Americas

Occupy Wall Street may share fate of Coxey’s Army

12 October 2011

Like today’s demonstrators, Coxey’s 1894 march on Washington followed a period of deflation that increased inequality and a financial crash. Coxey failed, but his demands for stimulus spending and printing money became the standard response to recession. OWS should be so lucky.

Outage hastens BlackBerry’s slide into irrelevance

12 October 2011

A three-day global disruption has left users of the handheld gadget struggling to access email. The growth of other mobile devices and tablets means it’s less of a hassle than it once might have been. It may also persuade customers to dump their BlackBerries for good.

Harrisburg’s fall should inspire U.S. city leaders

12 October 2011

A costly incinerator debacle has sent the capital of Pennsylvania into Chapter 9 bankruptcy. It’s a wakeup call for other cities grappling with their own revenue shortfalls. The ability to govern in a crisis could be as important as fiscal prudence.

Alcoa’s miss could belie better earnings surprises

11 October 2011

Equity investors are braced for terrible Q3 earnings. On that basis, aluminum giant Alcoa lived up to expectations with the season’s results debut. But there may yet be bigger potential for shares on the upside. Investors appear to have already priced in much of the global gloom.

Obama’s jobs council promotes distorted reality

11 October 2011

Its report includes some good ideas, especially on deregulation. But it ignores the role of domestic savings; its ideas on infrastructure investments would be unproductive; and its support of immigration would worsen unemployment. You can tell GE’s Jeff Immelt chaired the panel.

Patent litigation becoming a vicious circle

11 October 2011

Motorola, which Google is buying, is the target of Intellectual Ventures, a patent-holding firm backed by Google. Such tail-chasing is a bad sign for the business of acquiring invention rights and suing for dollars. Innovative pursuits might yield better returns than lawsuits.

Embattled Wall Street should prepare for worse

11 October 2011

Bankers are already on the defensive. Third-quarter earnings look set to be shoddy. Another 10,000 job cuts may be in the offing. And protesters are ready to camp outside Jamie Dimon’s house. Yet financials have grown as a share of GDP since 2006, suggesting more pain is to come.

Private bondholders won’t make the IMF better

11 October 2011

Proposals to let the IMF tap private investors by issuing bonds look desperate. It could use extra cash to aid the euro crisis, but new funding might delay restructuring. It could also give the fund too much firepower and risk leaving it beholden to fickle market sentiment.

99 Cents Only shows the way to handle an MBO

11 October 2011

Instead of cozying up to the first buyout firm that came along, the discount retailer appointed independent directors to run an auction. They found a new buyer and 15 pct extra for shareholders, including the family owners. After the J Crew debacle, a fresh example is welcome.

Will Wells Fargo get hooked on Wall Street crack?

10 October 2011

The California-based lender has mostly resisted lower Manhattan’s siren call. New rules would make it even costlier. But Wells kept Wachovia’s investment bank and is hiring. Ailing Morgan Stanley could even be a good fit. But such temptation can become a debilitating addiction.

Sprint’s splat opens up U.S. wireless dance floor

10 October 2011

Bodies are piling up in the industry’s increasingly complicated waltz. Cash concerns tripped up Sprint and partner Clearwire, after AT&T and Phil Falcone’s LightSquared stumbled earlier. That makes space for a possibly jilted T-Mobile and a surprisingly dexterous Dish.

Oil trader, stock investor variance is opportunity

10 October 2011

Economic fear has taken a heavier toll on U.S. oil company shares than on crude itself. Either there are bargains among the stocks of oil explorers, or commodity investors are too bullish. The difference of opinion ought to mean there’s room to make money.

Wall Street dealmakers get trampled by PIIGS

10 October 2011

The fear and uncertainty over Europe has sent the cost of U.S. credit skyward. By one closely watched gauge, junk bonds are yielding almost five percentage points more than they reasonably should. Given the bureaucratic dithering, bankers and buyout barons may be idle for a while.

Sinopec shows quirks of Chinese resource M&A

10 October 2011

The Chinese energy group has offered a massive 120 pct premium for Canadian producer Daylight. Like similar Chinese deals, the $2.2 bln offer works because of strategic necessity, still-high commodity prices, cheap capital and a shareholder none too fussed about value creation.

Volcker Rule draft still leaves many gray areas

7 October 2011

U.S. regulators have made a good stab at trying to minimize the prop-trading ban’s impact on market-making. But their 200-page draft still raises many questions. It confirms that the former Fed chairman’s know-it-when-you-see-it mantra was too simplistic for this complex task.

Latest U.S. tax on rich would be counterproductive

7 October 2011

A 5.6 percent millionaire’s surtax is being pushed by Senate Democrats. Unlike Obama’s original scheme to limit deductions, which would help fix part of the tax code, this one doesn’t. The high marginal rates would encourage avoidance and risks dinging the already ailing economy.

U.S. jobs data confirm economy is muddling along

7 October 2011

The six-figure increase in employment in September beat expectations but wasn’t enough to cut long-term unemployment, which increased. Still, alongside positive manufacturing data, it suggests the outlook is for slow, patchy growth rather than a relapse into recession.

Del Monte settlement quantifies cost of conflicts

6 October 2011

Barclays will surrender a big slug of fees from the $5.3 bln buyout, where it advised the seller and financed the buyer, KKR. Wall Street read the writing on the wall after a judge’s slap. But when banks get spanked on the bottom line, the message resonates loud and clear.

Apple effect far greater than $350 bln market cap

6 October 2011

The company changed the world several times. It introduced the spreadsheet, made computers into consumer goods and its phones helped make the Cloud realistic. Jobs’ genius for design and user-helpfulness turned IT from nerdish to uber-cool. Apple has been tech’s good Pied Piper.

Goldman bankers may need to sacrifice more spoils

6 October 2011

A rare loss possibly looms after the market’s tumultuous Q3. But that assumes Goldman keeps socking away 44 pct of revenue for compensation. Cutting the pool, perhaps by a lot, would keep returns above water and shareholders sweet. And this solution may not be a short-term one.