Hadas: Malthus, Condorcet and “shithole” economics 17 Jan 2018 The English curate was totally wrong about permanent poverty, but the legacy of his grim expectations still clouds judgments. His lesser-known French rival was a better guide. Condorcet would have expected the recent progress in countries the U.S. president seems to despise.
BofA finally has a share price to live up to 17 Jan 2018 As last year’s best-performing big-bank stock, the U.S. lender now trades at a respectable multiple of book value. U.S. tax cuts only partly justify that. Boss Brian Moynihan needs to boost earnings by almost half for Bank of America to deserve its elevated status.
Goldman’s new hope tainted by old habits 17 Jan 2018 With trading revenue falling, it’s no wonder Lloyd Blankfein’s bank has pushed into new business lines. Consumer lending, say, might one day be a big part of Goldman Sachs’ value. Yet a passion for the new is mirrored by an unhelpful attachment to the past – notably, commodities.
Pearson investors need their homework checking 17 Jan 2018 The $8 bln education publisher’s revenue has stopped cratering after it stemmed a decline in sales of U.S. textbooks. The relief may be temporary. Colleges are shifting to cheaper course materials and a price war is looming. That is hard to square with a rich valuation.
Disney’s future turns board geeks to possible rats 16 Jan 2018 Facebook’s Sheryl Sandberg and Twitter CEO Jack Dorsey are leaving the entertainment giant’s board. Convergence with technology – in virtual reality, say – makes conflicts of interest likelier. That can dent directors’ effectiveness. Put less blandly, it can make them dangerous.
Sugar-for-supplements swap will test Nestlé boss 16 Jan 2018 The KitKat maker is selling its U.S. candy arm to Ferrero for a sweet $2.8 bln to invest in products with better growth than junk food. But high valuations for alternatives like vitamin pills limit CEO Mark Schneider’s opportunities to make Nestlé a clean-living champion.
BlackRock’s social activism stick is big and pointy 16 Jan 2018 Larry Fink’s investment firm is demanding companies make a positive contribution to society for the long term. Having $4.1 trln of passively managed assets gives a big bully pulpit. BlackRock may have self-interest at heart, but if the private sector bucks up, that’s just fine.
GE’s legacy losses reinforce case for breakup 16 Jan 2018 A $6.2 bln charge relating to reinsurance - a business the company exited over a decade ago - shows the challenge of managing a conglomerate. CEO John Flannery is struggling to shrug off the past and turn to the future. At least he’s open-minded enough to consider a GE carve-up.
Citi investors go through the tax looking glass 16 Jan 2018 U.S. tax cuts pushed the lender into an $18.3 bln loss, but should boost future earnings. That means boss Mike Corbat can be more ambitious about recently set growth targets. Citi’s recovery may be driven largely by forces beyond its control, but that’s not always a bad thing.
Shareholders leave Autos 2.0 on the hard shoulder 15 Jan 2018 Ford is more than doubling its electric-battery investment to $11 bln, and GM is pushing its driverless car. But as industry gathers for its annual Detroit confab, investors still seem to doubt carmakers can turn new technology into dollars. Tesla remains the exception.
Sanctions purgatory haunts EU as much as Iran 15 Jan 2018 Donald Trump has again waived nuclear sanctions on the Islamic Republic, a short-term relief for the domestic economy. It’s also a near-miss for the European Union: fresh curbs on non-American firms in Iran could spark a transatlantic standoff. But the reprieve is only temporary.
Mnuchin and Dudley exemplify a political dilemma 12 Jan 2018 The U.S. Treasury secretary, contradicting forecasts, expects tax cuts to pay for themselves. The New York Fed chief fears growing deficits and debt. Republicans may nod to the former but enough probably worry about the latter to hamper new outlays on infrastructure and the like.
Facebook discovers cost of factory-farming users 12 Jan 2018 The $550 bln social network’s success harvesting ad dollars from mass-appeal content made it very profitable. The snag is that users are increasingly unhappy. Mark Zuckerberg’s return to focusing more on their welfare may limit short-run profits but should improve sustainability.
Review: “The Post” gets more relevant by the hour 12 Jan 2018 Steven Spielberg's cinematic retelling of the publication of the Pentagon Papers feels rushed at times, and the nostalgia for a bygone newspaper business is maudlin. But such flaws are easy to forgive as current events emphasize the necessity of a free – and profitable – press.
Wells Fargo CEO creates rod for own back 12 Jan 2018 Tim Sloan reckons his beleaguered bank is in better shape than a year ago, and will be better still 12 months from now. Bolstering revenue, cutting costs and catching up on rivals' stock gains are key. But so is changing the bank's culture. That's harder to prove.
BlackRock to rivals: Heads I win, tails you lose 12 Jan 2018 The world’s largest money manager swept in $103 bln of new money in the fourth quarter, with ETFs and active funds growing. A jump in performance fees fueled a big earnings beat. Whether the pendulum swings back in favor of stock and bond pickers or not, BlackRock will still come out on top.
Wall Street banks need yet another earnings metric 12 Jan 2018 JPMorgan, Wells Fargo and peers already deluge investors with performance measures. But tax cuts will make it easier for them to hit returns targets – and for executives to claim bonuses despite mediocre growth. Pre-tax returns on equity would be a helpful alternative yardstick.
GKN breakup defence is still on drawing board 12 Jan 2018 The UK engineer grappling with an accounting scandal rejected a $9.5 bln offer from serial acquirer Melrose. Its alternative plan of splitting itself in two makes sense and could deliver more value. But investors need more proof it can fix its business, and a clearer timetable.
Viewsroom: China’s dubious shot across U.S. bow 11 Jan 2018 Talk of buying fewer of Uncle Sam’s bonds may be Beijing’s way of showing some teeth as the Trump administration mulls import tariffs. But as with other retaliatory trade tactics, it would hurt China too. Plus, why Nelson Peltz doesn’t want to be called an activist investor.
Walmart pay hike is less than largesse 11 Jan 2018 The $300 bln U.S. supermarket chain is raising hourly wages by $300 mln. That’s just a sliver of what it could save through tax cuts, but that may not be the biggest driver anyway. In fact, with super-low unemployment, it’s a wonder Walmart can get away with so little.