Mark Carney’s triple-bind is recipe for BoE stasis 11 Mar 2015 The UK economy is doing pretty well, which argues for a rate hike. But sterling’s export-denting rise against the euro is a reason to consider extra stimulus. And risks to the housing market abound either way. The Bank of England chief may just leave policy on hold for a while.
UK can get by without homegrown investment banks 11 Mar 2015 Downsizing at RBS and Barclays means Britain has lost two full-scale universal banks. That may upset the odd corporate relationship and dent national pride. But a successful UK-owned broker-dealer is like Andy Murray winning Wimbledon: nice to have, but not essential.
Wood Mackenzie’s pipeline defies oil rout 10 Mar 2015 The research firm is fetching $2.8 bln, or 17 times EBITDA, from U.S. analytics company Verisk. WoodMac has gushed profit for several buyout firms. The global energy squeeze presents a risk for the new owner, but demand for data seems to persist regardless of crude supply.
Germany’s problem banks are running out of friends 10 Mar 2015 The ropey Landesbanken lack a business model and access to capital: state owners that paid for previous bailouts are maxed out. Now some of their other stakeholders – Sparkassen savings banks – want to cap their exposure. That could hasten much-needed consolidation.
Credit Suisse finds CEO industry fears – but needs 10 Mar 2015 Tidjane Thiam, who will replace Brady Dougan in July, has no ties or loyalty to investment or private banking. And he has a reputation for making bold moves. It’s a combination that should send shivers not just through Credit Suisse, but the City and Wall Street, too.
Next Prudential chief’s job harder than it looks 10 Mar 2015 Tidjane Thiam’s successor inherits a business with a good strategy that generates lots of cash. As moving the Pru’s domicile is off the agenda, the new CEO’s plan should be more of the same. That makes it difficult to make a mark – but with plenty of downside if things slow down.
RWE’s last, dim hope is political support 10 Mar 2015 The stricken German utility is more than keeping its promises on restructuring. But the company’s operating performance will still get worse, as heavily subsidised green energy pushes electricity prices down. The old utilities want the government to help, but that’s a long shot.
Credit Suisse buys some insurance with Pru CEO 10 Mar 2015 Hiring Tidjane Thiam to replace Brady Dougan should bring a fresh perspective to capital and cost conundrums. The former consultant may encounter skeptical dealmakers and regulators. Even so, his decision to leave the fast-growing UK insurer is a vote of confidence in banking.
U.S. issuers will find limit to cheap euro funding 9 Mar 2015 Berkshire Hathaway and Coca-Cola are among American companies saving money by borrowing in euros to take advantage of lower costs. But the “Reverse Yankee” bandwagon is filling up. The cost of swapping euros into dollars is rising. Arbitrages don’t last forever.
Hugo Dixon: Greece has no good Plan Bs 9 Mar 2015 Defaulting on its debts and quitting the euro would be a disaster. So would imposing capital controls, while defaulting and staying in the single currency. Athens has no rational course of action apart from working with its creditors to vigorously reform its economy.
WPP is good value in a pricey sector 9 Mar 2015 The ad giant’s pretax profit increased 12 pct last year. Earnings and dividends are set to rise at a similar clip in 2015. WPP’s markets are improving and its finances are strong. The news is good for CEO Martin Sorrell. The shares are hardly cheap, but momentum is plain to see.
Turkey’s central bank is in a very tough spot 9 Mar 2015 Rate-setters are under pressure from President Erdogan to ease, despite a big trade deficit, high inflation and a weakening lira. The central bank is trying to square the circle, including by cutting forex deposit rates. It could all get much worse, if Erdogan pushes too hard.
Review: Money, theft and death in Putin’s Russia 6 Mar 2015 Bill Browder’s grandfather was an American communist. The grandson ran a hedge fund which profited during the chaos under Boris Yeltsin. But Browder did not reckon with the hard men of the Putin regime. His book offers some sobering lessons for investors in emerging markets.
Euro’s path towards dollar parity may be winding 6 Mar 2015 The drop below $1.10 can extend further. But ECB bond-buying expectations have probably hurt more than the programme will itself. Meanwhile, the dollar is increasingly at the mercy of U.S. data. The single currency could take longer to shed the next 10 cents than the last.
UK retreat from RBS is more important than value 6 Mar 2015 Chancellor George Osborne now wants to return the bank rapidly to private hands after May’s election. Both strategy and governance have been flawed. Britain is wary of starting to reduce its 79 pct stake at a loss. But that’s a price worth paying to put RBS on a stable footing.
BPI twist makes breakup an option 6 Mar 2015 The Portuguese bank says it’s worth 2.26 euros a share to Caixa, way above its suitor’s pitch. That’s a punchy 40 pct premium to forward book value. BPI was recently trading at a 50 pct discount. The bluster makes a deal for the group harder, but not a sale of its Angola assets.
AbbVie CEO may have overpaid again in $21 bln deal 5 Mar 2015 Richard Gonzalez, the pharma firm’s boss, shelled out $1.6 bln last year to get out of a hard-won bid for Shire. Now he has come out on top in an intensely competitive biotech auction. AbbVie may get a blockbuster drug, but at a high cost: It must share profits with rival J&J.
EU bonus policy becomes a comedy of errors 5 Mar 2015 Capping variable compensation makes scant sense for bankers; it makes even less sense for asset managers. Doing so, as European authorities are now proposing, will do little for stability but push up compliance costs. The final irony is EU lawmakers didn’t even want it.
Aviva’s dividend and future get more sustainable 5 Mar 2015 The UK insurer’s 2014 results showed rising excess cash from operations. That’s reassuring, given tricky times for the sector and a 21 pct dividend hike. While the integration of Friends Life is a risk, Aviva doesn’t look to be doing the deal to cover up operating weakness.
Auto industry shifts lift Continental 5 Mar 2015 The world’s largest tyre and car-parts maker has a bullish 2020 outlook. Suppliers stand to benefit greatly from the auto industry’s technological shifts. Yet investors should stay sober. Conti’s shares already price in the upside. And its dividend policy remains thrifty.