U.S. watchdog gives bank customers back their bite 5 May 2016 The Consumer Financial Protection Bureau is reviving class-action lawsuits as a way to fight unfair fees and other scams. Existing rules often allow only solo cases in arbitration, where lenders get the edge. The masses deserve a better shot at bringing Wall Street to heel.
Alibaba’s strong core comes with shaky periphery 5 May 2016 The Chinese e-commerce group’s revenue soared 39 pct year on year, faster than volumes of stuff sold on its sites. Alibaba also disclosed losses on its fintech, services and logistics affiliates. Those trends can co-exist, so long as online shopping growth stays sturdy.
Pfizer mulls actually having an M&A strategy 5 May 2016 The $205 bln drug giant’s last two huge acquisition attempts failed. Pfizer could yet try another merger to cut its tax rate, it could enter a potentially heated auction for $10 bln biotech Medivation, or it could split up. Dealmaking success depends on having clearer goals.
Sard Verbinnen sale burnishes its deal credentials 5 May 2016 The crisis and merger PR firm is unloading 40 pct of itself to a buyout shop. Word leaking out with ugly details about unhappy partners hardly showcases its spin services. A valuation of nearly eight times what the founders paid a decade ago, however, suggests a certain M&A nous.
Who’s London’s next mayor? It doesn’t matter 5 May 2016 Neither Sadiq Khan nor Zac Goldsmith, frontrunners for May 5’s vote, have the tools to fix London’s housing shortage. That’s a national issue. The question for businesses isn’t who runs the capital after Boris Johnson, but whether expansion elsewhere in the UK makes more sense.
Barclays Africa sale starts clock on Diamond bid 5 May 2016 The UK bank has placed $878 mln of shares in its Africa arm at a tight discount of 6.5 pct, with South Africa’s state pension fund taking a tenth. Central bank opposition to private equity won’t stop a tilt by its former boss for the rest. Barclays can sell that in 90 days’ time.
500-euro note passes into illogical limbo 5 May 2016 If the ECB really feared its highest-value bill were a tool for criminals, it would scrap the note altogether. If it saw a strong case for keeping it, it would print more. Instead, the central bank is merely suspending production from 2018. It’s a classic euro-compromise.
Stupid names can’t hurt good companies 5 May 2016 Healthineers, Siemens’ new brand for its healthcare unit, is reminiscent of a hero in a 1950s science fiction comic. Users of its brain-scanners are unlikely to care. For investors the goofy name is, at the margin, a good thing: it shows a spin-off may have become more likely.
Tesla’s acceleration may get investors shaking 5 May 2016 The electric-auto maker expects to produce 500,000 vehicles two years earlier than planned amid strong demand for its new Model 3 sedan. Such ambition is typical for boss Elon Musk. The cash and technical capabilities involved, however, increase risk with the potential rewards.
Mitsubishi Motors fiasco shows reforms lack oomph 5 May 2016 The carmaker’s legacy of dodgy testing is astonishing. At best, management and directors were in the dark for 25 years. The firm badly needs a stronger board and better internal controls. For all the talk of improved corporate governance, much of Japan Inc is similarly lacking.
China index: Bond boom drives rebound 5 May 2016 Breakingviews’ Tea Leaf index leapt to a 20-month high in March as stimulus kicked in. Exports and property investment grew at the fastest rate in over a year. Increased pollution points to busier factories. But by far the strongest factor was record issuance of corporate bonds.
Meirelles’ magic touch may offer Brazil new hope 4 May 2016 The former central bank chief, an investor favorite, is likely to become finance minister of Latin America’s No. 1 economy if President Rousseff steps down. At best, he could restore confidence and kick-start a recovery. But political discord and scandal may stymie his efforts.
Hulu live-streaming plan risks ire of cable giants 4 May 2016 The online video service backed by the likes of Disney and Fox may offer consumers something that’s a bit like a cable package. It’s another way to bypass distributors, but it could also hand the content makers’ biggest customers more sway in crucial fee negotiations.
Financiers may want to keep a closer eye on Trump 4 May 2016 The bellicose real-estate mogul has all but sewed up the Republican presidential nomination. Markets are pricing in a Hillary Clinton victory, however, as Carlyle’s David Rubenstein told an elite Beverly Hills gathering. Trump doubters have learned how the odds can swing quickly.
LSE investors look even more bearish on merger 4 May 2016 The UK exchange’s shares dived after U.S. rival ICE said it wouldn’t submit a bid. Investors weren’t giving an LSE-Deutsche merger much credit for potential revenue synergies as it was. Now, fear a deal could get blocked may be prevailing over value creation from cost savings.
British store wars get simpler but no less fierce 4 May 2016 Sainsbury is disclosing fees suppliers pay to get their goods on shelves – equivalent to half its operating profit. Such complex agreements are falling out of favour with frustrated shoppers. Ditching them should help increase sales but won’t do much to end an ongoing price war.
Credit Suisse sheds problem assets but not stigma 4 May 2016 The Swiss bank has sold $1.2 billion of distressed credit to buyout group TPG, locking in an extra $100 mln of writedowns. High-yield prices are similar to what they were in October. Hence Credit Suisse hasn’t gained much financially for the dent in its credibility.
SocGen gets nose in front of BNP and EU peers 4 May 2016 France’s third bank by assets added more capital than BNP Paribas, with better returns. It also trounced fixed income trading rivals with a 17 pct revenue increase. SocGen’s decision to cut 220 mln euros more costs could provide cover against future rises in bad debts.
Shell, after eating for two, starts strict diet 4 May 2016 After buying rival BG, Shell has cut costs. But it will need the $30 bln of planned asset sales to help cover gaps in cashflow over the next three years. It looks like a tall order, though the rising oil price will help. Shell probably has scope to reduce spending further.
BHP’s $44 bln Brazil lawsuit shows dangers of JVs 4 May 2016 Miners use joint ventures to get places they otherwise couldn’t. But sharing risk can go very wrong. Brazil wants to hit BHP Billiton and Vale with a huge claim for the Samarco mining disaster. It’s a bill neither can afford for a partnership neither really controlled.
Next models three unflattering UK trends 4 May 2016 The fashion chain lowered its sales outlook for the third time in five months and cut profit guidance. Life will only get harder. New players like Sainsbury’s are selling clothes, foreign rivals are better judges of what shoppers want, and consumers may be nearing “peak stuff”.
Siemens turns screw on rival ABB 4 May 2016 The German engineer has long trailed its more profitable and agile Swiss peer. But quarterly results suggest Siemens is closing the gap. It is growing faster while catching up on profitability, which makes a 28 pct price-to-earnings discount hard to justify.
UK deal veto would be big setback for Li Ka-shing 4 May 2016 A $15 bln takeover of Telefonica’s O2 unit was key to making the Hong Kong tycoon’s costly bet on European telecoms pay off. If CK Hutchison cannot overturn a likely EU veto, his UK telco will either have to carry on as a disruptive fourth player, or find a fallback deal.
Bets on Macau run ahead of reality 4 May 2016 Gaming revenues are falling less steeply in China’s gambling enclave, and could stabilise this year after crashing a third in 2015. But the move away from VIPs remains a work in progress. Investors in Sands China, Wynn Macau and others are getting ahead of themselves.
Halliburton owners may have to speak up again 3 May 2016 CEO David Lesar passed on using Tuesday’s earnings call to apologize after overconfidence in a failed deal cost the company $3.5 bln. Nearly 30 pct of shareholders dissed Halliburton’s executive pay last year. Maybe they’ll send a sterner message in this month’s annual vote.
Retrograde governance will cost Facebook little 3 May 2016 The social network’s new non-voting shares have been challenged in court. A similar spat at Google ended with the search giant paying shareholders just $522 mln – 0.15 pct of its market cap. An equivalent result at Facebook would entrench boss Mark Zuckerberg’s control cheaply.
UK slowdown has a silver lining for Cameron 3 May 2016 An unexpected contraction in manufacturing is the latest sign that growth is losing momentum. Usually such a slowdown would be unmitigated bad news for the government. Right now, it’s all useful PR fodder for Prime Minister David Cameron in his battle to keep Britain in the EU.
Investors treat Russia like a wounded bear 3 May 2016 Russia’s escalating anti-Western rhetoric is damaging its chances of winning back foreign investment. Shifting the blame may keep Russians distracted from economic realities for a while longer, but it can’t replace hard cash.
Steve Cohen returns as beau of Wall Street ball 3 May 2016 The billionaire investor starred at Michael Milken’s annual bash, warning global grandees that overcrowding in the hedge-fund world is lowering returns. Now managing $11 bln of mostly family money, his joviality seemed justified: U.S. watchdogs left him bruised but unbowed.
Australian central bank comes to miners’ aid 3 May 2016 Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.