AT&T is all dressed up with nowhere to go 12 Nov 2012 The telecom company had a $93 bln bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied the story. But it’s a sign of the problem AT&T faces: a lofty stock multiple makes M&A tempting, but it seems shut out of both domestic and foreign deals.
IPO may be better option for Vivendi’s Brazil unit 12 Nov 2012 The French company is courting top names to unload GVT. But Telecom Italia and Brazil’s Oi can’t afford the $9 bln price tag. And Brasilia could deny Carlos Slim’s America Movil a bigger role. With a full sale tough to achieve, returning GVT to the market may make sense.
U.S. energy autonomy leaves climate threat intact 12 Nov 2012 Booming output from gas and oil-rich shale should see the United States become energy-independent by 2035, according to the IEA. The geopolitical implications are huge. But despite gas’s cleaner, reassuring profile, the window for fighting destructive climate change is narrowing.
Inequality hits home for Wall Street middle class 12 Nov 2012 Pity all those 30-ish Greg Smiths who entered the industry after the dot-com bust and tirelessly served MDs minting record bonuses in the leverage boom. Now comp is down and their bosses aren’t moving. Even Goldman’s partnership must make way for the new realities of finance.
Who would argue with a U.S. millionaire tax hike? 9 Nov 2012 OK, millionaires would. But selling out the 250,000 super-rich by taxing them at Clinton-era rates might be the political compromise needed to avert the fiscal cliff. It would only raise a third less than hiking rates on Americans earning $200,000 but snag 2 mln fewer taxpayers.
Not all internet investors are irrational fools 9 Nov 2012 The reaction to Priceline’s $1.8 bln deal for rival travel website Kayak is a case in point. With no synergies or obvious industrial logic, it’s nice to see Priceline owners thwack the shares for the company’s adventurism. Internet stocks shouldn’t be a free pass to get stupid.
Diageo pays heady price for Indian spirits 9 Nov 2012 The UK drinks group will get up to 53.4 pct of United Spirits for $2 bln. Despite a weakened seller, that’s 20 times historic EBITDA with few synergies. But the long-term logic adds up if it helps CEO Paul Walsh position Diageo as the leader in giving emerging markets a buzz.
Riposte: Republican problem isn’t immigration 9 Nov 2012 Even if the GOP softened its opposition, more low-skill immigration would not win many converts, just create more Democrats. The biggest 2012 Republican failure was elsewhere: the low turnout of blue-collar whites. The cure is simple, don’t nominate a private equity titan.
Review: Embracing the psychopath within 9 Nov 2012 “The Wisdom of Psychopaths” is a good read lurking within a bad one. Amidst the showboating, Kevin Dutton’s book mines brain science to make a cogent case that some psychopathic traits - seen in CEOs, traders and monks as well as serial killers - are not only necessary, but good.
O-Burma trip rewards reformists for job half done 9 Nov 2012 Including Myanmar in the president’s first post-re-election trip abroad is reward for dramatic reforms and cultivates a key ally in the U.S. pivot to Asia. But it’s sure to antagonize China’s new leaders - and could reduce pressure on Myanmar to make to make even tougher changes.
Obama continuity is good for China-U.S. ties 8 Nov 2012 The U.S. president’s re-election allows him to engage Beijing’s new leaders right away. Obama may have to endure aggressive rhetoric as the regime builds credibility. If he does that and builds on recent prudent diplomacy, the two superpowers’ rivalry can be constructive.
Election reveals clear calculus: 47 pct > 1 pct 8 Nov 2012 Ultra-wealthy candidates and supporters - from the billionaire Koch brothers and their man Mitt Romney to pro wrestling maven Linda McMahon - learned the hard way that money can’t buy everything in America. Voting rights can be a great equalizer in a land of income inequality.
U.S. Republicans have an immigration problem 8 Nov 2012 Mitt Romney’s praise of “self-deportation” alienated two fast-growing ethnic groups. Two-thirds of Hispanics and an even higher portion of Asians supported Obama. The anti-immigrant stance doesn’t just squander votes. It costs Republicans money and threatens U.S. growth.
U.S. deal lawyers not as valuable as they may think 8 Nov 2012 Financial markets are indifferent to the legal terms of U.S. public company mergers, new research shows. That may be because most transactions close regardless of the fine print. M&A attorneys have uses, but agonizing over detailed wording isn’t the best way to serve clients.
Voters prove more predictable than markets 7 Nov 2012 The U.S. election was a triumph for more impartial pollsters. They got it right, using the same sort of statistical analysis which failed to anticipate the credit crunch. Voters are often accused of being superficial and irrational, but they’re much steadier than investors.
U.S. referendums suggest liberal high-tax future 7 Nov 2012 A California proposition raising taxes passed but others, like one prohibiting union campaign deductions, failed. Elsewhere gay marriage and ganja were favored while assisted suicide was spiked. Voters want government to serve, but not to meddle. Reconciling this won’t be easy.
New PIK-toggle surge doesn’t mean the end is nigh 7 Nov 2012 Investors should be wary of bonds that can pay IOUs in lieu of interest. But a rash of issuance to fund dividends to private equity firms doesn’t yet look like a 2007-2008 rerun. The recent deals have protections built in that should help keep reckless behavior in check.
At least Obama has a mandate – he really needs it 7 Nov 2012 Barack Obama’s decisive electoral win over rival Mitt Romney means the divisive Bush-Gore battle won’t be repeated. The U.S. economy, however, is in much worse shape than in 2000. Having a mandate helps, but the president, and the country, can’t get by with that alone.
New banking sheriff will aim further to the right 7 Nov 2012 Texas Republican Jeb Hensarling is likely to be the next chairman of the agenda-setting U.S. House Financial Services Committee. He wants to gut Dodd-Frank but is also keen to get Uncle Sam out of housing and refocus the Fed. Such a bold agenda could be tough to advance, though.
Sandy fiasco reveals investor-customer disconnect 7 Nov 2012 The storm that created up to $50 bln of damage across the East Coast left 8 mln customers without power, and ornery. Politicians are hopping mad, too. Yet the market values of the region’s major power utilities barely took a hit. If regulators do their job, that won’t last.