Market signals turning point in U.S. gun debate 18 Dec 2012 Private equity isn’t known for squeamishness - or for dumping promising investments. So it’s significant that Cerberus is selling firearms maker Freedom Group following the Newtown school atrocity. Gunmakers’ shares are plunging, too: big money is betting on tougher restrictions.
Jefferies puts Wall Street’s dilemma in a nutshell 18 Dec 2012 The firm reported record annual revenue but only a paltry 8 pct return on equity. CEO Richard Handler, like bosses of larger rivals, wants to improve on that. He has a tax-efficient merger on the cards to help. But without an upturn or big cost cuts, others won’t be so lucky.
Rising US inequality shows need for fiscal reform 18 Dec 2012 A Reuters study shows tax changes and federal outsourcing have helped funnel income to the well-off at the expense of the poor and middle class. Such polarization can slow economic growth and fuel financial instability. Restoring some balance would be both just and rational.
Grains are the commodities to watch in 2013 18 Dec 2012 Iffy global economics make it hard to gauge the outlook for copper and iron ore. Grains are different. Stocks are low and the drought that hit harvests in 2012 has continued. Low rainfall is also hitting river-borne U.S. trade routes. Expect prices to stay high.
Congress should push for mandatory gun insurance 17 Dec 2012 Firearm ownership is a U.S. constitutional right. But it comes at a cost. Requiring liability coverage could pass legal muster while helping to compensate victims. The market might also do a better job than politicians at keeping the most dangerous weapons from unstable hands.
U.S. VAT could become practical politics in 2013 17 Dec 2012 Washington’s budget spat shows that reducing deficits will be tough without new sources of revenue. A value-added tax could soon become a serious option. Using VAT to replace other taxes, especially corporate levies, could help boost U.S. competitiveness and growth.
Warning to investors: Chavismo doesn’t need Chavez 17 Dec 2012 A big win for the Venezuelan president’s allies in regional elections, despite his absence for cancer treatment, hints at the popularity of his approach. Anyone hoping that Chavez’s successor will have to ditch his ideology for more market-friendly policies should take note.
Central bank independence at risk in 2013 17 Dec 2012 The Fed celebrates its centennial next year. In recent decades the independence of the U.S. lender of last resort and its peers elsewhere has become an article of faith. But with Western central bank balance sheets swelling toward 30 pct of GDP, that faith is far from rock solid.
When your town is Newtown 17 Dec 2012 The scene of last week’s school massacre is a bucolic New England town with a deep sense of community. That will play a crucial role as its residents deal with their grief, says Breakingviews Editor Rob Cox, who grew up in Newtown and returned to live there with his family.
Review: Every monetary system needs a Paul Volcker 14 Dec 2012 William Silber’s biography praises the man whose determination and integrity overcame U.S. inflation with monetary policies the opposite of today’s, against opposition from politicians and economists. Yet once his work was done, policy slid back and his abilities were wasted.
Other banks may take most of the UBS Libor pain 14 Dec 2012 The Swiss lender is set to pay $1 bln for fiddling interbank rates. That’s more than twice as much as Barclays, which lost a CEO over the case. After many reputational blows, UBS has less to lose. But fellow Libor miscreants will be looking at an even more hostile world.
What if regulation makes finance more efficient? 13 Dec 2012 Though technology and innovation have squeezed trading costs, the industry’s profits are accounting for a bigger share of U.S. GDP, a former Goldman banker says, needlessly diverting some $635 bln from the broader economy. It lends credence to ideas like a transaction tax.
Brazil’s ailing oil industry needs a nudge 13 Dec 2012 Petrobras can’t meet output targets. The fallout from Chevron’s spill is making it hard for companies to hire. And Eike Batista overhyped OGX, whose value has plummeted. The country’s once-promising oil bounty is going to waste. A revival may need fresh thinking from Brasilia.
Sprint confronts starry-eyed activists 13 Dec 2012 The U.S. mobile operator being acquired by Japan’s Softbank is offering $2.1 bln to buy the rest of Clearwire. The 5 pct premium won’t satisfy uppity investors who want Clearwire to seek other options. Sprint’s control limits their power, but they could elicit a sweetener.
Central bankers may embrace old enemy: inflation 13 Dec 2012 Central banks in developed economies have been trying to juice the economy for years, without much success. As they run out of fresh ideas to battle the doldrums in 2013, they may reluctantly decide that debt-melting price increases are the least bad way forward.
Difference between "and" and "or" could undo Fed 12 Dec 2012 As well as saying it will buy more bonds, the U.S. central bank replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.
TripAdvisor deal excludes regular shareholders 12 Dec 2012 Barry Diller sold shares in the internet travel group to Liberty Interactive at a 63 pct premium. John Malone’s group paid up to regain voting control over its other shares. As so often where there’s supervoting stock, the moguls’ games have left ordinary owners powerless.
Too big to fail looks on its way to being licked 12 Dec 2012 The Bank of England and FDIC sound pretty confident they could resolve a massive bank failure. It’s hard to know without a test case. But by making bigger U.S. banks pay more to fund themselves in the capital markets, investors may be showing they agree with the watchdogs.
Michigan opens up to good and bad of globalization 12 Dec 2012 The home of the U.S. auto industry has joined 23 other states that allow workers to opt out of union membership. That could attract jobs, but is also likely to bring lower average wages. In a global market, becoming sustainably competitive isn’t necessarily comfortable.
SolarCity IPO valuation approaches earth 12 Dec 2012 The U.S. solar panel installer slashed its expected sale price by more than 40 pct at the last moment. The old price, some six times 2012 revenue, always looked starry-eyed - even with the involvement of Tesla guru Elon Musk. The new price merely requires optimism.