Goldman’s NYSE exit further stokes HFT debate 1 Apr 2014 The Wall Street bank may yank its last humans from the exchange floor. It has also invested in electronic venues like BATS and is a big customer of newcomer IEX, which aims to neutralize high-frequency traders. Goldman’s timing is apt for the latest bout of market scrutiny.
Banking goliaths can indeed be tamed 1 Apr 2014 No country has ended the problem of maybe needing to rescue a hulking financial institution. A new IMF report, though, shows the United States has done a better job than most with stronger rules and less concentration. A $600 bln subsidies figure also gives lawmakers a target.
Deflationary world can still stoke asset inflation 1 Apr 2014 The U.S. economy is a test case for the baffling coexistence of inflated asset prices and disinflation in consumer prices. Poor capital utilization and wonky income distribution – a sharp drop in workers’ share, a jump in financiers’ take – help resolve the mystery.
High-speed traders just latest market rent-seekers 31 Mar 2014 In “Flash Boys” Michael Lewis claims they are rigging equity markets. Even the Goldman COO acknowledges concerns. New rules, taxes or structures could reduce unfair advantages. While someone has to make money making markets, profit shouldn’t be allowed to grow unchecked.
GM, regulator dabble in Wall Street shortcomings 31 Mar 2014 A combo of laziness, greed and incompetence characterized the response by the carmaker and its overseer to the ignition switch fault. In this sense, the Detroit saga echoes many of the corporate and regulatory failings that preceded - and contributed to - the financial crisis.
Mike Cavanagh takes a pushmi-pullyu pay cut 31 Mar 2014 Jamie Dimon’s protégé at JPMorgan is working for less at Carlyle, estimating his new incentive pay using recent results. On the one side, Cavanagh may have really wanted out of the banking grind. On the other, if he can help Carlyle grow a lot he could score a mega-payday.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
Official attention will make or break bitcoin 31 Mar 2014 Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.
Global house price surge calls for QE door to shut 31 Mar 2014 It’s too soon to call it a global bubble, but house prices are rising in most countries outside southern Europe. U.S. quantitative easing is a big factor, because capital inflows generated credit growth in emerging economies. Tighter monetary policy, now, is the simplest cure.
Boards’ defender-in-chief keeps fighting last war 28 Mar 2014 Lawyer Marty Lipton proved again at the New Orleans M&A confab that he can give as good as he gets. But prior panelists’ emphasis on improving governance and shareholder value made his swipes at activists seem dated. The legal lion is sounding more stubborn than persuasive.
U.S. LNG exports set for boost from Ukraine 28 Mar 2014 Though liquefying America’s plentiful gas for export makes business and economic sense, approvals are enmeshed in politics. U.S. gas wouldn’t reach Europe for years, but the energy implications of Kiev’s standoff with Moscow provide cover for lawmakers to give projects the nod.
Data realism conveniently saves Argentina $3.5 bln 28 Mar 2014 Last year’s growth was 3 pct officially, against expectations of a suspiciously high 5 pct. That allowed Argentina to avoid a payout on GDP-linked bonds. But the move toward more a credible economic policy has broader, lasting benefits too, like helping YPF borrow money abroad.
Review: Moneyball flaws can be found in finance 28 Mar 2014 “The Sabermetric Revolution” debunks some of the numerical analysis craze sweeping baseball. Two Smith College professors expose how many of the stats rely on poor measurement, dodgy theory and small data sets. Even good metrics quickly get arbitraged. Just like on Wall Street.
Putin may find more appeal in Arctic than ex-USSR 27 Mar 2014 The eight-member Arctic Council meeting this week may only talk about environmental issues. But the region holds some $17 trln of energy resources. Canada, Denmark and Russia all claim much of it. And Putin has upped his country’s military presence. A storm may lie ahead.
Venezuela’s oil diplomacy is past its sell-by date 27 Mar 2014 The Bolivarian Republic still gives about $9 bln a year in free crude to the likes of Cuba. Even ignoring domestic shortages of staples, that’s enough to cover, say, a year of debt service. With economic cracks widening, President Maduro could start by cutting off this largess.
How to slow runaway executive pay 27 Mar 2014 Pay for top U.S. executives continues to soar relative to both GDP and to middle incomes, raising inequality. Increased activism by shareholders and outsiders could help. So could targeted taxes on bosses and profit. Higher interest rates might also have a role to play.
Baxter puts conscious uncoupling on pharma radar 27 Mar 2014 The $40 bln healthcare giant is separating its biotech and medical products units. Baxter’s spinoff history suggests this latest move will create value for shareholders. This, and the success of Pfizer’s and Abbott’s recent splits, will encourage other pharma giants to follow.
Ken Lewis gets partial comeuppance for BofA mess 27 Mar 2014 The ex-CEO is paying $10 mln and is banned from top public company posts for three years to settle charges over BofA’s purchase of Merrill Lynch. It’s not much, especially with the bank adding another $6.3 bln in legal costs. But it’s a rare example of personal accountability.
Fed raises bar for Europe’s bank stress tests 27 Mar 2014 The Federal Reserve has found flaws in the U.S. capital plans of HSBC, RBS and Santander. While two American banks also failed the assessment, the focus on process shows the credibility of Europe’s stress tests will depend on more than capital quantum.
Citi’s latest fail should stress Mike O’Neill 27 Mar 2014 The Fed’s rejection of the mega-bank’s buyback and dividend plan is bad news for CEO Mike Corbat. The chairman, however, is more exposed. A similar flub two years ago helped convince him to oust then-boss Vikram Pandit. O’Neill may have to consider more radical action.