Goldman shows commerce and governments don’t mix 30 Jan 2014 Danish politicians are angry the U.S. bank is lead investor in the recapitalisation of state-run Dong Energy. It shows that banks can’t be too commercial with government business. And Goldman’s reputation for always being on the better side of deals can backfire.
Vodafone has upper hand in Spanish cable fight 30 Jan 2014 The mobile giant is vying with the acquisitive Liberty Global for Ono, the 7 bln euro Spanish cable group. Financial heft, strategic need and synergies all point to Vodafone winning again, as it did in Germany. But Spain is a tougher market so Vodafone needs to stay disciplined.
U.S. GDP glass begins to look more than half full 30 Jan 2014 Output increased at a 3.2 pct rate in the fourth quarter. That’s decent, but the details look better than the headline. Exports rose sharply and the private sector more than compensated for shrinking government. Even low savings may now get a boost from Obama’s new MyRAs.
Market ructions mask underlying complacency 30 Jan 2014 Equity markets have given investors a scare in the past week. But options prices show they are pretty sure the selloff won’t snowball in coming months and market swings will subside. Confidence that very low volatility is here to stay may well turn out to be complacency.
Exxon outlays should pump up 2014 after down year 30 Jan 2014 The oil giant’s quarterly profit slid 16 pct to $8.4 bln due to sluggish oil and gas production and record capital spending. But output should pick up as mega-projects stop guzzling funds and go online. With cash beginning to flow, investors can look forward to brighter times.
Free weekends won’t restore Wall Street’s allure 30 Jan 2014 Investment banks used to offer juniors a simple tradeoff: long hours for future riches and prestige. Now they’re making up for shrunken bonuses and social cachet by easing workloads. But clients still demand round-the-clock service. A Wall Street career is no longer a no-brainer.
Markets give central bankers lessons in humility 30 Jan 2014 Monetary authorities should have already been chastened by the doubtful results of extreme policies in developed economies. Now they are learning how hard it is to switch direction. And emerging markets are showing that no policy rate is right when the economy is wrong.
Lenovo’s M&A spree challenges investors’ faith 30 Jan 2014 The Chinese group is buying Google’s Motorola phones just days after picking up IBM’s low-end server unit. The two loss-making divisions will cost up to $5.2 bln. Though there’s some strategic logic, shareholders have few details to help them work out whether the deals stack up.
Google salvages insurance from its biggest deal 30 Jan 2014 Selling Motorola Mobility to Lenovo for $2.9 bln after buying it for $12.5 bln barely two years ago looks awful. The search giant extracted some value, however, and is keeping loads of patents. The deal was still costly, but it did find a kind of protection for the Android world.
Facebook has another mobile call to answer 29 Jan 2014 The $130 bln social network defied skeptics by generating over half its Q4 ad sales from portable devices, up from zero two years ago. The number of daily visitors is also quickly on the rise. Selling more ads is one thing, though. Making them targeted and unobtrusive is another.
Yellen’s unanimous Fed welcome may not last 29 Jan 2014 At Bernanke’s final FOMC meeting, all voters were for once agreed on cutting QE by another $10 bln to $65 bln a month. Despite emerging-market volatility, the U.S. economy seems to be normalizing fast. Consensus may again become harder to forge if the Fed has to catch up.
Men’s Wearhouse gets caught with its pants down 29 Jan 2014 The U.S. suit peddler rejected Jos. A. Bank’s approach partly because of “significant antitrust concerns.” Now, competition authorities are digging deeper into the table-turning offer made by Men’s Wearhouse. It’s an ominous sign for a deal that once looked tailor-made.
Forget WTI – Louisiana crude is the new spread bet 29 Jan 2014 With U.S. output surging, West Texas Intermediate oil costs less than global Brent crude by about $11 a barrel at present. Louisiana Light Sweet, though, still trades nearer the world price. With no sign of American production growth slowing, that discount will soon widen.
Obama’s retirement plan may start more than saving 29 Jan 2014 Making it easier for U.S. workers to sock away money for their golden years is admirable. Many won’t have a buck to invest now and real returns would be 0.4 pct. That’ll change, though. And the project may create a big Treasuries buyer and make Social Security easier to reform.
Fiat-Chrysler debut marred by Agnelli power grab 29 Jan 2014 The Italian carmaker not only bought its U.S. rival on the cheap. It’s also creating a “loyalty scheme” giving long-term holders extra voting rights. That may help ward off activist investors. But it could also boost the founding family’s control from 30 pct to more than 40 pct.
Sotheby’s revamps financial science – now for art 29 Jan 2014 The auctioneer’s stock popped on news of a $300 mln special dividend and a more disciplined approach to investment. The plan addresses finance aspects of the critique by activist investor Dan Loeb. But governance and broader strategy – say, in contemporary art – remain at issue.
Edward Hadas: Don’t be afraid of deflation 29 Jan 2014 Christine Lagarde is wrong to call deflation an ogre. There’s no chance of falling into a destructive cycle of debt deflation, and mild deflation does no economic harm. If she wants to slay a monster, the IMF chief should take aim at the real beast – debt.
Apple numbers show scale of China challenge 29 Jan 2014 Disappointing global sales increase pressure on the iPhone maker to gain ground in the People’s Republic. A deal with China Mobile helps. But lifting China market share to just 10 percent requires a 75 percent jump in orders this year. Lower-cost rivals make that a tall order.
Good corporate governance doesn’t go out of style 28 Jan 2014 Just ask the shareholders of mall fixture Abercrombie & Fitch. The no-longer so fashionable retailer separated the roles of chairman and CEO and dropped a poison pill. Its market value popped some 5 pct, or $130 mln. It’s worth giving shareholders the rights they deserve.
Miners make a tempting but risky activist target 28 Jan 2014 A hedge fund’s call to break up struggling iron ore producer Cliffs suggests U.S. mining may be a fertile sector for pushy investors, just as oil exploration has been. But long paybacks and gyrating commodity prices make even good strategic ideas tough to turn into timely profit.