Lloyds revival makes retail offer unnecessary 1 May 2015 The state-owned UK lender avoided new legal charges as underlying pre-tax profit rose 21 pct. Improved capital implies decent dividends. The government may think retail investors should share the upside. But banks are leveraged, cyclical investments better sold to institutions.
Inflation stages a small comeback 1 May 2015 Oil prices have rebounded 47 pct, U.S. wages are picking up and euro zone prices have stopped falling. The worst of this cycle’s disinflationary pressure is probably over. But an oil glut and an ageing world will temper inflation, even if GDP growth speeds up.
Market shakeout too incoherent to mark trends’ end 30 Apr 2015 The dollar has stopped rising, German bond yields have stopped falling and both are now flouting consensus expectations. Economic data can’t fully explain the sharp moves. The unwinding of traders’ positions can. But that is not a good enough reason to give up on big trends.
Nokia could end up paying more for Alcatel 30 Apr 2015 A weak quarter in wireless network equipment has disappointed investors in both Ericsson and now Nokia. If Alcatel holds up better, the case for Nokia buying this broader business will look stronger. So will the argument, already pushed by Odey, for giving Alcatel owners more.
Downstream cushions Shell while it waits for BG 30 Apr 2015 Like BP and Total, profit from refining and marketing limited pain from low oil prices for the Anglo-Dutch major. Short term, it will struggle. But there is value to be had from the $70 billion tie-up with BG. The deal synergies could well be higher than advertised.
Market could push BNP to lift capital ratios 30 Apr 2015 France’s biggest bank outdid forecasts with a 17.5 pct rise in first-quarter net profit to 1.6 bln euros. Yet BNP Paribas failed to grow its capital ratios. French banks aren’t yet under regulatory pressure. But with peers stronger, investors may require higher levels.
Renzi’s Italian gamble is worth taking 30 Apr 2015 Premier Matteo Renzi is using confidence votes to ram though electoral reform. He risks a government collapse, and has nearly torn his own party apart. Yet the law should reshape Italian politics for the better - and help the economy.
Britain’s Tories take prize for fiscal folly 30 Apr 2015 The big parties’ electoral manifestos all contain ill-advised pledges that look dubiously costed. Given they aim to cut the deficit more, the Conservatives’ silence on how to do so is more striking. Promising to freeze taxes in the next parliament is the silliest ruse yet.
Abu Dhabi’s $2.4bln hotel JV shows HK is still hot 30 Apr 2015 Tycoon Cheng Yu-tung’s offspring are shaking up property group New World Development. The sale of three top hotels to a joint venture with the Gulf sovereign fund shows that, despite falling visitor numbers and the slowdown in China, Hong Kong is still an attractive destination.
Sergio Marchionne a man on someone else’s mission 29 Apr 2015 Fiat Chrysler’s boss sounded like an activist investor in making a solid case for car industry consolidation while haranguing analysts. Yet his bizarre plea for help with mass mergers sent the company’s shares down 5 pct. That kind of backfire smacks more of ex-VW chair Ferdinand Piech.
Spanish bank recovery has sting in the tail 29 Apr 2015 Better GDP prospects, cheaper funding and lower provisions for bad loans are helping Spain’s lenders. Banks have reported sharp increases in profits in the first quarter of 2015. But pressure on net interest margins will create headwinds later this year.
Edward Hadas: UK housing and the fear of greatness 29 Apr 2015 London urgently needs to be rebuilt and expanded, but none of the leading candidates in the upcoming election promises to do much about the problem. This, like costly U.S. healthcare and high European unemployment, is a rich democracy inertia trap. Affluence retards boldness.
Barclays cost restraint adds to heat on Deutsche 29 Apr 2015 The UK bank’s hefty first-quarter provision implies it may be hit with an FX fine of as much as $3 bln. And ring-fencing costs remain an unknown quantity. But Barclays is making progress on expenses, and its targeted returns look higher than those of main rival Deutsche Bank.
Ready-reckoning the markets post-UK election 29 Apr 2015 Next week’s British general election is unlikely to produce a clear winner. But a government will eventually be formed, even if it takes a second vote. Different medium-term trends will emerge after the inevitable short-run volatility in sterling, gilts and UK-listed stocks.
Well-oiled performance shows VW on right track 29 Apr 2015 Volkswagen had a better-than-expected first quarter. Operating profit rose 16 pct to 3.3 bln euros. Trading woes cannot explain the boardroom battle launched and lost by ex-Chairman Ferdinand Piech. If VW modernises its governance and keeps delivering cost cuts, shares may motor.
Serial dealmaker makes smart truck stop in France 29 Apr 2015 Bradley Jacobs’ XPO is paying an undemanding 3.2 bln euros with debt for French trucking firm Norbert Dentressangle. The U.S. buyer’s timing is good: the euro is weak while France is increasingly open to deals. And the capital markets could hardly be better for M&A machines.
BP and Total find downstream respite 28 Apr 2015 Strong results in refining and marketing limited the profit fall at the two European majors. With the oil price down, the gains are especially welcome. But downstream overcapacity will bite in the medium term, while upstream businesses remain hostage to the oil market.
Roaring Daimler can rival BMW in investor rewards 28 Apr 2015 The Mercedes maker recorded its best ever quarter for sales and operating profit. With profit margins rising and a cash pile of 20 bln euros, it’s time to re-engineer the payout policy. BMW, which is mulling a special dividend in 2016, can again serve as a role model.
Economy can neither make nor break UK elections 28 Apr 2015 Britain’s quarterly growth rate has halved to 0.3 percent. The figure will become a political football days before a tight election. But it is not high enough for the ruling Conservatives to inspire voters with their economic track record and too high for rivals to damn them.
Commerzbank capital-raising recognises new reality 28 Apr 2015 The German lender is raising 1.4 bln euros to push its main capital ratio above 10 pct. Commerz once saw 8 pct as enough. But investors are taking a tougher stance and banks need to keep a new pan-European regulator sweet. More holdouts will capitulate.