Wall Street bank owners too optimistic on taxes 12 Oct 2017 Citi and JPMorgan’s results don’t justify the past month’s 12 pct surge in U.S. bank stocks. Tax cuts do, but they're at best some way off. In the meantime, problems like sluggish loan demand, rising credit costs and less effective buybacks will challenge a rosy profit outlook.
Sky investors choose between profit and principles 12 Oct 2017 Chairman James Murdoch faces a backlash over concerns about his independence as Twenty-First Century Fox, which he runs, tries to buy the UK pay-TV group. Shareholders have legitimate corporate-governance grievances. But financially they’d be better off with Murdoch’s money.
KKR sets a collision course with Elliott in Japan 12 Oct 2017 The buyout firm raised its bid for a Hitachi subsidiary, offering outside investors $1.3 bln. That price might not satisfy activist shareholder Elliott. KKR may need to sweeten the deal, within reason - its reputation in Tokyo for disciplined buying is worth preserving.
Coach name-change is more than a fashion statement 12 Oct 2017 The New York luxury handbag maker changed its corporate name to Tapestry. Expensive rebrands can help companies distance themselves from past scandal or capitalise on investor mania for certain industries. Coach’s new identity signals a more acquisitive future to shareholders.
CDO cousin thrives a decade after the crisis 11 Oct 2017 The subprime-mortgage fiasco killed the business of pooling debt securities but not its commercial-lending relative, the collateralized loan obligation. CLO issuance has surged on the back of solid credit and investors’ hunger for yield. The bonanza has plenty of life left.
Da Vinci bragging rights going cheap at $100 mln 11 Oct 2017 That’s the estimate on the only Leonardo painting today’s billionaires will ever be able to bid for. It’ll attract collectors and lovers of scarcity and quality, and perhaps science geeks: the pre-auction tour includes San Francisco. The old master could easily set a new bar.
Goldman necessity mothers M&A invention 11 Oct 2017 The Wall Street firm has set up a new team to cook up creative deals for big clients. Goldman is making a habit of trying new things, from retail banking to personality tests for interviewees. Given the drag in the trading business, it sounds like worthwhile experimentation.
Pharma firms gloss over hurricanes’ effects 11 Oct 2017 About 10 pct of drugs consumed by Americans are made in Puerto Rico. Companies from AbbVie to Zimmer state problems are manageable. Yet the FDA is warning of possible shortages - and intervening daily to ensure factories have fuel and oxygen to stay open. Earnings may be hit.
Trump’s hardline NAFTA stance could benefit Asia 11 Oct 2017 Canada and Mexico oppose a U.S. push to boost North American content for autos and impose a new 50 percent standard for U.S.-sourced parts. The White House says it will reduce the U.S. trade deficit. But the push could increase costs for automakers and force them to move abroad.
Hadas: Economists need more psychological abuse 11 Oct 2017 Insights from the study of the mind helped Richard Thaler win the Nobel Prize in economics. The dismal science would benefit from more thoughtful analysis. Rules of thumb could help with investments, statistics would become less alien, while ethics could illuminate big decisions.
Smith & Nephew could use surgical activism 11 Oct 2017 U.S. hedge fund Elliott is building a stake in the artificial knee and hip maker. Talk that the company could be taken over has surfaced more often than actual bids. Agitating for bigger profit margins and a breakup may be more rewarding than hopes for a bigger deal.
Trump “coal first” drive is blowing smoke 10 Oct 2017 His environment agency aims to reverse Obama-era pollution rules, while the energy department wants regulatory changes that favor nuclear and coal power generation. Even if both happen, the closure of a Texas power plant shows the economic and social forces pushing the other way.
Wal-Mart gets into e-commerce groove 10 Oct 2017 The $250 bln grocer said U.S. online sales will jump 40 pct next year. Additions like Jet.com help and it is using its 5,000-plus stores well. The channel represents less than 4 pct of Wal-Mart revenue stateside, so there’s room to grow. Maybe even Amazon should watch its back.
Pfizer and Glaxo may find romance over the counter 10 Oct 2017 The $215 bln U.S. drugmaker is preparing to detach its consumer-goods unit, and its British rival is a logical owner. Folding the Advil maker into GlaxoSmithKline’s existing venture with Novartis would be logical, provided CEO Emma Walmsley can whip the business into shape.
Time for Barclays to sever its U.S. cards arm 10 Oct 2017 CEO Jes Staley has a conundrum: the UK bank’s market value is so depressed investors are essentially getting the U.S. credit card business for free, according to Breakingviews calculations. Spinning off the unit would make Barclays less complex and help it to a richer valuation.
P&G scores hollow victory over Nelson Peltz 10 Oct 2017 The $234 bln toiletries firm says the activist has lost his fight for a board seat. Peltz says the vote is too close to call. Either way, the narrow margin should be a wake-up call for P&G’s insular leaders, even if change comes hard for them. Expect Peltz to stick around.
Honeywell puts Dan Loeb in his place 10 Oct 2017 The conglomerate is spinning off two small, low-margin risky businesses rather than the aerospace unit the activist had targeted. It’s a smarter way for new CEO Darius Adamczyk to improve returns without much pain, especially on top of the better margins he’s already producing.
HelloFresh IPO belongs in the deep-freeze 10 Oct 2017 The German meal-kit service is planning a float before proving it can turn a profit. That’s premature. The flame-out of U.S. rival Blue Apron’s IPO in June offers an unhappy precedent. Both firms could go stale if Amazon or traditional retailers launch an assault on the sector.
Companies WACC central bankers on yields 10 Oct 2017 Rate-setters have engineered ultra-low borrowing costs and the risk premium on stocks is down. In theory, that lowers the bar for business investments. In practice, corporate hurdle rates have barely budged for decades. It’s a reality check for policymakers trying to fan growth.
IKEA digital surrender raises flicker of IPO hope 10 Oct 2017 The Swedish furniture firm has grown through its warren-like stores and without needing external capital. Yet it now plans to sell through websites like Amazon to reach new customers. With competitive pressures growing, IKEA might also revisit its aversion to selling stock.