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.
Amec engineers $3.2 bln strategic shift 13 Jan 2014 The UK engineer is set to buy U.S.-listed rival Foster Wheeler. The structure is solid: a slim 12.8 percent premium, decent cost cuts, and payment half in stock to keep debt down. Investors just need to be satisfied that a big push into downstream energy makes sense.
UK election clouds have gilt-edged lining 10 Jan 2014 Politicians are already jostling before next year’s general election. On current form, the left-leaning opposition could oust the governing coalition. Any knee-jerk investor dismay may be tempered given the Labour Party is likely to cement Britain’s place in the European Union.
Carney shouldn’t shift BoE’s guidance goalposts 10 Jan 2014 The Bank of England Governor has a nice little problem. His forward guidance, based on a 7 percent unemployment rate, might seem to suggest a rate hike. Shift the goalpost? But goalposts that shift lose their credibility. And a move would dangerously reduce policy flexibility.
UK grocers’ woes raise threat of all-out price war 9 Jan 2014 Morrisons has stolen Tesco’s thunder – with a thundering profit warning. It’s been a tough Christmas for UK supermarket retailers: but Morrisons is trailing the pack on sales. For Tesco, the big issue remains profit margins. An aggressive new period of price cuts beckons.
Marks & Spencer does just enough to justify plan A 9 Jan 2014 Britain’s biggest clothing retailer surprised with a bad quarter in its key business, in spite of strong food and online sales. CEO Marc Bolland’s turnaround is proving a slog. But a 3.5 pct stock rally suggests investors feared the Christmas numbers would be even worse.
Britain will be first rich country to raise rates 9 Jan 2014 The UK has a large trade deficit, falling unemployment and a frothy housing market. As the economy picks up, inflation could return. Bank of England Governor Mark Carney wants to keep rates low for a long time. Facts will force him to change his mind.
Flat sales at Sainsbury set high bar for Tesco 8 Jan 2014 It may appear an easy task to emulate a rival that is standing still. For UK supermarket retailers, hemmed in by intense competition, no growth is actually quite an achievement. Sainsbury’s shares trade at a discount to the inherent, if constrained, strengths being shown.
New target for UK: build 600,000 homes per year 3 Jan 2014 Britain’s biggest economic weakness is its dilapidated and inadequate stock of housing. GDP and inflation goals have their place but they miss this point. A five-fold increase in annual construction would bring stock up to snuff in a decade. All it needs is political will.
Scotland will reject independence 31 Dec 2013 The north British state will decide in September whether to secede from the United Kingdom. A thriving, home-ruled Scotland sounds great, but the economics look ropey. Moreover, secessionists have already surrendered monetary tools that could have made independence compelling.
Western debt magic is poison for Africa 24 Dec 2013 A poor continent with limited savings is hugely vulnerable to a credit crunch. Africa desperately needs capital, but only the sort that can’t easily leave. Speculative investors and yield-hunters will eventually do more harm than good. There’s a caution here for Bob Diamond.
Carney will struggle to sustain BoE governorship 23 Dec 2013 The UK’s central bank chief is a vulnerable hostage to fortune. The Canadian thinks the British economy will enjoy economic recovery with low inflation and no housing market mess. If he’s right, he’ll be fine. If he’s wrong, Carney will find himself friendless.
Inflation is the sleeping dog in UK recovery 18 Dec 2013 Britain is creating jobs faster than expected, yet inflation is surprisingly benign. A high-employment recovery is welcome. But the housing market is bubbly and inflationary pressure will gradually build - in defiance of the Bank of England’s low-for-long policy on rates.
Bean-counters plant question for next Lloyds sale 18 Dec 2013 The UK’s National Audit Office says British taxpayers made a small loss on the recent sale of shares in Lloyds Banking Group. In itself, that’s no big deal. But it is a setback that could have been avoided – and made the next part of the privatisation easier.
RSA firesales could bring new headaches 13 Dec 2013 The UK general insurer’s CEO has quit and its shares have tanked after a third profit warning. The chairman is reviewing RSA’s empire and could sell units to shore up the capital position. But a piecemeal sale of crown jewels like Scandinavia would create its own problems.