Behold the unversion: an inversion in all but name 8 Aug 2014 U.S.-based data protection firm SafeNet may slash its tax rate as part of a cross-border deal. Instead of doing so by acquiring overseas, though, it is simply selling itself to Dutch digital security company Gemalto. It shows the limitations of a possible ban on inversions.
Pemex troubles could drag down Mexican oil 8 Aug 2014 The nation is lifting its 75-year ban on private drilling while easing costs at the state-owned energy giant. That may boost falling output but won’t do much to make Pemex more efficient. Without a broader overhaul of the company, plans for an oil and gas revival may flounder.
Credit score change tests U.S. bank reform resolve 8 Aug 2014 Revising so-called FICO math mainly reflects political pressure to help more Americans borrow. It’s a bit like the government’s push for home ownership before the 2008 crisis. So far, bank regulators are mostly still leaning the other way. But lenders can also play their part.
Demographic doomsayers missing shades of grey 8 Aug 2014 Moody’s is the latest to predict slower GDP growth in ageing nations. Reality is likely to be much less gloomy. Besides, economic output is an especially poor gauge of prosperity when population gains slow and reverse. It’s the debt in the census trends that looks burdensome.
Private equity discord is best collusion defense 7 Aug 2014 Blackstone, KKR and TPG are paying $325 mln to resolve allegations that they conspired to limit buyout prices. Three other firms previously settled for less. Carlyle is holding out for now. Legally, there’s safety in numbers. Yet they can’t even agree on how to resolve the case.
BofA swaps legal fight for earnings battle 7 Aug 2014 A $16.5 billion settlement with the U.S. government would resolve most of the bank’s mortgage woes. But CEO Brian Moynihan needs to find up to $10 billion extra a year to create a respectable bottom line. That will require costs cuts, tax breaks and higher interest rates.
Rob Cox: Ushering Eric Cantor to revolving door 7 Aug 2014 The summer parlor game from Wall Street to K Street to Meadow Lane in the Hamptons is guessing where the former U.S. House majority leader will work after decamping from Congress. It’s easy to imagine how a recruiter might try to put his experience to good – and lucrative – use.
Colombia sets example for U.S. and Africa alike 7 Aug 2014 Small deficits and sound monetary policy contrast with Uncle Sam’s. And the Latam nation’s rapid growth puts similarly-sized South Africa and others in the shade. Peace, new infrastructure and pragmatism should help make President Santos’ second term another economic success.
Walgreen encounters uncommon inversion boundary 6 Aug 2014 The drugstore chain will keep flying the U.S. flag even after buying the rest of Swiss-based Alliance Boots for $15 bln. A backlash against corporate emigration may have affected Walgreen’s decision, but harder numbers probably mattered more. Expect more tax arbitrage deals.
Edward Hadas: Why the global recovery is so slow 6 Aug 2014 Reducing GDP growth forecasts has become an annual ritual. The main problem isn’t bad monetary and fiscal policy, as the secular stagnation theory claims. Blame the stifling effect of excessive debt and asymmetric modern labour practices. The best cure is to focus on jobs.
Wall Street watchdog looks wimpy ducking court 6 Aug 2014 The SEC is using its own administrative judges to hear more complaints, as the Dodd-Frank law allows. That may make lawsuits easier to win, but it weakens judicial oversight and suspects’ legal rights. Stronger cases, not friendlier jurists, would serve the regulator better.
Dollar set to take pound’s strong currency title 6 Aug 2014 Sterling became the FX market strongman during the past year as investors started to believe the UK would be the first big economy to raise rates. They may be right. Even so, shifting market expectations of when U.S. rates will be hiked now look set to boost the dollar.
SoftBank’s U.S. mobile retreat is least bad option 6 Aug 2014 The Japanese group has bowed to hostile regulators and scrapped its Sprint unit’s $32 bln takeover of T-Mobile US. Withdrawing avoids months of antitrust limbo and leaves open the option of a future deal. For now, SoftBank’s ambitions in American mobile will be more modest.
Murdoch miscalculation points to Time Warner value 5 Aug 2014 The media mogul abruptly yanked an $80 bln offer after failing to anticipate his quarry’s resolve and price demands of investors. Fox shares rallied while Time Warner’s retreated toward their pre-bid level. That leaves refusenik boss Jeff Bewkes with something more to prove.
Bank living-will flop may open door for boutiques 5 Aug 2014 Watchdogs have again rejected crisis breakup plans from the likes of JPMorgan and Goldman Sachs. Granted, this Dodd-Frank requirement is not as important as once thought. But if mega-banks can’t get it right, perhaps their smaller rivals’ restructuring units would have more luck.
Gannett split puts digital on wrong side of divide 5 Aug 2014 The media company is spinning off newspapers, including USA Today, to unburden its TV arm. Cars.com, which Gannett is buying at a $2.5 bln valuation, would have buffered the weaker half in a similar way to Rupert Murdoch’s News Corp carve-up. Instead, print must stand on its own.
Investment is America’s key to African riches 5 Aug 2014 Africa’s goods trade with the U.S. totaled only $63 bln in 2013, a fraction of exchanges with China and the EU. America finds many resources nearer home. But as the $14 bln of investments on show at Tuesday’s Washington summit show, its big companies can tap into African growth.
Vivendi can push for more in GVT sale 5 Aug 2014 The French group got a 6.7 bln euro bid for Brazilian broadband unit GVT from Telefonica. Some natural counter-bidders will struggle to respond but Vivendi could still try to start an auction. At the least it could demand a higher price and more cash from its Spanish suitor.
Vladimir Putin is the new bad weather 4 Aug 2014 The bogeyman of Ukrainian unrest is replacing snow as a reason to expect worse earnings. Just ask VW, Adidas or McDonald’s. The World Cup goes the other way, helping Adidas (again), Twitter and maybe Disney. The message could be muddled when Russia and soccer converge in 2018.
U.S. corporate émigrés may one day long for home 4 Aug 2014 High-flyers at firms like Goldman Sachs sometimes think they can do better striking out alone – only to fail for lack of the business card they’d undervalued. So it may prove with U.S. companies that invert, merging with foreign firms to gain domicile overseas and save on taxes.