Fracking’s big benefit may be steadier oil prices 21 Jan 2014 Despite a price slide since the year-end, crude volatility is at 20-year lows. One explanation is the U.S.-centric shale boom. There’s more oil around, and drillers can respond more quickly to price moves. A damper on price swings should help companies and governments plan ahead.
Wealth Addicts Anonymous? It misses the point 20 Jan 2014 Ex-trader Sam Polk says that money-sucking finance types should meet up to get a grip on their bonus addiction. If such support groups are needed, meetings should start with a firm lecture on why greed is not good. But there’s a better way – common-sense pay regimes.
James Gorman gives investors rope to hang him with 17 Jan 2014 Morgan Stanley’s boss offset another rough quarter that included a 1 pct return on equity by laying out targets to finally make some half-decent coin. They look reasonable enough, but the bank has failed to deliver before. Gorman’s fifth year at the helm should be make or break.
Davos briefing offers scary set of global risks 17 Jan 2014 The World Economic Forum’s annual risk report gives the global elite plenty to worry about at next week’s shindig. It highlights issues like inequality and global warming, but also low-probability, high-impact dangers like another financial bust. That’s still a big concern.
Ex-Tyco chief’s release puts prosecutors on spot 17 Jan 2014 After more than eight years doing time, Dennis Kozlowski has paid his dues. Wall Street honchos haven’t. Their firms have been punished instead, at a high cost to investors and staff. Lucrative settlements and elusive proof don’t ease doubts about the government’s record.
Citigroup needs to channel boardroom aggression 16 Jan 2014 The mega-bank is alone among peers in missing estimates so far despite having its best year since 2006. It leaves Citi with a weak return on equity and market valuation. Mike Corbat, who rose to power via a harsh coup, can’t rely on cost cuts. He’ll have to scrap for revenue.
Gas deal means Brazil can also be seen from Alaska 16 Jan 2014 Sarah Palin’s gubernatorial successor has signed a deal for the state to take an equity stake in a $45 bln LNG project. The Last Frontier seems the last place likely to get entangled Latam-style with Exxon, BP and others. Oil production is falling, though, leaving fewer options.
Goldman ekes profit wind out of doldrums 16 Jan 2014 The Wall Street heavyweight’s top line barely budged last year, thanks to disappointing bond trading. And Lloyd Blankfein’s firm added staff. Yet net income jumped 8 pct on the back of cost cuts, not least Goldman’s new-found religion on pay. That’s something for shareholders.
Migration is an economic positive 16 Jan 2014 Immigrants to rich countries have little long-term effect on wages, unemployment or government finances. At worst, migration exposes defective economic structures. Overall it also helps poor sending lands, which gain habits and capital from destination countries.
Unemployment insurance wrong tool for tougher task 15 Jan 2014 Emergency relief made sense in the midst of the financial crisis. But a rising number of long-term jobless requires another approach. Training and incentives to relocate might better address structural workforce issues. They won’t come cheaply, but the investment could pay off.
World Bank boss Kim tested by Honduran loan fracas 15 Jan 2014 President Jim Kim’s goal of cutting $400 mln of expenses just got harder. With the bank under fire for lending to a company accused of thuggish behavior, the temptation will be to add red tape, slowing the already sluggish loan process and impeding efforts to cut poverty.
Supreme Court’s iffy economics cheat investors 15 Jan 2014 The top U.S. tribunal assumes prices of listed shares reflect all public data - even lies. That allows owners of widely traded stock to sue en masse for fraud but cuts out others. A Halliburton lawsuit gives the justices a chance to rethink the rules and focus on duped investors.
BofA on a roll, but investor zeal looks overdone 15 Jan 2014 Bumper results in wealth management and global banking helped the bank run by Brian Moynihan earn $3.4 bln. That’s just shy of a 10 pct equity return even with big legal costs. But it relied on a very low tax rate. BofA is rebounding, but setbacks are still possible.
Edward Hadas: Madoff/subprime – spot the difference 15 Jan 2014 The fraudster’s rise and fall has alarmingly close parallels to any story of financial boom and bust. Greedy investors rush to a hot manager, but his promises prove empty. Ironically, Madoff’s dupes will ultimately suffer less than legitimate subprime investors.
U.S. natural gas price finally reaches safety zone 15 Jan 2014 At near $4.50 per mln Btu, drillers can turn a profit on gas after several painful years. Cold weather has helped push up the price, but with demand rising it’s more than a blip. Meanwhile, production costs have come down. The likes of Exxon and Chesapeake can breathe easier.
GM’s dividend hits right spot on multiple levels 15 Jan 2014 At 30 pct of expected 2013 net income, it’s a punchy return to shareholder payouts. GM’s profit is rising, it has plenty of cash to handle its challenges and the timing implies shareholder returns rank ahead of executive pay. Mary Barra is set for a good first day as CEO.
Japan’s cheap debt drives Suntory’s animal spirits 15 Jan 2014 The privately-held booze group will borrow $14 bln to finance its bid for Beam, leaving it with more than twice the leverage of big rivals. Ultra-low funding costs make the debt burden affordable until growth comes through. The lesson will not be lost on the rest of Japan, Inc.
Another reason to be gloomy about emerging markets 15 Jan 2014 Workers in developing economies aren’t cranking up output as much as before. Fading productivity growth will put a brake on wages and consumption, and slow emerging markets’ quest to become less reliant on spenders in rich nations. Investors are right to be pessimistic.
Net neutrality requires bolder U.S. backing 14 Jan 2014 Washington’s communications watchdog tried not to regulate broadband providers while also preventing them from discriminating between content types. Now a court says it can’t have things both ways. With broadband pipes often oligopolies, internet users need Uncle Sam to step up.
Time Warner Cable can jack up Charter’s bill 14 Jan 2014 Charter’s $62 bln takeover bid contains no premium. Its first proposal last July didn’t either. The valuation falls short of other industry deals and in theory Time Warner Cable could be worth more by turning the tables on its suitor. Expect Charter to come up more than halfway.