Don’t blame the economy for melting markets 4 Feb 2014 Small-country troubles, shaky Chinese demand and a few U.S. disappointments would not normally be enough to push investors into fear mode. The current volatility proves what a difference a tapering Fed makes to the health of financial markets.
John Malone’s drive for F1 shows value of sport 4 Feb 2014 The cable tycoon offered to buy a stake in Formula One last year. His recent focus has been on distribution, not programming. But the taste for motor racing highlights live sport’s must-have status in content. If he wants it, he can expect an auction and a $10 bln-plus valuation.
TPG’s bitter coffee should wake up private equity 4 Feb 2014 David Bonderman’s shop and Israel’s Strauss family are feuding over their java joint venture. Buyout firms prefer control for good reason, though it isn’t always possible. While the payoffs from different ownership structures can be big, the risks are often commensurate.
UBS’ next task: avoid U.S. overreach 4 Feb 2014 The Swiss group’s revamp into a wealth manager with a smaller investment bank tacked on has paid off. UBS’ capital position is solid and over 20 bln Swiss francs of tax assets give it options. But management should heed the risks of breakneck expansion - especially in the U.S.
BP starts to shine next to Shell 4 Feb 2014 It’s all relative: BP’s profit fell almost a third in the fourth quarter, but it was no worse than expected. Russia and mounting Gulf of Mexico spill costs make its earnings hard to predict. But, unlike Shell, it has set more concrete targets to back up its promises.
Smith & Nephew jumps on a wounded rival 3 Feb 2014 Treating injured athletes is a faster-growing business than selling artificial joints to a greying world. So the UK medtech giant is paying $1.5 bln including cash for U.S.-listed ArthroCare. A share price premium of just 6 pct reflects the target’s own self-inflicted wounds.
KKR needs lucky goals to win in German soccer 3 Feb 2014 The buyout group is investing 61 mln euros in Berlin-based team Hertha BSC. The club is struggling financially and mediocre on the pitch. A thriving Bundesliga tournament and a booming Berlin suggests potential. But turning Hertha round looks a long shot for private equity.
Emerging markets’ big danger is financial markets 3 Feb 2014 Investors are right to shun the worst emerging markets. But some poor countries are doing well. They don’t deserve to be shut out of global capital markets by panicky investors. Of course, folly creates opportunities. Smart investors will be able to find some emerging bargains.
Retail bankers outdo casino peers on misconduct 3 Feb 2014 Even before the latest provisions for selling bogus mortgage insurance, UK retail bank fines outstripped those caused by their trader colleagues as a proportion of earnings. That makes it harder to judge the true profitability of the supposedly safer consumer business.
Lloyds still looks best of a bad bunch of UK banks 3 Feb 2014 The past weighs on the UK lender, with charges for mis-selling up another 1.8 bln stg. Dividends will be smaller than hoped and the next stage of privatisation could be rocky. But given Lloyds’ durable strategy and market position, its premium valuation looks intact.
Ryanair’s loss highlights need to change 3 Feb 2014 Revenue at the low-cost airline has stalled, plunging the group to a heavy third-quarter loss. The shares, however, are up smartly. Investors are relieved that guidance is unchanged. But they are putting a lot of faith in the company’s new strategy to be nice to its customers.
German job miracle becomes ever harder to sustain 3 Feb 2014 The country’s long-lasting labour market revolution is half-kaput. New jobs are still appearing at an amazing rate. But this is no longer translating into falling unemployment. And an ill-considered labour market re-regulation is poised to worsen the deep structural problems.
Hugo Dixon: Independent Scotland won’t keep the pound 3 Feb 2014 The Scottish government wants to be part of a sterling zone if the people vote for independence, as alternatives to the pound aren’t attractive. But it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.
EU bank stress test can be saved from joke status 31 Jan 2014 The European Banking Authority’s stresses on lenders look too soft on capital and sovereign debt treatment. Fortunately, the EBA will allow national regulators to be tougher. That gives the ECB, as the head of the EU banking union, the chance to make the exercise credible.
ECB can live with near-deflation 31 Jan 2014 After a drop in January, euro zone inflation has been below 1 pct for four months. The region’s internal devaluations are a durable drag. But the central bank has run out of easy anti-deflation policies. As the zone returns to growth, the ECB can get away with doing nothing.
BT and BSkyB equality will be short-lived 31 Jan 2014 Both groups have produced market-pleasing results. Telco BT, once the poor relation, now trades on a comparable valuation to its satellite rival. Both offer similar earnings growth. However, a lot hinges on who wins what in the next major UK soccer-rights auction.
Spanish banks’ diversity no longer a trump card 31 Jan 2014 Santander and BBVA shrugged off Spain’s crisis thanks to their substantial operations abroad. The domestic economy remains weak, but Spanish bad debt provisions are easing. The problem now is that emerging stalwarts like Brazil are becoming a drag, not a benefit.
Emerging vacuum a harbinger of global downdraught 31 Jan 2014 Brazil’s central bank president complains that rising developed country rates are like a “vacuum cleaner.” But tighter global money is needed. Emerging economies must adapt and improve their own fundamentals. Their woes are a harbinger of the developed market pain to come.
Goldman shows commerce and governments don’t mix 30 Jan 2014 Danish politicians are angry the U.S. bank is lead investor in the recapitalisation of state-run Dong Energy. It shows that banks can’t be too commercial with government business. And Goldman’s reputation for always being on the better side of deals can backfire.
Vodafone has upper hand in Spanish cable fight 30 Jan 2014 The mobile giant is vying with the acquisitive Liberty Global for Ono, the 7 bln euro Spanish cable group. Financial heft, strategic need and synergies all point to Vodafone winning again, as it did in Germany. But Spain is a tougher market so Vodafone needs to stay disciplined.