Trading illiquidity theories lack solid ground 18 Jun 2015 Blackstone’s Steve Schwarzman is the latest financial bigwig to argue that the enforced shrinkage of banks’ activities is hurting liquidity so badly that it could fuel the next crisis. A look at how markets have changed – and how brokers actually behave – suggests otherwise.
Uber skid flashes hazard-lights at sharing economy 17 Jun 2015 A California labor agency says the ride-hailing service’s drivers are employees not contractors. A U.S. judge sounds open to the idea, too. It’s a serious warning sign for backers of TaskRabbit and other Uber-like business models. The added costs would disrupt these disruptors.
Jimmy Lee kept old-school Wall Street relevant 17 Jun 2015 The JPMorgan vice chair, who has died aged 62, lasted 40 years at JPMorgan and its predecessors, through painful mergers, and built valuable businesses. Loyalty, longevity and personality come from another era. But he never lost currency with clients, blue chip and tech alike.
Fed hears data more loudly than IMF and World Bank 17 Jun 2015 The institutions urged the U.S. central bank to delay interest hikes into 2016, but Chair Janet Yellen and her colleagues see rates starting upward this year. With its mandated unemployment and inflation metrics static, the Fed’s analysis now seems to owe more to GDP and wages.
Guest view: Apollo is fleecing OM shareholders 17 Jun 2015 The $1 bln buyout undervalues the specialty chemicals maker, writes Jeffrey Bronchick, whose Cove Street owns a 1.5 pct stake. The implied price Apollo is paying for the main magnetics unit is just 1.7 times EBITDA. Barring a revolt, a go-shop provision is the last best hope.
Wall Street wizardry would benefit its regulator 17 Jun 2015 Gripes about soft penalties and rigged tribunals might ebb if the SEC spun off enforcement duties to the Justice Department. A breakup of this sort promises unlocked value and synergies. One agency could focus on crafting smarter rules while the other nailed more fraudsters.
Fat Americans inflate peculiar stock market bubble 17 Jun 2015 Restaurant IPOs are hot, with chicken-wing outlets soaring to dizzying valuations. So are attempts to deal with obesity. Fitbit’s launching a $3.7 bln float. A loss-making double-chin reduction specialist got a $2.1 bln bid. It all gives new meaning to “overweighting” stocks.
Edward Hadas: Bring on kitchen economics 17 Jun 2015 A distinguished professor accuses his academic opponents of “mathiness”. It is wrong to use fancy formulas to justify intellectual prejudice. The discipline is poisoned by models created with mathematical abstractions. Equations muddy almost all economic debates.
Coty investors in premature lather over P&G swoop 16 Jun 2015 The fragrance group’s shares rose 19 pct on reports it won the auction for its rival’s perfume, cosmetics and shampoo brands. That implies some punchy cost cuts on a complex, as yet unsigned deal that may tie up resources for some time. Shareholders may have to rinse and repeat.
Elizabeth Warren’s anti-buyback call a winner 16 Jun 2015 U.S. share repurchases are hitting record levels. But more cash for shareholders means less for workers and investments. The Massachusetts senator is right to see a political angle. Even if she has no luck in her quest to change the law, she may help make buybacks unpalatable.
Rob Cox: Colt failure more mismanagement than guns 16 Jun 2015 The 179-year-old maker of the revolver that won the U.S. West has filed for a fast-track bankruptcy. Sciens, the buyout firm that sucked Colt dry with dividends and fees and now owns its headquarters, is the default bidder. That could mean déjà vu for the gunmaker and lenders.
Kirk Kerkorian: the carmaking king who wasn’t 16 Jun 2015 The billionaire, who has died at age 98, helped shape Las Vegas. He was less successful, though, at trying to inject a unique brand of fuel into Detroit’s engine. Kerkorian’s career is a sobering lesson for Fiat boss Sergio Marchionne, who drives his own brand of auto activism.
Goldman may lose its way on Main Street 16 Jun 2015 The Wall Street denizen plans to lend to regular Joes and Joannes online. Healthy returns probably await. CEO Lloyd Blankfein may also hope a broader set of customers comes in handy in the next crisis. It’s a big strategic change, however, fraught with distractions and risks.
Wall Street lead over EU banks looks set in stone 16 Jun 2015 European trading and advisory revenue is down 30 pct since 2010 while U.S. investment banking has grown. Now Deutsche Bank and HSBC are cutting further, even more ground will be ceded. The region’s tentative recovery and capital markets project offer only slim hope of a reversal.
U.S. homebuilders pour $5 bln slab of common sense 16 Jun 2015 Standard Pacific and Ryland have unveiled a purported merger of equals that actually approximates one. Investors even pushed both stocks up over 5 pct on Monday. The new group needs help from housing markets – but if it’s approved, the deal looks like a solid foundation.
Under Armour dresses in ugly Google governance 16 Jun 2015 The $18 bln athletic-wear maker wants to hand out a new class of stock, as the web search giant recently did, to keep control in founder Kevin Plank’s hands. Super-voting stock is bad enough. Changing the rules on shareholders is worse. The Great Man theory has gone wild.
Fed might fret about emerging market "spillback" 16 Jun 2015 Weak investment and import demand in developing nations is threatening to drag down U.S. growth just as the Federal Reserve mulls raising interest rates. The central bank was able ignore the effects of its bond-buying on others. But a spillback could choke the American recovery.
Health insurer M&A is risky Obamacare side effect 15 Jun 2015 Cigna rebuffed Anthem’s $45 bln offer while mulling a $32 bln bid for Humana. The urge to merge is a predictable attempt to boost profit after the controversial law clamped down on premiums. With only five big insurers, though, any deals will get a thorough antitrust checkup.
Judge humbles Greenberg and Uncle Sam in one shot 15 Jun 2015 The former AIG boss proved the insurer’s $182 bln rescue was technically illegal, yet the government owes him no money. What can probably be spun as a victory for both sides will surely please neither. The reality is that huge egos have finally been cut down to size.
Hudson’s Bay wangles way back to Teutonic roots 15 Jun 2015 The Canadian owner of U.S. store Saks – once an English company headed by a German – has the best of a $3 bln deal to buy Cologne-based retailer Kaufhof. Offloading real estate will help it finance the trade. It also gives Hudson’s Bay a cushion against old world risks.