Americas

GOP may get inside help to defang bank watchdog

20 July 2017

U.S. Republicans want to nix a key CFPB rule. Champions like Democratic Senator Elizabeth Warren will defend the consumer regulator created by the Dodd-Frank Act. But if Director Richard Cordray runs for Ohio governor, as seems plausible, the agency may soon wither away.

Unilever is half way there on Kraft challenge

20 July 2017

The Marmite maker has cut costs faster than expected, reducing ad spend and paying less to its suppliers. Its 20 pct operating margin goal looks reachable. Yet with U.S. rival Kraft Heinz free to reprise its hostile bid next month, volume growth is too low for comfort.

Publicis pleasant surprise flags ad world’s plight

20 July 2017

The French ad group’s top line grew 0.8 percent. But even that looks good: in the previous two quarters Publicis’ organic revenue shrank, and analysts were expecting it to do so again. The challenges to media buying make the industry’s low valuation look justified.

Crypto-currency deals recall an earlier tech craze

19 July 2017

A rash of initial coin offerings has raised $1.3 bln in 2017, much of it in the past month. These crypto-currency versions of an IPO bear the speculative hallmarks of the ‘90s tech boom. With untested managements and few if any investor protections, this wave may end just as badly.

Let venture capitalists subsidize your life

19 July 2017

Frustrated by an inability to invest in unicorns? Try another strategy. VCs and other investors lose money funding vendors of meal kits, car rides, music, data storage, and even household necessities. Here’s how to live well off Silicon Valley’s obsession with the future.

McCormick may struggle to digest $4.2 bln deal

19 July 2017

The $12 bln spice vendor is paying a fat 20 times EBITDA for the mustard and hot-sauce business of Reckitt Benckiser. With modest synergies in prospect, McCormick will need strong growth to pay down debt. Investors have reason to question the acquisition’s aftertaste.

Hadas: No auction often beats a bad auction

19 July 2017

Governments and Google are fans of auction theory, which teaches how to extract the highest bids for assets like radio spectrum or online ads. But the branch of economics cannot say if the price is fair. Auctions too often confuse consumers and tarnish the image of capitalism.

Morgan Stanley gives Goldman a lesson in diversity

19 July 2017

Stabilizing fixed-income trading isn’t the only way CEO James Gorman showed Lloyd Blankfein his tail for the second quarter in a row. His growing wealth unit helped, too. With the diversified firm firing on all cylinders, it is justifiably overtaking Goldman even on valuation.

Discovery, Scripps tie-up a subscale DIY fix

19 July 2017

The cable network part-owned by John Malone may be in talks to combine with its smaller peer. A deal with the producer of HGTV would give Discovery more clout with distributors, but it would still be a bit player in a fast-changing industry. Bigger pockets might get the job done.

Carrefour unit shows way to Brazil IPO revival

19 July 2017

The French supermarket chain’s local unit raised $1.6 bln in the country’s biggest stock offering in four years. Rising deal flow suggests growing confidence Latin America’s largest economy is getting back on track. But the recovery’s pace is tepid, and sensible pricing is key.

Reckitt shows bigger rivals how it’s done

19 July 2017

The UK company sold its French’s Mustard unit to U.S. food group McCormick for $4.2 bln, a spicy 7.4 times sales – even though there’s no recovery story and limited synergies. With buyers this hungry, less efficient peers Unilever and Nestlé ought to emulate Reckitt’s recipe.

Akzo’s misguided strategy will weather CEO change

19 July 2017

The Dutch paint maker’s new boss Thierry Vanlancker inherits his predecessor’s fanciful mid-term targets. The goals are backed by Chairman Antony Burgmans, a key opponent of a deal with PPG who may now find his position strengthened. Real change at Akzo is even less likely.

Einhorn’s bold Toshiba play has just enough logic

19 July 2017

The Greenlight boss unexpectedly took a stake in the beleaguered Japanese group, betting it's hit bottom. That's gutsy, but not necessarily reckless: Toshiba is closer to selling its chip business, which could give it much-needed financial relief and unlock value in other units.

Exchange Podcast: Mauricio Cárdenas

18 July 2017

After half a century of strife, FARC guerrillas are laying down their weapons and integrating into Colombia's political landscape. The Exchange traveled to Bogota to discuss potential dividends from peace, infrastructure investment and the economy with Colombia's finance minister.

Mayo board’s exodus sets spicy governance example

18 July 2017

Hampton Creek may have used dodgy methods to boost sales of its eggless mayonnaise. Now most of the Silicon Valley startup’s directors have quit after they clashed with the co-founder and CEO. It’s a last resort, but boards at Theranos and Uber, for example, might have tried it.

Guest view: Culture can’t be bank-reform casualty

18 July 2017

Moves to relax U.S., UK and European regulation and supervision necessitate still greater attention on the important issues of institutional conduct, argues William Rhodes, a former Citigroup executive and co-chair of the G30’s steering committee on bank culture and governance.

BofA’s progress fails to achieve escape velocity

18 July 2017

The $236 bln U.S. lender's $4.9 bln of Q2 profit beat estimates as retail, wealth management and investment banking all did the best in years. CEO Brian Moynihan is also keeping costs down. Yet return on equity is stuck in single digits. Only help from the Fed can change that.

Third Senate GOP health attempt is most charmless

18 July 2017

Having twice failed to pass alternatives to Obamacare, Republicans may try to repeal it with no replacement. Based on a similar 2015 effort an estimated 32 mln Americans would lose insurance cover, some 10 mln more than under the nixed bills. It’s hard to see senators backing it.

Goldman’s compass points in wrong direction

18 July 2017

Fixed-income trading revenue fell 40 pct in the second quarter as Lloyd Blankfein’s Wall Street firm again navigated the market worse than rivals. The $90 bln Goldman is slowly changing course, but its high valuation relative to rivals demands faster improvement.

German climate change policy takes Trumpian turn

18 July 2017

Angela Merkel has castigated the U.S. President for pulling out of the Paris accord. Yet two German states are putting mining jobs ahead of cutting carbon emissions. If they don’t reconsider, the Chancellor’s green credentials – and the global agreement – will suffer a blow.