Vodafone’s $11 bln spending spree only goes so far 12 Nov 2013 The mobile giant will invest more in networks and elsewhere. That’s good preparation for economic upturn and a boom in data usage. But Vodafone remains disadvantaged versus fixed-line and cable rivals. The clearest route to a higher share price remains a bid from AT&T.
Inflation surprise offers BoE crumbs of comfort 12 Nov 2013 British consumer prices are rising at their slowest annual rate in more than a year. That will give the Bank of England more flexibility: the central bank will feel less pressured to tighten monetary policy if unemployment falls more quickly than it has anticipated.
Monetary policy now a single-indicator issue 11 Nov 2013 The ECB was blindsided by disinflation – a falling rate of price increases. Surprisingly low inflation also kept the Fed from tightening. It’s not clear that disinflation is actually bad. But for now, the fear of it outweighs any positive economic indicators in guiding policy.
RSA isn’t in opportunistic bid territory yet 11 Nov 2013 The UK insurer has suspended its Irish bosses and issued a new profit warning. Potential predators like Allianz will have noticed. But despite a share-price rout, RSA isn’t cheap enough to make up for all the uncertainty. That buys management some breathing space.
Ending Congo conflict could herald growth 11 Nov 2013 The Democratic Republic of Congo enjoys huge mineral resources, a fertile climate and a big population. Following a rebel ceasefire, globalization’s forces may finally bring rapid development to Africa’s poorest nation, so long as it attains some level of passable governance.
Shire adds to premium valuation with toppy deal 11 Nov 2013 The pharma company’s shares jumped 3 pct after it agreed to buy biotech group ViroPharma at an aggressive nine times revenue. The deal brings hefty synergies, a tax kicker and boosts Shire’s place in profitable rare diseases. Markets are keen to reward growth over breadth.
BT buys its way into TV sport’s top rank 11 Nov 2013 The British telco bid 299 mln stg a year to show Champions League soccer. BT overpaid - but now becomes a serious player in sports broadcasting. That should help retain broadband customers, win back defectors and sell new TV services. The threat to pay-TV king BSkyB is growing.
Hugo Dixon: Greece’s reform job isn’t even half done 11 Nov 2013 The government hasn’t done enough to root out vested interests. Meanwhile, it could collapse if the troika forces it to impose more austerity. Its best bet is to try to persuade its lenders that it’s so serious about structural change that more cuts and taxes aren’t required.
French banks’ strategies smack of déjà vu 8 Nov 2013 BNP Paribas is expanding conservatively in low-growth markets. SocGen prefers racier climes and investment banking. And Credit Agricole is retrenching to the certainties of asset management, licking its wounds. Despite France’s ratings downgrade, its banks are reverting to type.
ECB adds to bubbly markets’ risky lack of fear 8 Nov 2013 The euro zone central bank cut rates to fight deflation, but its move on Thursday pumps up the global glut of money. The unsurprising result is investor complacency amid many signs of market excess. The calm suggests danger.
Telecom Italia buys time for better Telefonica deal 8 Nov 2013 The Italian telco will exit Argentina, issue convertible bonds, and sell mobile phone towers to cut debt and boost investment at home. The plan, backed by part-owner Telefonica, won’t entirely solve TI’s debt problem. But TI avoids a firesale of its prized Brazilian unit.
Draghi plays his last conventional card 7 Nov 2013 The ECB head announced a rate cut a month earlier than expected. It won’t work miracles, but might fend off deflation. With traditional monetary tools near exhausted, Draghi will hope for a calm 2014. If it isn’t, his talent for activist policymaking will face more severe tests.
ECB easing shows forward guidance no bar to shocks 7 Nov 2013 The central bank’s rate cut triggered sharp price swings and shows policymakers and financial markets have different ideas of what a clear steer on monetary policy means. Rate setters may be right not to paint themselves into a corner, but aren’t proving as predictable as billed.
FX market needs clarity in its rules and economics 7 Nov 2013 Possible manipulation of foreign exchange rates is being investigated. It might seem odd in a $5 trillion-a-day liquid market, but trading could conceivably cross the line from legitimate risk management to market abuse. Binding rules are vital. And clients may need to pay fees.
Deutsche Tel has big M&A calls to make 7 Nov 2013 Rene Obermann is leaving Germany’s biggest telephone company in decent shape. Still, his successor as CEO faces big decisions on DT’s U.S. and UK units - and how to react if AT&T gatecrashes the European market. Timotheus Hoettges’ dealmaking skills may be quickly tested.
Swiss banks could handle a 6 pct leverage ratio 7 Nov 2013 Switzerland’s finance minister reckons UBS and Credit Suisse should have an equity-to-assets ratio of 6-10 pct. While that’s miles above Basel’s 3 pct minimum, both banks could manage 6 pct, a Breakingviews calculator shows. Above that, Credit Suisse would have the bigger problem.
Settling is hard to refuse in EU rates probes 7 Nov 2013 Brussels is set to levy big antitrust fines on lenders it suspects of rigging interbank rates. Some banks will settle. Others think they have a stronger case, but face a tricky dilemma: buy peace now, or risk the ire of a powerful regulator and a potentially larger fine later.
Commerz makes less progress than market thinks 7 Nov 2013 Germany’s second largest bank is ahead of plan on cutting down its big pile of non-core assets, and it beat modest net profit forecasts. The market responded ecstatically. But any expectations that strong returns, or a bid, are imminent are unlikely to be realised.
New Siemens boss calms market hopes of quick win 7 Nov 2013 Joe Kaeser offered lots of cash to the German industrial giant’s shareholders - a generous dividend and a 4 bn euro share buyback. But the promised 15 pct hike in earnings per share in 2014 is half what analysts hoped for. Kaeser needs time to engineer a new long-term strategy.
ECB options include doing nothing 6 Nov 2013 Markets and politicians are putting pressure on the European Central Bank to “do something” to help the economy. The bank has many options. None of them are spectacular and they all come with risks. Doing nothing at this week’s meeting is a good alternative.