Volatility is the new weather for Citi and BofA 15 Jan 2015 Both joined JPMorgan in blaming market ups and downs for hurting earnings. That’s rich after years of claiming conditions were too docile. Nor can it mask the deeper problem at the two banks. Even if traders do better and one-offs are stripped out, returns remain inadequate.
Target’s Canada retreat shows benefit of new broom 15 Jan 2015 Investors cheered the $50 bln U.S. retailer’s decision to close shop north of the border, where the poorly executed “cheap chic” concept didn’t take hold. At least it wasn’t the current CEO’s idea. That means he can safely take a $5.4 bln pre-tax loss and focus elsewhere.
Rob Cox: It took the Grim Reaper to restructure GM 14 Jan 2015 The carmaker’s swift bankruptcy sparked less soul-searching than the process of determining who died from faulty ignitions. Bringing Ken Feinberg in will go down as CEO Mary Barra’s smartest decision. She should go a step further and memorialize the dead in the lobby of GM’s HQ.
MetLife SIFI suit is risk for harried watchdogs 14 Jan 2015 U.S. courts have squelched a slew of securities and commodities rules. Systemic tags may be next as the insurer challenges its big-and-risky designation. Activist judges are often blamed, but sloppy, rushed regulators are likelier culprits. More watertight rulemaking is in order.
JPMorgan augurs year of mediocrity for big banks 14 Jan 2015 The Wall Street giant’s Q4 had some bright spots. But more lending is doing little for results, trading suffered from the wrong kind of volatility, revenue was down, expenses up. Absent cost cuts or a big rate hike, 2015’s not looking rosy for boss Jamie Dimon and his rivals.
Wells Fargo may get more from oil drop than rivals 14 Jan 2015 The largest U.S. lender by market value may take some hits from the plunging price of black gold. These should be small. But the extra cash in consumers’ pockets should benefit the bank. Healthier housing and labor markets should help. Outperforming, though, will be harder.
No one should buy AOL 13 Jan 2015 Yahoo and Verizon are the latest to be linked to the onetime internet darling. As its ad business struggles to grow, most of the company’s profit still derives from subscriptions of yore. Even using AOL to save taxes would be tough. Any takeover rationale would be a stretch.
Obama and lawmakers toy with art of compromise 13 Jan 2015 The president and Congress have reached a deal to renew government-backstopped terrorism insurance. Reducing taxpayers’ exposure helped sway those against aiding the private sector. Issues like housing finance may be harder to fix. But at least Washington’s not in total gridlock.
Obama pulls a Warren to put a banker at Treasury 13 Jan 2015 The president bypassed opposition to Lazard’s Weiss by naming him to a post not needing Senate approval. That’s the trick used to install Senator Warren, Weiss’ big critic, as a consumer watchdog. Even with a broken confirmation process, the White House gets the expertise it needs.
MetLife’s Snoopy takes on the regulatory Red Baron 13 Jan 2015 As JPMorgan showed, challenging Wall Street’s overseers can come back to haunt. Now MetLife boss Steve Kandarian is taking his insurer’s designation as a SIFI to a U.S. federal court. He may have a point, and the right to legal redress, but his stance carries risks of its own.
Dollar stores prove more cash can make less sense 12 Jan 2015 Discount chain Dollar Tree’s $8.5 bln bid for Family Dollar may win after all. Rival suitor Dollar General offered $9.1 bln – and a higher cash stake – but probably couldn’t satisfy trustbusters without closing more outlets. The Dollar Tree deal adds up for selling shareholders.
Thiel bets regulators just blowing smoke on weed 12 Jan 2015 The PayPal founder’s investment in a marijuana business could run up against U.S. anti-drug laws. Like sharing-economy upstarts Airbnb and Uber, though, the billionaire wagers the legal haze will clear. With banks unable to take that risk, the reward could be sky-high returns.
Tech steering carmakers down valuation dead end 12 Jan 2015 As the Detroit auto show kicks off, manufacturers from Toyota to Ford to VW are getting little, if any, credit for profit growth. Recalls, currencies and geopolitics are all to blame. Longer term, they’ll feel the squeeze from connected vehicles. Low multiples may be here to stay.
Roche tries to recapture the Genentech magic 12 Jan 2015 The Swiss drugs giant is paying about $1 bln for up to 56 pct of cancer testing firm Foundation Medicine. The structure echoes its success taking control of Genentech in 1990 and leaving it independent. A whopping 109 pct premium reflects Roche’s mistake of low-balling Illumina.
Shire gambles AbbVie break fee on risky $5 bln deal 12 Jan 2015 The Dublin-based drugmaker is buying NPS to expand in lucrative rare drugs. The 51 pct premium is covered almost entirely by compensation from the collapse of Shire’s sale to U.S. peer AbbVie. That doesn’t much mitigate the risk of doing a deal ahead of a key regulatory ruling.
Proxy fight as much about Peltz’s Trian as DuPont 9 Jan 2015 The billionaire activist is seeking four board seats at the chemicals group, his first public contest since Heinz nine years ago. Flexing muscle sends a message to other stubborn targets, like Pepsi. It also gives younger staff at Trian Partners experience in the trenches.
U.S. jobs plentiful but too cheap for comfort 9 Jan 2015 Strong employment growth last year was marred by a late hit to wages. Blame the workforce participation rate and low-paying new jobs. Minimum wage initiatives might help, though have their own drawbacks. Republican attempts to redefine the work week look even more ludicrous.
Review: Trade can bring war 9 Jan 2015 Intimate commercial relations do not bring international peace, as James Macdonald demonstrates in his discussion of WW1. Striving for autarky is worse. “When Globalization Fails” argues that a trusted global hegemon reduces conflicts. America’s relative decline looks ominous.
M&A at last finds a way for lawsuits to pay 8 Jan 2015 Cases challenging deals are often flimsy. Merger appraisal suits that allow investors to sue for higher prices have, though, proven strong. A ruling against Ancestry.com makes the strategy even more appealing. It’s one litigation process that doesn’t just benefit the lawyers.
Biotech unicorn startups thrive in darkness 8 Jan 2015 Moderna’s the latest to be worth at least the $1 bln that earns the moniker of the mythical beast. It aims to develop 100 drugs in 10 years. That’s laudable, but the technology may not work in humans. Moderna’s valuation is another sign the biotech boom’s flirting with fantasy.