Welfare cuts betray UK’s lingering weakness 30 Sep 2014 George Osborne says the economy is stellar yet benefit cuts are needed. The picture is worse than the finance minister admits. As Britain’s deficit stays high, debt soars and weak wages persist, the government faces more harsh choices. The UK is far from paying its way.
UK retail fails to weather the patently obvious 30 Sep 2014 Clothes shop Next says Britain has had an unseasonably warm September. Who knew? Shares across the sector took fright at the ramifications for earnings. Investors may be venting other fears, maybe of a price war. Still, the reaction reveals a bizarrely inefficient market.
Repel Bramson’s Electra boarding party 30 Sep 2014 The New York raider wants seats on the board of the London-listed private equity trust. He also reckons he can double Electra’s value. But if Edward Bramson really can whistle up an extra 1 bln stg, he can afford to pay a premium for full control.
Rouble slide puts central bank in a bind 29 Sep 2014 The Russian currency’s fall will make runaway inflation worse and force monetary authorities to act. It will help the central bank resist political calls to loosen policy to fight the sanctions-induced slump. But it could deal the economy another nasty blow.
Commodity bear market looks entrenched 29 Sep 2014 A rising dollar, the prospect of U.S. rate rises, and moderating Chinese growth are casting long shadows over the asset class. The threats to the bear case are strong supply-side responses, or successful economic stimulation by the ECB. Neither looks very likely.
Andreessen would probably pass on Rocket Internet 29 Sep 2014 The U.S. venture capitalist is worried about cash-burning startups that grow accustomed to easy fundraising and high valuations. Berlin-based Rocket, the tech company incubator set to go public with a 6.7 bln euro market cap, exhibits some of the warning signs.
Vindication is bitter for Royal Mail privatisation 29 Sep 2014 The froth is off. Forget the 87 pct pop: a year after its frenzied IPO, shares in the UK postal service hover 20 pct above its float price. That feels about right. The snag for the state and its bankers is that it will be fiendishly difficult to shift the unsold stake.
Hugo Dixon: UK faces unpalatable election choice 29 Sep 2014 The Labour opposition has a somewhat anti-business agenda, while the Conservatives want to hold a referendum on Britain’s EU membership. Next May’s election contest isn’t quite a choice between the devil and the deep blue sea, but it’s not a good one.
Gross exit offers soft reset on Pimco governance 26 Sep 2014 With the investment firm’s domineering ego out the door, owner Allianz can now push for team-based structures less dependent on single individuals. The temptation to resist is an urge to tighten the grip from Munich over a subsidiary that naturally benefits from autonomy.
Santander has a 6 bln euro capital opportunity 26 Sep 2014 The Spanish bank’s diversification and earnings power are cushions against a shock. But the core capital ratio looks tight. Given Santander’s high valuation, there may not be a better time to boost equity and silence capital sceptics. Raising 6 bln euros would do the trick.
Sainsbury should heed market message on dividend 26 Sep 2014 The UK grocer’s shares are down 27 pct since May and yield over 6 pct. The group faces the same competitive threats as dividend-slashing Tesco. A small drop in sales, coupled with margin compression, would make Sainsbury’s payout unsustainable. Management has cover to make a cut.
Power to borrow is vital for proper UK devolution 26 Sep 2014 Prime Minister David Cameron plans to devolve more tax and spending to Scotland after it voted to stay in the United Kingdom. For the process to be really meaningful, though, the Scots must be free to issue debt. That’s risky, but there are ways to limit the dangers.
Time for Telecom Italia to set its own agenda 25 Sep 2014 The Italian telco is indebted and adrift, having failed to clinch GVT in Brazil. No wonder predators are circling. Reported bid interest from industry veteran Sol Trujillo may not go anywhere – but it underscores the need for TI to produce a clear plan for capital and strategy.
Financial fall raises Gherkin’s symbolic status 25 Sep 2014 Receivers are shopping London’s pickle-shaped edifice for $1 bln. Bankruptcy can’t undo its effect on the skyline. Now, though, the glass-sided Gherkin also will reflect back to City bankers and traders an ill-advised currency hedge, a lasting monument to the dangers of avarice.
Politics mar GSK and RBS chairman succession 25 Sep 2014 Philip Hampton is to join drug giant GSK in January, but may not succeed Chris Gent as chairman until next September. The long transition reflects the difficulty of replacing Hampton at state-backed RBS in an election year. For GSK, the ambiguity in board leadership is unhelpful.
Guest view: EU must hold firm on opening markets 25 Sep 2014 European legislation to free up the derivatives trading and clearing industry may face stiff resistance. Policymakers need to be resolute if they want to deliver a truly open market in financial services, say the CEOs of the London Stock Exchange and clearing house LCH.Clearnet.
Edward Hadas: The core of what economics should be 25 Sep 2014 A new textbook will help make the academic discipline less dogmatic and more realistic. It is a small step in the right direction. An ideal introduction would have a clearer definition of the field and its purpose – and forget about supply and demand.
Tesco chairman should step aside 24 Sep 2014 Richard Broadbent will struggle to restore market confidence in the UK retailer. This week’s accounting scandal compounds existing concerns about his period at the helm. The priority should be an orderly handover to the right successor. But speed matters too.
Tesco needs to lighten the debt load 24 Sep 2014 Britain’s biggest retailer is overrun with strategic and operational problems. And it must keep investing despite a weak balance sheet. A rights issue is impossible for now due to a lack of trust in the numbers. That leaves holding the dividend down and making disposals.
German M&A boom defies ghost of Daimler-Chrysler 24 Sep 2014 Be it SAP or Siemens, Merck or Bayer, Germany’s big blue chips are on a foreign buying spree. At $91.5 bln, outbound M&A is up sevenfold on 2013. That’s despite the car crashes of previous mega-deals. Investors are giving a new generation of bosses the benefit of the doubt.