly missed the mark. The likely culprits - groupthink and over-reliance on models – similarly fuel financial conflagrations.
Uber navigates its way into a Nokia moment 11 May 2015 The ride-hailing service is detouring from its DIY strategy to enter a competitive $3 bln auction for the Finnish company’s map technology. Nokia acted similarly when it bought it in 2007 for $8.1 bln. Even with a $50 bln valuation in the offing, Uber is emitting a whiff of fear.
Monsanto would have to dig too deep for Syngenta 11 May 2015 Big holders in the Swiss agribusiness say they’d back a $50 bln bid, or 10 pct more than the U.S. crops company offered last week. To justify a price that high, however, would require Monsanto to find at least $2 bln in annual cost savings. That sounds like an implausible harvest.
Ahold-Delhaize is a 25 bln euro deal full of hope 11 May 2015 The shares of both Dutch-listed grocer and its potential Belgian-listed target were up strongly on reports of renewed merger negotiations. A combination of the two U.S.-centric companies makes sense. But financing could be an issue, and the American market will still be tough.
Hugo Dixon: Greece seemingly has no Plan A or Plan B 11 May 2015 It owes around 324 billion euros. The government doesn’t seem to have a credible plan for reaching agreement with its creditors. Nor does it appear to have thought out how to default while containing the collateral damage.
New trading dynamics encourage big FX lurches 11 May 2015 Trading scandals and losses from the Swiss franc’s dramatic January rise have made currency traders more cautious. The result is a market where fewer dealers will challenge trends. It’s like a train with faulty brakes. A little momentum can take exchange rates on a long journey.
China’s new monetary tool: quantitative teasing 11 May 2015 Cutting interest rates, as the central bank just did, can ease pressure on some borrowers, but won’t do much more. Making money more abundant, rather than just cheaper, would be a more decisive move. For now the government is wisely keeping its powder dry.
Toshiba adds accounting fog to strategic blur 11 May 2015 Accounting irregularities at the Japanese group are more serious than it first thought, yet disclosure remains vague. The shares have tumbled. Clarity is valuable for investors trying to decode a conglomerate that makes everything from flash memory chips to steam turbines.
Boring is beautiful for U.S. employment 8 May 2015 April’s 223,000 new positions represent a welcome rebound from a pitiful March, even if the pace is modest. The jobless rate also dipped to 5.4 pct, while participation barely moved. It all adds up to a durable recovery that should lead soon to higher wages and interest rates.