Draghi remains conventionally unconventional 3 Apr 2014 QE is no longer a dirty word in Europe. ECB head Mario Draghi has given his strongest hint that “unconventional” measures are on the agenda to fight low inflation – and help depreciate the euro. But by talking instead of acting, the central bank has lost the element of surprise.
Madrid’s investment bankers regain their mojo 3 Apr 2014 After some very lean years, cash-starved Spanish companies are sidestepping banks and turning to debt capital markets for funds. The IPO market is also resuscitating. Meanwhile, there’s still plenty of restructuring work to do. Growth in fees reflects this bullish recovery.
Central bankers live in silent fear 3 Apr 2014 It’s scary to think what higher policy interest rates might do to a financial system accustomed to virtually free money. Stress tests aren’t foolproof. Yellen et al look calm. They may be overconfident. Or maybe they know that expressing worries could provoke panic.
Buyers bake fat growth into Just Eat IPO value 3 Apr 2014 London’s third sizeable e-commerce debut in weeks values the online takeaway firm at 1.5 bln stg. That’s an unpalatable 15 times 2013 sales. This business is harder than it looks and Just Eat has built a strong position. But investors’ hunger for growth has led them to over-order.
Blythe Masters could chair Glencore 3 Apr 2014 The derivatives mastermind is leaving JPMorgan’s commodities unit after its sale to Mercuria. Her next stop could be Glencore. The trading house’s all-male board looks anachronistic. It needs a chair to keep Ivan Glasenberg in check. And her banking nous would be useful.
Shrinking margins take bling off Prada valuation 3 Apr 2014 Shares in the Italian fashion house fell 8 percent after costs rose faster than revenue in 2013. Weak sales from its Miu Miu brand added to the gloom. The selloff scuffs Prada’s premium rating relative to rival luxury brands. But there may be further markdowns to come.
The question ECB hasn’t answered: why wait? 2 Apr 2014 The latest euro zone inflation numbers show that the European Central Bank is failing to provide price stability, its only mandate. The ECB may not believe that disinflation is here to stay, but even if that’s right, there’s little risk in acting now to help Europe’s economy.
French cabinet reshuffle creates policy confusion 2 Apr 2014 Francois Hollande has chosen an odd couple to tackle France’s economic malaise. Old hand Michel Sapin will be finance minister while anti-globalisation crusader Arnaud Montebourg will run the economy ministry. The crude effort to please both markets and the public will backfire.
ASOS’s glitzy rating assumes a lot goes right 2 Apr 2014 Even after a blip last month, the UK fashion and tech darling still fetches more than 75 times forward earnings. Ploughing money into new warehouses is vital, but could create supply disruptions. Global expansion is causing headaches. And other retailers won’t stand still.
Big German public pay hike is good news for Europe 2 Apr 2014 More than 2 mln civil servants in Germany will see their pay rise 5.7 pct over the next two years. That means real income growth, and it will be a benchmark for the private sector. But much hinges on what consumers will do with the extra money in a country where savings are high.
ECB could fight currency war – by buying Treasuries 2 Apr 2014 The euro is at uncomfortable levels partly because quantitative easing is pulling down other currencies. A radical idea is that the ECB could respond by adopting QE and buying U.S. Treasuries. Direct FX intervention would break the rules but might lead to discussion and disarmament.
BHP spinoff would swap one problem for another 1 Apr 2014 The miner wants to simplify its portfolio, possibly by demerging less attractive assets. But it’s not certain this would create shareholder value, and the move could cost financial and operational synergies. BHP may be better off patiently selling down as opportunities arise.
Deflationary world can still stoke asset inflation 1 Apr 2014 The U.S. economy is a test case for the baffling coexistence of inflated asset prices and disinflation in consumer prices. Poor capital utilization and wonky income distribution – a sharp drop in workers’ share, a jump in financiers’ take – help resolve the mystery.
Weir may struggle to extract a merger from Metso 1 Apr 2014 The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient.
New French PM’s main challenge: his own party 1 Apr 2014 Manuel Valls will take over the French government after the ruling Socialist Party’s debacle in municipal elections. The interior minister’s free-market leanings suit President Hollande’s new supply-side views. But to conquer, Valls must fight off more traditional Socialists.
Telecom Italia renewal has further to go 1 Apr 2014 Under pressure from a dissident investor, Italy’s main phone company will soon get a strong, independent board. That’s good for outside shareholders. But the intentions of key stakeholder Telefonica remain opaque. TI’s undemocratic voting system needs an overhaul too.
How to avoid another second-class UK privatisation 1 Apr 2014 Royal Mail’s IPO looks awfully cheap in hindsight. So an official post-mortem will embarrass politicians and bankers alike. Still, there are lessons for future privatisations. Sell down slowly, be more flexible in book-building, and handle retail offers with extreme care.
Alstom warms up turnaround plans with $1 bln sale 1 Apr 2014 The ailing French engineering giant is selling its heat exchanger unit to private equity group Triton for 730 mln euros. It’s an important milestone, but Alstom’s asset disposal programme will have to go further. The group is also under pressure to deliver on cost cuts.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
ECB has to cope with global disinflation illness 31 Mar 2014 The malaise of meagre price increases and high sovereign debt is almost global, but the euro zone is suffering particularly badly. The ECB is constrained, too, because it has so many national masters. Still, a bold QE campaign might be able to keep deflation away.