Carney deals intellectual blow to Scots’ secession 29 Jan 2014 The governor of the Bank of England studiously avoided criticising the idea of Scottish independence in his Edinburgh speech. But he said currency unions need watertight fiscal rules to work properly. As the euro zone is finding, that implies more political union - not less.
Sainsbury’s succession scepticism is overdone 29 Jan 2014 Justin King could have gone on for longer as the retailer’s CEO. But a decade is the natural point to be stepping down. New market dynamics call for fresh leadership; internal succession makes sense in a company that isn’t broken. The negative market reaction looks knee-jerk.
UK GDP another blow for economics’ physics envy 28 Jan 2014 The latest growth figure - 1.9 percent for 2013 - was in line with most recent expectations. But that’s three times faster than the consensus in March. The UK’s fast turnaround is a typical forecasting failure for a would-be science that’s putting too much faith in faulty models.
Canadian bid does F&C shareholders a favour 28 Jan 2014 The venerable London fund manager saw assets fall for two years running. Its shares have traded well below peers’ and it is relatively small. There are some recent brighter signs. But investors will find it easy to accept a 708 mln stg takeover offer from BMO, the Montreal bank.
Google’s latest deal makes uncharacteristic sense 27 Jan 2014 The web giant is paying $662 mln for DeepMind Technologies, a UK startup with no sales. But compared to purchases of Nest and Boston Dynamics, the firm’s focus on using neuroscience to teach machines to learn sits firmly in Google’s core business. It’s the next frontier for search.
BG makes a habit of disappointing investors 27 Jan 2014 The UK gas company’s shares fell 15 pct after it predicted lower production this year and the next due to problems in Egypt and America. BG has traditionally enjoyed a premium valuation for its growth. But it clearly faces the same output and cost pressures as its peers.
UK’s guidance flop means markets must think again 24 Jan 2014 Mark Carney signalled the early end of a policy that was designed to keep market rates down but actually pushed them up. The shift after a mere five months is embarrassing for the central bank governor, but makes sense. Investors have become too confident that rates will rise soon.
Swiss housing bubble-poppers are bolder than UK’s 23 Jan 2014 Switzerland’s central bank has intervened for the second time in a year to check house price inflation. Mortgage stocks are growing quicker than in the UK. But the Swiss regulator’s willingness to deploy macro-prudential tools is at odds with British inactivity.
Pearson’s small warning exposes bigger fears 23 Jan 2014 Shares in the educational publisher slumped 8 pct as Pearson warned of weakness in its U.S. business. Restructuring charges will be higher than expected too. It’s disappointing. But the size of the stock price reversal suggests investors have deeper-seated concerns.
Hugo Dixon: UK Tories mishandle EU relationship 23 Jan 2014 A year after David Cameron promised a referendum on EU membership, the British PM and his party are alienating potential allies across the Channel. He needs to pitch reforms that benefit the whole bloc, not just pander to eurosceptics. Otherwise an “Out” vote looks more likely.
EasyJet’s shares flying into ever thinner air 23 Jan 2014 Decent quarterly results show that the no-frills carrier has not yet reached the limits of its business model. The steep rise of its share price, which quadrupled in the last two years, is still likely to end. EasyJet’s fundamentals have yet to catch up to its sky-high valuation.
India deal leaves Diageo with a long hangover 23 Jan 2014 The UK drinks group is fighting to hang on to some of the United Spirits shares it bought from Indian tycoon Vijay Mallya. Defeat in court could see Diageo’s stake fall below 20 pct. Though it still has options to reach a majority, its Indian adventure is getting riskier.
Bank of England gets ready to forget unemployment 22 Jan 2014 The market takes the UK central bank at its 2013 word - tumbling UK unemployment will fairly soon lead to higher rates. Sterling and gilt yields are up. But the BoE’s minutes suggest joblessness was last year’s story. As long as inflation stays low, rates will too.
Used cars give The Guardian helpful cash in hand 21 Jan 2014 The UK news group will get about 600 mln stg, sources say, for its share of the auto-focused Trader Media. Apax, the current co-owner, is paying a decent price. As car dealers know, cash upfront is good. It will help underwrite the paper’s long and costly digital reinvention.
Unilever washes off emerging-market uncertainties 21 Jan 2014 Currencies and slowing growth are working against the consumer staples giant. But forex aside, the trends in developing economies remain firmly positive. For Unilever, the declines in developed markets’ revenues and profits are more worrying.
Shell’s profit warning shows way for new CEO 17 Jan 2014 The oil and gas major blamed refining woes and high exploration costs for its fourth-quarter profit miss. It comes on top of a string of disappointing results. The worry now is that Shell won’t generate enough cash to hit its targets. The group’s new boss has his work cut out.
Mike Ashley finds new way to go long Debenhams 16 Jan 2014 The Sports Direct founder made a quick turn on a 4.6 pct stake in the UK retailer, and has written a put option on 6.6 pct. It’s unconventional, to say the least. But the upshot is Ashley either winds up with a gain for little effort, or a larger stake in a stock he likes.
RBS bonuses sadly remain a necessary evil 15 Jan 2014 Opposition politicians want the state-owned lender to cap bonuses at 100 pct of salary. It would be great if new boss Ross McEwan could cut pay at loss-making RBS – investment banking is not a strategic priority. But this accident-prone bank can’t afford a further skills exodus.
Punch bondholder brawl nears last orders 15 Jan 2014 The over-indebted UK pub group has been caught between different sets of bondholders for years. They may not like its latest 2.3 bln stg restructuring plan, but rejecting it risks a messy default. The cocktail of debt and financial engineering would leave a nasty hangover.
Sterling may fall as UK inflation eases 15 Jan 2014 The buoyant pound may weaken, temporarily, in the face of latest UK consumer prices. The inflation level helps the Bank of England’s lower-for-longer interest-rate promises. A bout of risk aversion could also hit the value of sterling. But the retreat won’t last.