Inflation could make a surprise comeback 24 Dec 2014 Price and wage increases look like endangered economic species. Falling commodity prices make it hard to imagine a comeback. But many policymakers would welcome a return of mild inflation. They might eventually get more than they want.
Edward Hadas: The virtues of job fidelity 24 Dec 2014 Companies can have their own purposes, characters and cultures. They can have an identity which is independent of government, and sometimes even opposed. But employers cannot be strong actors in civil society unless the staff are loyal to them and they are loyal to their staff.
Bank cyberinsurance is overdue to come of age 23 Dec 2014 It’s a confusing market, but growing fast. No wonder with a huge breach at JPMorgan in 2014, never mind monsters at Sony and Home Depot. Add a Washington campaign, and insurance may become standard. As well as financial cover, that could improve security – but only at the margin.
Kim Jong Un could succeed where Dan Loeb failed 23 Dec 2014 While it’s unlikely the North Korean leader wants to become a new kind of activist investor – despite the generous compensation – the hacking of Sony reignites the issue of whether the Japanese conglomerate should spin off its entertainment unit as Loeb’s Third Point suggested.
Positive U.S. momentum could grow in 2015 23 Dec 2014 Jitters like recessions abroad seem unlikely to derail America’s economic recovery as late-year growth, jobs and incomes came in unusually strong. Lower gas prices and the possibility that housing ticks up make even inevitable interest rate hikes look easy to shake off.
Uber takes patent office for ride on surge pricing 23 Dec 2014 The taxi app’s claim to own the idea of upping charges in peak hours is a stretch. Like the company’s other dubious IP filings, though, this one can slow rivals, at least temporarily. That may buoy investors anticipating an IPO, but the tactic risks fueling costly patent wars.
Meddling will be central banking’s new mantra 23 Dec 2014 Monetary authorities haven’t stopped being responsible for financial stability. But weak output and the threat of deflation mean they can’t raise interest rates to fulfil their mandate. That leaves macroprudential policies – meddling, in plain English – as the preferred tool.
Acquirers can expect more M&A investor skeptics 22 Dec 2014 There’s no reason to think the $3.2 trln pace of deals will slow in 2015, but the uproarious reception from shareholders is already showing signs of subsiding. As easy pickings of squeezing costs from overlapping operations evaporate, the laws of corporate finance will prevail.
First case against algorithm could reboot U.S. law 22 Dec 2014 A market manipulation prosecution essentially turns on whether one program duped another. That makes proving criminal intent seem futuristic at best. Similar obstacles could trip up other cases where software is the de facto defendant. Judges will tackle the issue in 2015.
Wall St’s $18 bln poker game has more rounds to go 22 Dec 2014 Apollo, Blackstone, Elliott and others are feuding over Caesars. Some senior bondholders in the casino group’s biggest unit back a bankruptcy that its parent’s merger with an affiliate could fund. Others may want to wait. And junior creditors have one card left: more litigation.
Pharma toys with mutually assured destruction 22 Dec 2014 Gilead lost $20 bln in value after Express Scripts ditched its hepatitis C treatment for AbbVie’s discounted drug. It may kick off widespread price wars throughout the sector. Such tactics, though, could be a strategic disaster for all concerned.
More than Slim odds America Movil buys T-Mobile 22 Dec 2014 Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.
Stick with BRIC 22 Dec 2014 It’s easy to mock the idea that the four biggest emerging markets – Brazil, Russia, India and China – will reshape the world economy. But the balance is still moving their way, even with slowdowns and Russian turmoil. Markets say otherwise because they were too keen at first.
China-U.S. shift will end Cold War peace dividend 22 Dec 2014 The PRC’s military outlays may match Uncle Sam’s in 15 years, while U.S. policy paired with Russian aggression could force up EU spending. Western defense firms face more competition, but added demand. Governments may have to choose between just rearming and an all-out arms race.
High-yield boom enters hold-your-nose territory 22 Dec 2014 With defaults and interest rates low, junk bond sales have broken records. Central banks won’t stop the party in 2015. So investors will keep chasing yield, despite a market sell-off, a few blow-ups and rising corporate indebtedness. That will store up trouble.
Activists may take the Pepsi, and Coke, challenge 19 Dec 2014 Thanks to stagnant sales the world’s top soda makers – with $300 bln of combined market cap – already attracted agitators in 2014. Now Pepsi is risking a proxy fight over billionaire Nelson Peltz’s break-up plan. Coke, too, may face a radical shake-up if it can’t reignite growth.
Review: An Icelandic tycoon’s sorry saga 19 Dec 2014 Thor Bjorgolfsson embodies Iceland’s volcanic rise and fall. He made a fortune in post-Soviet Europe, lost a bank in 2008 and caused Deutsche Bank years of grief with Actavis. This deal junkie’s memoir is self-critical in parts - but unlikely to win many new friends in Reykjavik.
Thai Union sets right flavour for Asian food M&A 19 Dec 2014 When little-known Asian buyers pounce on foreign companies, the resulting deals are often overpriced or lacking in strategy. The $1.5 bln Thai purchase of U.S. tinned seafood company Bumble Bee swims against the tide. Thai Union’s focused, low-key approach has lessons for others.
Dry powder may explode in buyout barons’ faces 18 Dec 2014 Everything is going up in private equity except deal volume. Acquisition multiples are at a record high, as is competition from corporate buyers. For big firms such as Apollo and Blackstone, $1.5 trln of purchasing power may be tough to deploy without cratering returns.
Rampaging animal spirits birth biotech unicorn 18 Dec 2014 The public offering of Juno Therapeutics presents an apt finale to the best year for biotech IPOs. It’s only a year old and revenue free, but its cancer fighting technology is hot. Juno’s $2 bln valuation shows capitalism’s ability to catalyze investors’ hopes and resources.