Review: Breaking central banking’s last taboo 23 Oct 2015 Policymakers are struggling with a debt hangover while trying to avoid another crisis. Current methods won’t work, Adair Turner argues in “Between Debt and the Devil”. He wants to drop the prohibition on printing money. But that still requires placing our faith in central banks.
Tsipras shoots himself in foot by firing tax boss 22 Oct 2015 The Greek prime minister’s decision to sack the head of the supposedly independent tax authority will ring alarm bells with the country’s creditors. It could throw the entire bailout programme – including bank recapitalisation and debt relief – off track.
Publicis a great advert for media-sector anxieties 22 Oct 2015 The French ad giant’s shares dropped more than 9 pct after cutting full-year guidance on organic growth. Publicis says some clients are reducing ad spend in the U.S. Yet rivals are doing better. With an uncertain media outlook, investors have little tolerance for underperformers.
Hadas: The world would be better off without debt 22 Oct 2015 Why do governments borrow instead of just creating money? Mostly because they always have. Why do companies feel the need to take on leverage? Foolish tradition. If the financial world were designed for today’s economy, fixed-rate reimbursable debt wouldn’t be created.
Beijing backing for UK nuclear comes at high price 22 Oct 2015 China and France’s EDF are nearing an 18 billion pound N-plant deal at Hinkley. Long horizons make the economics hard to judge, but at current prices Britain is on the hook for 1 billion pounds a year in implied subsidies. The price of Chinese support is fiendish complexity.
Carney signals British establishment’s pro-EU view 22 Oct 2015 The central bank governor thinks Europe has been a good thing for the UK. Mark Carney’s Oxford speech focused on monetary and financial stability. But he set the tone for what is fast becoming Britain’s official, pro-European stance.
Big banks win by a whisker in UK competition probe 22 Oct 2015 Britain’s antitrust watchdog has ducked breaking up the country’s four dominant lenders, or taking the sensible step of banning “free” current accounts. Smaller banks will still find it tough to grow. As for bank account holders themselves, they will be little better off.
Time is missing brick for Vonovia merger ambition 22 Oct 2015 The residential landlord has shot down a tie-up of rivals Deutsche Wohnen and LEG. Instead, eventually, Vonovia and Wohnen are likely to merge. But stretched Vonovia is ill-placed to table a convincing bid right now. It can come back after having digested previous acquisitions.
Ferrari parks its $9.8 bln IPO in hybrid spot 21 Oct 2015 Fiat Chrysler priced its luxury unit at the top of the range and got a boost in early trading. That’s a better performance than most recent public offerings. But Ferrari doesn’t merit the Prada-like value boss Sergio Marchionne wanted. For now, it’s driving in the middle lane.
Starbucks and Fiat dragged along in fair tax tide 21 Oct 2015 The European Commission’s classification of corporate tax favours as unfair state aid makes sense, even if the two companies broke no laws. Corporate treasurers should note the trend. Following bank tax secrecy, corporate tax havens are very gradually heading for extinction.
Portugal may be a test for centripetal politics 21 Oct 2015 The opposition Socialists are willing to team up with parties further to the left in order to take power. Markets may have been naive to underestimate politicians’ ambitions. Greece sends a reassuring message that power can bring even idealist firebrands closer to the centre.
UK may have way round property-fuelled bank busts 21 Oct 2015 The Bank of England is looking at judging commercial real estate borrowing on long-term property values, not market prices. Good plan - too much bank lending just pushes up prices, inflating bubbles. But it will be hard to extend the plan to excess-prone housing markets.
Credit Suisse will struggle to shed subpar UBS tag 21 Oct 2015 New boss Tidjane Thiam is raising $6.3 bln and cutting costs to turn Credit Suisse into a wealth manager first, rather than private-cum-investment bank hybrid. Yet cross-town rival UBS is already ahead in that respect. Swiss acquisitions are logical, but growth could be elusive.
Syngenta CEO exit opens door to opportunists 21 Oct 2015 Mike Mack will leave the $30 bln Swiss agrochemical company. Shareholders grumbled that the company fumbled a bid from Monsanto. New leadership may be more credible than Mack in cutting costs. Meanwhile, Syngenta looks more open to a bid or a breakup.
Pearson profit scare raises existential questions 21 Oct 2015 Shares in the educational publisher fell more than 15 pct as Pearson warned earnings would suffer in part due to lower college enrolments in the U.S., a crucial market. The sharp share drop suggests investors believe Pearson faces structural, rather than cyclical, headwinds.
Electra and its activist should bury the hatchet 21 Oct 2015 The private equity investment trust is in open conflict with its near-30 percent shareholder. Sherborne’s Edward Bramson wants board seats. Electra hates the very idea but should yield. Otherwise, it risks total, humiliating and unnecessary defeat.
ABB’s weakening cash generation is concerning 21 Oct 2015 The Swiss engineer’s cost-cutting zeal bore fruit in the third quarter. But despite squeezing working capital by $845 mln, its cash generation fell year-on-year. ABB is already dogged by slow growth and falling orders. Customers paying up more slowly is an unwelcome trend.
Auto sector should fear Oslo as much as Apple 20 Oct 2015 Norway’s capital will ban cars by 2019. This delivers obvious benefits like clean air, less noise and fewer crashes. If public transport can keep up, Oslo’s move could be the auto equivalent of New York’s 2002 smoking ban, and disrupt carmakers just as much as new tech rivals.
Merkel deserves to survive migrant crisis 20 Oct 2015 The German chancellor’s welcome to refugees is backfiring at home. Critics abound in her own party, her popularity is low and right-wing populists are flourishing. Yet Merkel has two things in her favour: the German economy looks solid and her opponents lack a credible leader.
Deutsche’s fat finger points in helpful direction 20 Oct 2015 Germany’s biggest bank erroneously paid $6 bln to a hedge fund client in June. Howlers like this are common in trading. But this is embarrassing for Deutsche Bank given its supposed aptitude. At least co-CEO John Cryan may find it easier to pursue some much-needed trimming.