Draghi’s blanks make sovereign bazooka inevitable 11 Dec 2014 Euro zone banks drew just 130 billion euros of four-year loans from the ECB. The modest take-up makes sovereign purchases more likely: the ECB will need to buy sovereign debt to reach its stated balance sheet target. While QE is increasingly priced in, the challenges aren’t.
Carney the showman risks stage-managed policy 11 Dec 2014 The BoE governor wants monetary policy to be more transparent. So the central bank will publish transcripts of rate-setting committee meetings after eight years. A pre-meeting will stay secret. That’s where the real debate will happen, ahead of a performance for the record.
Gold’s rally won’t outlast tectonic rate shift 11 Dec 2014 The yellow metal is up as tumbling oil prices and a rising dollar destabilise many financial markets. Euro zone fears and Russian gold buying have also helped. But U.S. rate rises will create major shifts in the financial world. Gold is set for a bad 2015.
Fiat tries to make convertible a mandatory buy 11 Dec 2014 Mandatory convertible bonds – debt securities that become equity – aren’t to everyone’s taste. Fiat has priced its $2.5 bln issue to sell. Investors get a high coupon and access to the carmaker’s Ferrari IPO. That compensates for the bond’s low rating and deferrable interest.
Inditex shows retailers how to shop 11 Dec 2014 The Zara parent is enjoying a strong start to the winter season. Some retailers blame poor sales on poor weather. The Inditex business model means it can respond quickly to shoppers’ needs and tastes. Its shares are pricey. But that’s because there’s clear growth potential.
Airbus investors are caught in crosswinds 11 Dec 2014 The aircraft maker disappointed investors with a lacklustre 2016 outlook, mainly due to big R&D outlays and increasing costs of producing new planes. Yet medium-term prospects look good and a sale of the $5 bln Dassault stake could bridge temporary shortfalls.
FCA boss has lucky escape in briefing fiasco 10 Dec 2014 Martin Wheatley keeps his job but loses his bonus after the UK regulator botched a media briefing on insurance in March. The report into the debacle sets out his weak response to the unfolding crisis. If he wasn’t doing a good job otherwise, he would have paid a higher price.
Politics outweighed German unification economics 10 Dec 2014 Karl Otto Poehl, who died on Dec. 9, quit as president of Germany’s central bank in 1991. He thought his government’s reunification plans were unsound. His fears were justified and his steeliness admirable. But the economics proved less important than the politics.
French reform bill more talk than walk 10 Dec 2014 Economy Minister Emmanuel Macron wants to show Europe that France is finally getting serious about reform. But his limited plan to deregulate some services faces fierce opposition from within the ruling socialist camp. What Macron is demonstrating is how tough his job is.
Erste first to show risks in new bank hybrids 10 Dec 2014 The Austrian lender’s bonds have slumped after it cancelled coupons on its debt. It’s an oddity of local accounting, but shows the dangers in new bail-inable hybrid bonds where coupons can be stopped after one-off losses. The market is struggling to digest the risks.
Volkswagen can turn investors round 10 Dec 2014 Shareholders don’t really trust Europe’s largest carmaker. That may change in 2015, as hot new cars boost sales and cost-cutting takes hold. If boss Ferdinand Piech throws in higher dividends too, that could seal the deal – and narrow the valuation gap with BMW and Daimler.
Economist aura helps Bloomberg in financial times 9 Dec 2014 Replacing Matt Winkler, the top editor at Mike Bloomberg’s media empire, with the British weekly’s John Micklethwait ends an era. As well as portending the biggest internal shakeup in 25 years, the move could mean there’s a bigger chance of Bloomberg snapping up the pink-hued FT.
UK retail property values look ever more exposed 9 Dec 2014 Another profit warning from Tesco has drawn attention to Britons’ changing shopping habits. In grocery, it’s all about discounts, online and convenience. That calls into question the big retailers’ property valuations – especially those with super-large stores.
Tesco troubles are deep and long-lasting 9 Dec 2014 The UK grocer has cut profit guidance again, this time by a quarter, sending the shares to a new low. Tesco’s competitive weakness means more bad news could come. To keep investors on board, Tesco needs a chairman, a strategy and a strong balance sheet more than ever.
Beware of overhyping the oil dividend 9 Dec 2014 The sharp crude decline is widely seen as good for growth. Yet its main impact is not to boost the world’s total output but to change the distribution of income. Even then, the GDP shift from oil-exporting to oil-importing countries is likely to be substantially less than 1 pct.
Greece tries risky step to dispel uncertainty 9 Dec 2014 Emboldened by a euro zone finance ministers’ agreement to extend the country’s bailout by two months, Prime Minister Samaras has called a snap presidential election next week. That could clear the air. Or it could throw the country into fresh political and financial turmoil.
Haitong’s global ambitions start from low base 9 Dec 2014 The Chinese broker has scooped up bailed-out Portuguese lender Espirito Santo’s investment bank for $466 million. Though the brand is dented and many staff have quit, it brings a toehold in London and New York as well as Lisbon. It’s a safer way to build an international network.
UK doesn’t look ready for a rate hike 8 Dec 2014 Bank of England research suggests the impact of rate rises on mortgage holders could be manageable. If wages and rates rebound as the BoE forecasts, that might be so. But the data is sufficiently equivocal, and the UK economy sufficiently weak, to make it not worth finding out.
Springer holders to trade lesser power for growth 8 Dec 2014 The controlling family of Germany’s largest publisher will tighten its grip over the company by changing its governance, after a deal with private equity group General Atlantic. Axel Springer will become takeover-proof. At least it will be able to grow by using its own shares.
Saint-Gobain’s deal cunning could backfire 8 Dec 2014 The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.