Food deal shows how investors eat up synergies 9 Dec 2013 Sysco’s $3.5 bln purchase of US Foods received a rapturous reception with the buyer’s stock surging by as much as a quarter, or $5 bln. Hefty cost savings help the merger math. With this sort of reaction to deals, acquirers’ animal spirits won’t remain suppressed for long.
WTO’s small victory saves it from irrelevance 9 Dec 2013 The Bali deal to simplify customs rules lacks the drama of previous rounds. But after more than a decade of fruitless negotiation, it shows global agreements are still possible. The next challenge is to prevent future progress being confined to competing regional blocks.
Banks’ taper rehearsal gives emerging markets hope 9 Dec 2013 Global banks’ loans to developing countries fell by just 2 percent in the second quarter. Exclude Brazil, Russia, India and Mexico and credit actually rose. Lenders’ early calm response suggests the withdrawal of the Federal Reserve’s cash glut may be less painful than feared.
U.S. economic malaise may at last be wearing off 6 Dec 2013 America added 203,000 jobs last month and the unemployment rate dropped to 7 pct, adding to strong data like the third-quarter GDP growth rate of 3.6 pct. Reduced labor participation and sluggish wages are headwinds to a full-on recovery. But even a little normality is a relief.
Anti-troll bill missing patently obvious fixes 6 Dec 2013 Congress has made a good start on reining in firms that buy intellectual property just to file infringement suits. But true reform would block the vague and self-evident patents that fuel such claims. Lawmakers know the problem. If only they could muster the will to address it.
Benefits of being "G-SIFI" seem to outweigh costs 6 Dec 2013 Since regulators published a list of systemic institutions in 2011, the banks concerned have boosted capital and tamped down their balance sheets. But smaller lenders, particularly in Europe, have done the same. The “too big to fail” club turns out not to be too harsh after all.
Cheap money wrong cure for West’s long-term stasis 6 Dec 2013 Larry Summers seems to think years of negative real interest rates can end “secular stagnation”. That’s too optimistic. If the torpor is demographic and technological, it’s probably incurable. In that case, more money-printing will only bring new financial messes.
Deutsche ditch divines commoditized commodities 5 Dec 2013 The German bank is quitting energy and base metals trading. That should free up capital without hurting results. It’s a helpful step that others like Barclays and BNP Paribas may follow. It won’t, however, fully solve the bigger problem of a swoon making profits elusive for all.
U.S. trading overseer goes a little rogue 5 Dec 2013 Wall Street firms are suing the CFTC for bypassing standard practice when it issued tough guidance last month on overseas buying and selling of derivatives. U.S. dealers may suffer as a result. Absent the usual analyses and consultation, it’s hard for the agency to make its case.
Healthy U.S. GDP growth more mirage than reality 5 Dec 2013 Revising the Q3 estimate up to 3.6 pct sounds promising, but much of the gain came from inventory buildup. That suggests a return to sluggish expansion this quarter. Fueling sustainable growth requires more jobs and less Washington interference for the wealth effect to spread.
Japan’s yen glut is failing to lift global bonds 5 Dec 2013 With the central bank printing money at home, Japanese investors were supposed to be big buyers of global bonds. Instead they have been net sellers this year. While that’s changing, a yen deluge looks unlikely as long as investors remain afraid of the Federal Reserve’s next move.
Blackstone stock tells similar tale to Hilton’s 4 Dec 2013 The buyout firm’s traded units are at last nearing their $31 debut price of 2007. The recovery coincides with a profitable float of the hotelier, a $27 bln deal Blackstone struck the same year. While the results diverge for investors, both speak to private equity’s timing nous.
Forget museum art – Banksy might help Detroit 4 Dec 2013 Christie’s says artworks owned by the bankrupt Motor City could fetch up to $866 mln. That’s nearly 10 pct of unsecured creditors’ claims. But there’s no need to stop there. With 78,000 abandoned buildings and a Banksy tag worth $1 mln or more, graffiti could save the day.
Volcker Rule looking too complex to be practical 4 Dec 2013 U.S. watchdogs may soon adopt a stricter version of the law banning prop trading than expected. That may impede banks’ ability to hedge risk and trade for clients. Using a blend of metrics to raise red flags and regulatory power to intervene would be smarter and more realistic.
Detroit case revs up bankruptcy option for others 3 Dec 2013 Court approval of Motown’s filing may force bondholders, insurers and pensioners to share restructuring pain. The ruling also confirms bankruptcy as a credible choice for even the biggest cities. That could give shaky municipalities a needed kick to get their finances in order.
Investors plug Tesla back into stock supercharger 3 Dec 2013 The electric car maker’s shares revved up 15 pct after a positive Wall Street report. Fears over recent Model S fires had taken the high-flying stock down to an almost defensible 27 times 2016 profit. Now shareholders are again showing too much faith, too soon, in CEO Elon Musk.
Brazil’s GDP decline is fiscal wake-up call 3 Dec 2013 The economy shrank 0.5 pct in the third quarter. High interest rates and weak commodity prices are hitting growth. Though output rose 2.2 pct year-on-year, Dilma Rousseff’s public sector largesse is not a sustainable response. It’s a warning for emerging economies everywhere.
“Secular stagnation” lament revives wealth paradox 3 Dec 2013 Larry Summers has warned of long-term stasis in rich nations. If the former U.S. Treasury Secretary is right, emerging markets will need to invest more to end the savings glut causing the malaise. But that means confronting an old puzzle: why hasn’t capitalism solved the problem?
China’s market size gives it trust-busting clout 3 Dec 2013 One of the country’s competition watchdogs is investigating Qualcomm. Though details are scarce, a probe is likely to involve the mobile phone chipmaker’s approach to licensing technology. China’s big and fast-growing market gives it extra heft when going after foreign companies.
Canadian economy far from loony 2 Dec 2013 GDP expanded at a 2.7 pct rate in Q3, while stocks are up 8 pct in 2013. Housing may be set for a downturn and softer commodity prices don’t help. But its well-run banking system and moderate money supply growth mean Canada remains better crisis-proofed than most big economies.