Fed finally gets market’s attention for rate hike 28 Oct 2015 The FOMC has set up Dec. 15-16 as a decision point for liftoff and excised wording about global concerns. Futures prices now imply that investors have almost persuaded themselves higher rates are likelier than not in 2015. At last, puppeteer and puppets are almost in agreement.
Goldman thwacking marks revolving-door reckoning 28 Oct 2015 The bank led by Lloyd Blankfein will pay $50 mln for not monitoring an employee’s too-cozy relationship with the NY Fed, his former employer. It’s a paltry fine, but Goldman admitted fault - and it drives home the message that D.C.-to-Wall Street transfers bear closer scrutiny.
Shell faces tough call on what to cut next 28 Oct 2015 Shelving a high-cost Canadian oil sands project and taking a $2 bln writedown is smart amid lower crude prices. It is getting harder for the group to sift the wheat from the chaff in terms of bankable projects, but if it wants to safeguard its dividend, it has little choice.
AIG’s post-crisis babying days are over 28 Oct 2015 Carl Icahn has delivered the $80 bln insurer a rude awakening. The pushy investor isn’t satisfied with CEO Peter Hancock’s steps to boost performance and wants the company to split and shed its systemic tag. Say goodbye to any lingering sympathy for AIG’s near-death experience.
Follow KKR’s new buyback plan to its logical end 28 Oct 2015 Henry Kravis wants to lift his buyout shop’s valuation by paying a fixed dividend, repurchasing units and devoting more to its investment strategy. If it can’t alter public perceptions and the stock is consistently “cheap,” KKR could do what it does best: take the firm private.
Did Watson randomly generate IBM’s weather deal? 28 Oct 2015 Big Blue’s purchase of the bulk of Weather Co assets carries no clear strategic logic or even a price tag. But it has created a golden opportunity for CEO Ginni Rometty to distract her long-suffering shareholders with a litany of buzzwords and hollow corporate speak.
Breakingviews seeks Washington columnist 28 Oct 2015 Wanted: an experienced commentator to analyze the Fed, bank regulation and national policy issues like mortgages, the minimum wage and infrastructure. This is an opportunity to help shape opinion on Washington’s most important financial and economic stories for a global audience.
NYSE parent may be getting short end of IDC stick 28 Oct 2015 Exchange operator ICE’s $5.2 bln deal for Interactive Data bags it potentially lucrative info on bonds. But ICE will end up with more debt than rival marketplaces for a slow-growth asset. Sellers Silver Lake and Warburg Pincus, meanwhile, stand to make impressive gains.
Barclays pays tolerable price to plug CEO gap 28 Oct 2015 The UK bank is giving new boss Jes Staley 1.9 mln pounds of stock to replace shares in former employer JPMorgan. Staley ideally should have waived the award. But peers hired elsewhere have got more. Waiting until they vested would have meant another three months with no chief.
Lloyds earnings show folly of public share sale 28 Oct 2015 The UK bank’s share price fell 5 pct on weak third-quarter income. The government, set to sell part of its stake to retail investors, has focused on Lloyds’ dividends and market clout. But risks from regulation and misconduct could turn the stock into a political hot potato.
Cash-rich VW braced for dieselgate impact 28 Oct 2015 Third-quarter earnings don’t yet reflect the effect of the carmaker’s emissions scandal, besides slightly increasing its recall cost provision to 6.7 bln euros. Strong cashflow and stable demand for its cars suggest VW is in decent shape to absorb the likely financial impact.
Heineken strength justifies mega-merger abstinence 28 Oct 2015 The Dutch brewer’s quarterly sales increased 8 pct year-on-year. That’s better than latest figures from SABMiller and AB InBev. Carlsberg dropped 4 pct last quarter. While Heineken’s three global peers are chasing growth through change, the green-bottle brewer is sitting pretty.
Eni’s decoupling from Saipem is for the best 28 Oct 2015 The Italian oil major is selling a stake in the oilfield contractor while subscribing to a 3.5 bln euro rights issue. The complex refinancing will see Eni reduce its debt by a third and put Saipem’s borrowings at arm’s length. Both get much-needed balance-sheet underpinning.
Searching for China consumer bellwethers is futile 28 Oct 2015 Dubious about official data, investors are scouring corporate results for clues about shoppers’ confidence. Yet iPhone sales, e-commerce transactions and demand for fried chicken offer few clues. There are no consistently reliable proxies for the world’s second-largest economy.
Apple: a tech company with Chinese characteristics 27 Oct 2015 Almost a quarter of sales – and two-thirds of revenue growth – came from China. Apple’s new iPhone installment plan could bump this up even further. Chief Executive Tim Cook’s bet on the Middle Kingdom is yielding impressive dividends, but carries existential political risks.
Investors coax Walgreens Boots to swallow Rite Aid 27 Oct 2015 Scooping up the No. 3 U.S. drug chain strengthens $98 bln Walgreens as it battles domestic leader CVS. Antitrust is an obvious question given the rough ride Staples has faced with Office Depot, but the hurdles look manageable. Shareholders are certainly not worried.
Collapsed Ares deal leaves friends with benefits 27 Oct 2015 Tony Ressler’s buyout shop called off its $2.6 bln merger with Kayne Anderson after disagreements over investing in energy. Even so, Ares is giving Kayne $150 mln to play with. It’s a cozy solution between cronies that contrasts starkly with how some crisis-era LBOs ended.
How Theranos Hoovered up $9 bln of influence 27 Oct 2015 CEO Elizabeth Holmes persuaded a clutch of bigwigs like George Shultz to join her board, tapping the roster at Stanford’s world-improving think tank. Theranos’ headline valuation shot skywards. But the wise old men don’t seem to be helping now that things are looking shaky.
Alibaba’s mobile signal drowns out growth fears 27 Oct 2015 Quarterly revenue from handheld devices nearly tripled year-on-year for the Chinese e-commerce giant. Slowing sales growth and costly investments that have dragged on Alibaba’s shares haven’t gone away, but the unexpected boost in mobile shoppers gives some breathing space.
Glencore ought to lift the lid on its blackest box 27 Oct 2015 Investors seem unconvinced that the commodity trader’s $18 billion of inventory is as good as cash. The value of that hoard may have fallen by a fifth since last disclosed. Boss Ivan Glasenberg could allay concerns with better disclosure, but might put his trading edge at risk.
JPMorgan throws down against more than just Apple 27 Oct 2015 Its Chase Pay smartphone wallet is a clear challenge to the iPhone maker’s burgeoning rival. By lowering fees, absorbing fraud liabilities and allowing retailers to offer their own loyalty programs, however, JPMorgan is also putting banks and the likes of Amex on the back foot.
French labour market is lose-lose for Hollande 27 Oct 2015 President Francois Hollande was hauled over the coals when the jobless total hit a record high in August. Yet a just-reported hefty fall in unemployment won’t save him from a backlash in December’s regional elections. The temptation will be to dilute reforms and deficit cuts.
Deutsche’s Russia and IT problems could be linked 27 Oct 2015 Regulators are probing up to $6 bln of potentially sanctions-busting Russian trades made by Germany’s biggest lender. Deutsche Bank may be innocent. But another plan to rip up its computer systems implies a host of ways in which potential wrongdoing could slip by unnoticed.
Self-help underpins BP’s $108 billion value 27 Oct 2015 The UK-based oil major reckons it can fund its dividend organically by 2017 with oil at $60 a barrel. It is slashing operating costs and capital expenditure. It’s a big ask. BP’s forecast-busting third-quarter results provide comfort that it can pull it off.
Osborne’s new deficit: his own credibility 27 Oct 2015 The UK chancellor’s cut to tax credits has been thrown back by the upper house. The claim that cuts were offset by higher minimum wages always looked hollow. The hit to Osborne’s deficit reduction plan looks bearable. At worst, it dents his hopes of being the next prime minister.
BASF can withstand pain from cheap oil and China 27 Oct 2015 The German chemical giant has been hit by deteriorating emerging markets. Low oil prices also hurt BASF’s exploration business. A slightly poorer 2015 guidance sent shares down more than 3 pct. But a solid balance sheet and strong cashflow justify the group’s $77 bln valuation.
Messy deal calls truce in China online travel war 27 Oct 2015 The $3.4 bln tie-up between rival travel sites Ctrip and Qunar heralds a strategic ceasefire in increasingly costly discount battles. Yet the share swap with Qunar parent Baidu falls short of a full merger. Shareholders can only guess the value created from the tangled alliance.
Japan’s 7-Eleven owner is ripe target for activism 27 Oct 2015 U.S. agitator Dan Loeb has bought into top convenience store operator Seven & I. The $39 bln group is already tackling its ailing supermarkets, one of Loeb’s main concerns. Still, it could further reward investors with dividends, balance-sheet efficiency and succession planning.
Keep one eye on Sam Zell’s "For Sale" sign 26 Oct 2015 The U.S. real estate mogul’s Equity Residential is offloading a collection of apartments for $5.4 bln. While Zell got the timing right as a seller in 2007, so did buyer Barry Sternlicht’s Starwood in 2009. The one big difference is Zell’s two extra decades of investing experience.
Argentines may risk austerity to get change 26 Oct 2015 Presidential elections will go to a runoff after business favorite Mauricio Macri surprised ruling-party candidate Daniel Scioli in Sunday’s vote. Scioli will now say Macri wants to slash social programs. But voters may rather see Cristina Fernandez’s economics as unsustainable.