Federal Reserve playing with fire on bank capital 18 Feb 2016 The watchdog is allowing Capital One to buy back more stock than initially permitted under Dodd-Frank stress tests. It’s good news for lenders aiming to exploit recent stock drops. But it singes the central bank’s reputation for toughness in ensuring banks keep adequate cushions.
Refreshing candor springs from Jack in the Box 18 Feb 2016 The fast-food chain isn’t blaming currency, the weather or other such issues for an earnings miss that sent its stock slumping 18 pct. It’s being much more forthright: the new all-day breakfast from rival McDonald’s whacked prices. Such honesty is rare – and is to be applauded.
HNA’s $6 bln Ingram bid has weird Chinese logic 18 Feb 2016 There’s no clear rationale for the conglomerate to buy a U.S. electronics distributor and leave its management and business untouched. But like other recent outbound Chinese deals, the acquisition gives HNA diversification, political capital, and a hedge against the sliding yuan.
M&A with Chinese characteristics comes up short 17 Feb 2016 Fosun’s takeover of Phoenix unraveled. Fairchild snubbed a $2.4 bln offer from China Resources. Terex investors are shrugging at Zoomlion. From possible CFIUS blocks to bosses going missing, Chinese buyers bring added risks only partly papered over by higher premiums.
Dish has lost its signal with investors 17 Feb 2016 More bad results are expected from the $20 bln pay-TV company as it loses customers. Dish’s stock has fallen by 40 pct in the last year, underperforming cable rivals. Enigmatic boss Charlie Ergen could help by breaking his silence on plans for a storehouse of lucrative airwaves.
Uncle Sam’s iPhone security order pure Apple sauce 17 Feb 2016 A U.S. judge is requiring the tech giant to help the FBI hack into a device owned by a California mass shooter. Law-enforcement concerns are legit, but overriding privacy protections raises frightening risks of government snooping here and abroad. Apple gets an A for biting back.
Bernie Sanders may have found his Fed chief 16 Feb 2016 The left-wing presidential candidate wants to break up big banks. So does new Minneapolis Fed boss Neel Kashkari, a Republican and ex-Goldmanite who helped bail out the banks in 2008. That calls to dismember banks bridge the political divide should keep Wall Street on its toes.
Cox: Scope out the bank in U.S. retail camouflage 16 Feb 2016 The business model of Cabela’s, which is up for sale, resembles a $3.2 bln chain of taxidermy museums issuing unsecured debt to assault-rifle buyers. Most of the profit at the “World’s Foremost Outfitter” comes from a loan book ballooning in ways that should give suitors pause.
Apollo’s $7 bln ADT deal comes with extra security 16 Feb 2016 It’s an alarming buyout given the state of credit markets. The LBO firm and co-investors, though, are kicking in a big slug of equity to keep debt at a relatively safe level. Merging ADT with another Apollo-owned company should add cost savings and help lock up a decent return.
Anglo American fiddles while debt pile burns 16 Feb 2016 The mining group will divest most of its mines and around 40 pct of its EBITDA to bring down debt. On a good day, its parts look much more valuable than the whole. But reducing debt can’t wait. Cost cuts will only stop things getting worse, and selling assets depends on willing buyers.
Antonin Scalia’s death challenges U.S. leadership 14 Feb 2016 The conservative justice leaves behind a Supreme Court vacancy amid a nasty presidential election campaign. There’s already Republican talk of blocking any Obama nominee to replace Scalia. A governance stalemate threatens to rattle already shaky global investors and economies.
Chancellor: Negative rates, negative implications 12 Feb 2016 The latest weapon brandished by central banks is supposed to boost economic growth and ward off deflation by punishing cash hoarders. In practice, this radical policy damages credit creation, fuels bubbles, threatens civic freedoms and spooks the living hell out of markets.
Bad finance: Mind the non-GAAP @Twitter and beyond 12 Feb 2016 The micro-blogging service lost $521 mln in 2015 yet “earned” a profit of $277 mln after various adjustments. Regulators occasionally squawk about unofficial metrics, but departures from accounting convention that lead to more flattering figures are worth watching like a hawk.
Jamie Dimon aligns money and mouth 12 Feb 2016 JPMorgan’s CEO personally bought some $25 mln of the bank’s shares. This vote of confidence reflects his mantra that lenders do best buying back stock when it’s near book value. It is also an important counterweight to the panic gripping investors in U.S. banks.
Pandora faces lonely search for a partner 11 Feb 2016 The internet-radio service is reportedly up for sale. Q4 results show revenue growth slowing, however, suggesting potential matches are few and far between. Add stiff competition from Apple and Spotify and limited access to music, and the company seems destined to remain alone.
Boeing nosedive reflects fear of wider turbulence 11 Feb 2016 The $78 bln aerospace giant’s shares plunged as much as 12 pct on news of an SEC investigation into its airliner accounting. It looks like an overreaction, but jangly nerves are understandable. After a record run of aircraft deliveries, 2016 is off to a bumpy start.
Morgan Stanley case refutes skeptics of mea culpas 11 Feb 2016 The bank joins JPMorgan and BofA in bad-mortgage settlements acknowledging dodgy behavior. It’s not an admission of guilt but shows critics were wrong to claim firms would fight, rather than reveal misconduct. Greater transparency is a decent legacy for Wall Street’s watchdogs.
Lagarde faces quadruple challenge at IMF 11 Feb 2016 Christine Lagarde’s second term at the helm of the international lender will be no more relaxed than the first. Low oil prices are pushing some energy-producing nations to the brink, markets are in turmoil, and she has unfinished business in Greece. Then there’s China.
Silicon Valley’s smart money inching toward exits 11 Feb 2016 Top venture-capital firms Andreessen Horowitz and Founders Fund each sold a roughly $60 mln stake in privately held car-hailing service Lyft to Saudi Prince Alwaleed. He and GM, meanwhile, invested more in the firm. They may regret going against the gathering traffic.
Congress and markets need more mirror, less Yellen 11 Feb 2016 American lawmakers like to pepper the Fed chair with nitpicky questions and sweeping advice. Monetary policy can modify economic cycles, but so can fiscal initiatives, which are conspicuously lacking. Investors who blame the Fed for trouble can also do more to help themselves.