Verizon taps out unwise riposte to new web rules 26 Feb 2015 Regulators are giving consumers a boost by preventing broadband providers from offering favorable treatment to certain clients. But the telecoms giant expressed its discontent in Morse code and then in old typeset. Disagreeing is fine. Taunting your overseer, though, is a risky move.
Oil finally percolating toward a level price 26 Feb 2015 U.S. light crude has rallied 12 pct from last month’s six-year low but is still shy of where shale drillers can profit. Higher demand and less capital spending may push prices up while steady output from Saudi Arabia and others limits their rise. About $60 a barrel looks likely.
JPMorgan pruning could help fees sprout anew 26 Feb 2015 The U.S. mega-bank may trim some Wall Street operations if returns don’t improve. It’s bad news for smaller rivals if one of the biggest players in rates and derivatives can’t make money in some areas. But if clients end up paying more, bank investors will eventually benefit.
Morgan Stanley makes $2.7 bln hit an afterthought 26 Feb 2015 Like Citi, the bank sprung a legal settlement on investors. Unlike its rival, Morgan Stanley has shunted the cost into the previous year, making 2014 profit barely more than half what was reported. That’s handy, if cynical, for a Wall Street firm keen to trumpet its turnaround.
Rob Cox: Welcome to the new, global Tangentopoli 26 Feb 2015 Corruption is causing trouble for elites from Sao Paulo to Virginia and Santiago to London. Inequality can be a tolerable byproduct of free-market capitalism, but not when the winners are profiting from a rigged system. As a new book argues, such gains encourage radicalism.
Iberdrola takes baby steps to grow U.S. business 26 Feb 2015 The Spanish utility is paying $3 billion mostly in shares to merge its U.S. assets with much smaller listed UIL. The U.S. has greater growth potential than Spain, and the price isn’t cheap. But the small cash outlay makes this a relatively low-risk, if not transformational, deal.
Fed critics confuse independence with lack of bias 25 Feb 2015 U.S. lawmakers accused central bank Chair Janet Yellen of playing political favorites. Revealing more about her meetings wouldn’t hurt. But Fed officials favor different economic models that may reflect party divisions. That doesn’t mean they aren’t making their own decisions.
Computer Sciences LBO talk rings unhappy bells 25 Feb 2015 Activist investor Jana and the $10 bln IT services firm’s bosses have incentives to sell. But past attempts to find a buyer for the company have foundered. Declining sales and vulnerable cash flow make it a tricky buyout candidate. Splitting it up may be a better first step.
Petrobras downgrade tests Rousseff’s fiscal faith 25 Feb 2015 The Moody’s decision to strip Brazil’s state oil giant of its investment-grade rating redoubles the need for the president to support her economic lieutenants, who are trying to repair Latin America’s biggest economy. To do so, Rousseff will have to face down rising resistance.
Solar strikes it rich in oil’s financial wells 25 Feb 2015 A SunPower and First Solar JV will pool assets in a company that could pay fat dividends. The renewable energy page out of fossil fuel’s playbook generated $1.5 bln of extra market value. The structure presents some conflicts and the pressure will be on to supply new projects.
Lowball SFX bid stops music at Wall Street rave 25 Feb 2015 Robert Sillerman, the U.S. entrepreneur trying to roll up EDM festivals as he did concerts, is offering 37 cents on the IPO dollar for the remainder of the firm he took public less than two years ago. It’s shameful treatment of public investors. They were, however, amply warned.
Social trends may point to higher yields, someday 25 Feb 2015 In 2005, a Barclays strategist suggested a declining population of savers could push bond and stock prices down. A decade later, a different strategist at the same bank says the same thing. It may work out in time, but demographics have more influence on GDP than asset values.
JPMorgan optimism reinforces industry mediocrity 24 Feb 2015 Jamie Dimon and crew reckon growth, cost cuts and new fees can boost earnings 43 pct and help silence talk of a breakup. Trouble is, the bank’s 2017 target puts tangible ROE at just 15 pct. That’s not bad but underscores what an unimpressive investment big banking has become.
Vague Yellen more likely to surprise than soothe 24 Feb 2015 The Fed chair deftly parried conflicting calls for more patience and higher interest rates in congressional testimony on Tuesday. What she didn’t do is offer clarity on the timing of a rate hike. The strategy may calm markets now but ensures everyone will be caught off guard.
Cheap oil highlights multifaceted resource curse 24 Feb 2015 Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.
Wall Street’s broker fight is another losing cause 23 Feb 2015 The White House is pushing new rules for agents and retirement advisers that the industry says will hurt investors and curb fees. Added duties are sensible, however. The clarity is probably worth the price and fledgling online startups should pick up some of the customer slack.
Armstrong flooring spin suggests breakup ceiling 23 Feb 2015 Investors typically roll out the welcome mat for corporate splits. Yet the $3 bln building materials group’s shares were nearly as flat as hardwood boards after it revealed plans to house its two units under separate roofs. Financial engineering can’t cover up every crack.
Deal junkie Valeant shoots up on $10 bln fix 23 Feb 2015 The drugmaker’s pledge last year to focus on organic growth and debt reduction didn’t last long. Cost cuts and tax savings from buying Salix proved irresistible. What Valeant’s injecting isn’t clear. Salix’s numbers are fuzzy after it admitted pumping clients full of inventory.
GM agitators run into union roadblock 23 Feb 2015 Dennis Williams, boss of 8.7 pct shareholder UAW, calls an $8 bln stock buyback demand from hedgie-backed Harry Wilson premature. GM may have loads of cash, but also investment needs and $26 bln of retiree costs. A smaller repurchase would be smarter and may avoid a bigger clash.
Trustbusters cook up simpler way to fry food deal 20 Feb 2015 The FTC need only raise “serious” questions to thwart Sysco’s $3.5 bln US Foods purchase. It’s an unusually low hurdle that has helped stall mergers like Whole Foods and Wild Oats. A bill that would change the rule may not pass in time to keep Sysco’s from going up in smoke.