U.S. shale on rocky road to swing-producer status 24 Feb 2016 Saudi Arabia has ruled out oil production cuts. That suggests crude prices will stay low until enough shale drillers cut output or go bust. Brimming stockpiles and the ability to restart wells relatively quickly should keep supply flexible and any price recovery subdued.
Foreign minnows resist opaque U.S. penalties 24 Feb 2016 An Andorran bank has managed to erase its money-laundering black mark. Last year, the Chinese-backed owner of a U.S. wind-farm project won a settlement with D.C. over the secretive CFIUS group’s block on its activities. Overseas Davids can occasionally slay Washington Goliaths.
China’s chip dream can survive U.S. setback 24 Feb 2016 Beijing-backed Tsinghua Holdings dropped its $4 bln investment in Western Digital after a U.S. body said it would review the deal. Officials in America and elsewhere will scrutinize China’s chip acquisitions. But barring an outright ban, the likes of Tsinghua will keep shopping.
JPMorgan "tech company" claim nixed by reality 23 Feb 2016 That’s what the CFO dubbed the lender at its investor day. It may employ thousands of developers and use technology better than rivals. But its business is banking. The market reaction to a predictable deferral of profit targets and an increase in energy losses reinforces that.
M&A cycle reaches "running out of ideas" phase 23 Feb 2016 Time Inc’s interest in Yahoo’s bits, a Deutsche Boerse-LSE marriage and merger talks - however unlikely – between Honeywell and United Technologies are all variations of deals that have been tried but failed for regulatory and other reasons. They may fare no better this time.
Sinophobic U.S. politics sting Western Digital 23 Feb 2016 CFIUS, the shadowy body that reviews deals on national-security grounds, is ostensibly apolitical. But the decision that scuppered a PRC firm’s $4 bln purchase of 15 pct of Western Digital looks like election-year pandering. It’s another headache for M&A sellers to contend with.
Viacom movie-studio stake sale is only the trailer 23 Feb 2016 CEO Philippe Dauman may sell a minority of Paramount Pictures. It’s a first step for the $15 bln media conglomerate that is under pressure from shareholders unhappy with Dauman’s leadership and Sumner Redstone’s control. Investors will clamor for a much bigger-budget revamp.
Cox: Let the Chinese buy Chicago’s stock exchange 23 Feb 2016 Congress is up in arms about an obscure Chongqing group swallowing the old but tiny Midwest bourse. It’s an outcry that badly misses the point. The deal will force the new owners to learn a thing or two about disclosure, robust regulation and the benefits of free capital markets.
Forget Bloomberg: Boris Johnson for U.S. president 23 Feb 2016 London’s maverick mayor, now openly opposed to UK Prime Minister David Cameron on Europe, hasn’t yet given up his American citizenship. In an imaginary world where Johnson has been exiled, here’s how he might campaign for the White House against Trump, Clinton, Bloomberg et al.
Time plus Yahoo conjures ghoulish AOL past 23 Feb 2016 Merging the $1.5 bln magazine publisher with the troubled $30 bln internet company’s core would be much like a smaller version of the epically bad Time Warner deal. Combining print and digital might make more sense now than in 2000. The financial contortions it would take don’t.
VW car buyback would speed emissions-scandal exit 23 Feb 2016 After five months, the German automaker hasn’t shown U.S. watchdogs that its diesel vehicles can meet environmental standards. Purchasing the worst clunkers might limit legal exposure, appease regulators and help end the fiasco. The hefty $5 bln cost could be money well spent.
Honeywell could snare UTC with Dow-DuPont formula 23 Feb 2016 A $160 bln merger of the aerospace conglomerates would be an antitrust mess. But like the chemical giants last year, their similar size, complementary units and overlapping shareholders may offer a solution: tax breaks to entice UTC and spin-offs to appease regulators.
Apple may test speech recognition of legal kind 22 Feb 2016 The tech giant’s refusal to help unlock a shooter’s iPhone raises tough issues. U.S. national security, a 225-year-old law and attack-survivors’ voices may force CEO Tim Cook’s hand, but his privacy points are strong. A novel free-speech argument could give the company an edge.
Alphabet sinks further into antitrust quagmire 22 Feb 2016 The European Commission may beef up its anti-competitive complaint against Google. U.S. authorities are probing the search giant, too. Proving abuses will be difficult, but the expanding scope means the company will have to expend more energy to pull itself out of the bog.
U.S. to kick foreign banks while they’re down 22 Feb 2016 European lenders, already clobbered by investors, face more pain from American watchdogs. New rules require the ring-fencing of big U.S. businesses, which means earmarking more capital and liquid assets. That will squeeze earnings further – but how much depends on the fine print.
Energy haves circle have-nots as oil crunch bites 22 Feb 2016 Balance sheets and the recent Saudi-Russia deal will be on industry bigwigs’ agenda at a yearly gathering in Houston. Eighteen months into the crude price slump, the sector is primed for more M&A as a dearth of funding for weak producers pushes them into stronger players’ arms.
Jeb Bush leaves Wall St establishment in the lurch 21 Feb 2016 The former Florida governor dropped out of the White House race, putting millions in donor money and big backers in play. With Trump ahead, financiers like Henry Kravis, a gaggle of Goldman execs and others are skeptically calculating whether a return on Rubio is worth the risk.
Argentina reaches endgame with bond adversaries 19 Feb 2016 A U.S. judge says he will allow the Latin American nation to resume paying creditors by March if Argentina’s Congress cooperates. He also praised President Mauricio Macri for helping forge a deal. Settlement looks like the only option for hedge fund Elliott and fellow holdouts.
Newfound fears of investor panic can be soothed 19 Feb 2016 There’s a greater chance that credit woes spark bank-like runs on mutual funds, a New York Fed study suggests. One reason is that such asset managers haven’t evolved with the times. Longer lockups for some would reduce the pain for both the funds and the financial system alike.
Petrobras may be swapping debt for bigger problems 18 Feb 2016 The troubled Brazilian oil giant could get some relief from state banks, which are considering converting up to $22 bln of its bonds into stock. The move would dilute current owners’ holdings, but the greater worry is a de facto renationalization by an erratic government.