Millennial vigor helps drive U.S. employment gains 5 May 2017 U.S. employers added 211,000 positions in April, reducing the jobless rate to its lowest level in 10 years. Moreover, unemployment among young people is finally echoing the national picture as they are joining the workforce in bigger numbers. It’s a sign of a broadening recovery.
Review: Can we avoid another financial crisis? 5 May 2017 That's the question Steve Keen sets out to answer in his new book. He concludes that a capitalist economy can no better avoid another blowup than a dog can avoid attracting fleas. It’s only a matter of time. If the Australian economist is correct, we don’t have long to wait.
Cost cuts won’t save Pearson or its CEO 5 May 2017 The UK education publisher is planning 300 mln pounds of savings by 2020, with the troubled North America business taking some of the pain. Markets aren’t giving embattled boss John Fallon much credit for the plans, and falling revenue could cancel out the gain to shareholders.
Greek bonds are the last of the ECB free rides 5 May 2017 Athens has pledged to cut pensions and raise taxes, and could soon be eligible for European Central Bank bond purchases. That would push up prices just as other euro zone bonds start going the other way. Europe could drag its heels, but the likelihood of a messy default is low.
Death of diesel will contaminate German carmakers 5 May 2017 Sales of new diesel cars are falling sharply in Europe, as talk of selective driving bans in polluted cities is unsettling drivers. Market pressure may force carmakers to phase out diesel much quicker than planned, with negative effects on VW, BMW and Daimler.
M&S opts for safety over real shakeup 5 May 2017 The UK high street stalwart named Archie Norman as its chairman, days after finding a new boss for its clothing unit. His retail nous will bolster M&S’ turnaround plans. Yet the hire is the latest in a series of safe choices that underestimate the changes sweeping retail.
India unsheathes new weapon in bad debt fight 5 May 2017 The government has granted the Reserve Bank of India new powers to force lenders to push errant borrowers into bankruptcy. That puts extra pressure on state banks to finally clean up their soured loans. Given the failure of more refined methods, the bludgeon is welcome.
Morphing Macquarie powers ahead 5 May 2017 The Australian bank is a master of reinvention, relentlessly encouraging its financiers to move sideways into profitable new ventures. The result is record full-year earnings of $1.6 bln, a fat return on equity, and stock at 10-year highs – with a rich valuation that is justified.
Macau keeps gambling on gambling 5 May 2017 Gaming revenue in China's casino enclave have risen for nine straight months, and the three top players have gained $20 bln in value. But the sector still lacks a family-friendly hedge against political and economic risk. Resorts better hope their new luck holds.
Arconic board shoves head back in the sand 4 May 2017 Firing CEO Klaus Kleinfeld gave hope directors might embrace bigger strategic changes to improve results. Now they’re contending the former boss had it right and that two new board nominations should be change enough. Its argument, like the outfit’s performance, is poor.
Viewsroom: Apple starts iPhone birthday bash early 4 May 2017 Lucre from apps and other services should get investors in the party mood ahead of the company’s iconic device turning 10. Big Oil gets buoyed by rising prices – and the New York Times by more readers. And Coach shows the retail industry how to cope with upheaval, up to a point.
IHeartMedia’s one big LBO hit gets an extended run 4 May 2017 The U.S. radio giant has muddled through a 2008 mega-buyout largely because of looser terms on $20 bln of debt. IHeartMedia isn't sure now if it can survive another year. As Bain and Thomas H. Lee fight to save their investment, creditors keep playing the same covenant-lite song.
Cox: Tech monopolies crowding out little guys 4 May 2017 Disruption remains the biggest buzzword for the startup community, evidenced at this week's Collision conference in New Orleans. With the so-called FAANG stocks now worth a collective $2.4 trln, however, they may be in a position to squelch any challenges to their own dominance.
Obamacare fever impairs Republicans’ vision 4 May 2017 The party is hell-bent on pushing a new health framework to fulfill campaign pledges. Congressmen are moving so quickly that the costs and coverage fallout are unknown. Important benefits could be waived while sick people pay more. Only voters may cure this political malady.
Holding: SEC’s home-court edge nearing welcome end 4 May 2017 The U.S. regulator has been using in-house tribunals to run up the score against Wall Street targets. A rare loss last month and a new bill in Congress, however, may push more cases into federal court, where legal safeguards are stronger. Fairer hearings are worth giving up a few wins.
VW-Fiat Chrysler merger too tempting by half 4 May 2017 Welding together the German and the Italian-U.S. carmakers might unleash cost savings of more than $38 bln. As the auto industry gets more challenging, and Fiat Chrysler boss Sergio Marchionne more eager to sell, that prize may trump memories of previous car deals gone wrong.
London could trip on Aramco’s IPO red carpet 4 May 2017 The city’s stock exchange is considering a new kind of governance-lite listing to attract the Saudi oil producer. Innovation is okay, if new rules are clear and existing ones aren’t watered down. Too naked a desire to please the powerful, though, would hurt London’s reputation.
HSBC’s extra capital can help keep investors loyal 4 May 2017 Europe's largest bank by assets posted better-than-expected quarterly results. Growing revenue remains a challenge. But rising capital ratios make HSBC's generous dividends look more sustainable, and could point to more buybacks ahead. That should keep shareholders onside.
French banks’ foreign strength cuts both ways 4 May 2017 Strong first-quarter growth in BNP Paribas and SocGen’s foreign markets offset weaker showings at home. Still, SocGen’s 963 mln euro Libyan settlement shows how overseas adventures can go awry. And if Sunday’s election delivers a surprise, French banks face redenomination risk.
Time for Siemens investors to forget troubled past 4 May 2017 For decades, the German engineering group’s poor margins and talent for botching large-scale projects justified a persistent discount to peers. Quarterly results confirm turnaround CEO Joe Kaeser has fixed both issues. If shareholders agree, Siemens could be worth 9 pct more.
Shell nears midway point in turnaround 4 May 2017 Recovering prices boosted the Anglo-Dutch group’s first-quarter earnings. Judging by the downstream performance of Shell’s chemicals unit and improved efficiency, its diversification is paying off. The second half of the challenge is to convince markets to look beyond crude.
Malaysia makes room for better 1MDB property deal 4 May 2017 A $1.7 bln deal to sell a prime Kuala Lumpur development project to a Malaysian-Chinese consortium has lapsed. The two sides disagree about what went wrong. In any case, Malaysia could now do a deal that is better, politically and financially, as it seeks to fix the 1MDB mess.
Next iPhone is key to Apple’s future in China 4 May 2017 Sales in what was once Apple's biggest growth market have now fallen for five straight quarters. Stiff competition with local handset makers and a weaker yuan both hurt. While app-store sales are promising, a real turnaround hinges on the success of its next flagship smartphone.
Puerto Rico restructuring will be no day at beach 3 May 2017 Congress gave the U.S. territory access to a form of bankruptcy. Now the board overseeing its finances, encompassing $70 bln of debt, has pressed the button. Creditors will get their day in court, and tidy plans in spreadsheets could end up as warped as in Detroit – or worse.
Tesla demonstrates valuation staying power 3 May 2017 Boss Elon Musk vows that annual Model 3 production alone can meet the company's target of 500,000 vehicles by the end of 2018. That should be enough for the electric-car maker's faithful to overlook past missed goals and growing competition, and keep the stock unjustifiably high.
Even yellow flags can’t dent Facebook’s growth 3 May 2017 The social network largely defied its own executives’ slowdown warnings with a 51 pct jump in ad sales, helped by Instagram’s success. Boss Mark Zuckerberg is adding 3,000 staff to police content after a spate of violent videos. He may need more to contain reputational risk.
Kansas’ fiscal fiasco a warning for Trump tax plan 3 May 2017 The president’s tax plan echoes sweeping cuts by the Plains state in 2012. The GOP governor’s bet on trickle-down economics slashed revenue but failed to spur growth. Lawmakers now want to reverse the reductions amid a school-funding crisis. It may be a crystal ball for D.C.
Delphi goes where carmakers only dream of driving 3 May 2017 The $23 bln parts maker is spinning off its powertrain unit to focus on connected and autonomous tech. These fast-growing, higher-margin businesses will sport a top-tier multiple even if car sales slow. The likes of Ford and GM don’t have the luxury of following Delphi’s lead.
Make Britain’s Brexit bill performance-related 3 May 2017 The EU may demand 100 bln euros from the UK for leaving the bloc. Some Britons want to pay nothing. Investment bankers ease impasses between companies by making part of the cost contingent on future performance. Linking the bill to UK GDP might enable both sides to claim victory.
New York Times and CNN should beware news cycles 3 May 2017 What Donald Trump calls a "failing" publisher and "fake news" network revealed impressive subscriber and viewer numbers. Political fatigue is among the risks to the recent growth, however. Ad trends are scary, too. The companies can't believe too much in their own headlines.