James Gorman can leave Brian Moynihan in slow lane 18 Dec 2014 The Morgan Stanley and BofA CEOs each marks five years in charge in 2015. Neither has had an easy time of it. Gorman, though, ought to be able to lead his firm back above a 10 pct ROE – an important, if humdrum, ambition. Moynihan’s lending behemoth remains a ways off that.
Avon exposes ugly side of doing business in China 18 Dec 2014 The U.S. cosmetics company’s Chinese subsidiary gave officials handbags, holidays and cash to access a huge market. The rationale: muddy markets make dirty hands. Avon has learned its lesson with a $135 mln fine. Elsewhere in China, the belief that bribery pays remains engrained.
Uncle Sam closer to nixing one of dumbest policies 17 Dec 2014 President Obama intends to relax the U.S. embargo on Cuba. The egregious restrictions failed in their intent, won little support abroad and served only domestic political purposes. Removing trade barriers will bring a mini economic windfall and, ultimately perhaps, freedom.
Fed builds in wiggle room for rate surprises 17 Dec 2014 The U.S. central bank now puts “patience” above needing “considerable time” for changing monetary policy. It suggests Chair Janet Yellen is focusing more on data than anything else. That could stoke interpretive disagreements on the committee – but also spark unexpected hikes.
Rob Cox: Sony email shareholders would like to see 17 Dec 2014 The hacking scandal at the Japanese conglomerate’s Hollywood studio isn’t just embarrassing. It’s a business problem for a company already struggling to turn itself around. Herewith, a fictional selection of internal messages Sony’s board ought to be fielding.
Europe could edge past U.S. in race to courthouse 17 Dec 2014 New rules and bank scandals boost financial fraud and class-action filings in Britain. Patent combatants flock to German judges. And spats over failed investments clog EU courts. The upshot: a lawsuit boom that may topple America as the world’s business litigation capital.
M&A "clear day" defenses can cloud investor rights 17 Dec 2014 Anti-takeover protections adopted before threats arise are more apt to weather legal scrutiny. It’s one reason Allergan was able to resist Valeant’s $52 bln bid. When triggered reactively, they’re considered unfair surprises. Either way, shareholders often get unneeded cover.
Baidu’s Uber stake is more hype than substance 17 Dec 2014 The Chinese web giant is already behind rivals Alibaba and Tencent in mobile taxi-apps. Strategically the tie-up looks like a coup. But without financial terms, investors are left in the dark. Uber’s controversial track record and Baidu’s shrinking margins add to the uncertainty.
This is as good as global recovery gets 16 Dec 2014 Since 2009, each new calendar year has brought declarations of the end of the crisis and predictions of an economic upswing. This time the mood is gloomy, and with reason. Weak growth turns out to be the new normal, not part of the transition.
Shooting suit may bring capitalism to arms makers 16 Dec 2014 A U.S. law shields firearms firms from product liability, making litigation over a Connecticut school tragedy a stretch. But the exemption arguably gives the likes of Bushmaster an unfair edge. The case will succeed if it prods Congress to treat gun companies like any others.
Jefferies closes annus horribilis on wicked downer 16 Dec 2014 The Wall Street firm racked up a $93 mln fiscal Q4 loss. Boss Richard Handler says a senior banker’s messy public divorce had no material effect. Poor trading, a bum acquisition and one big bad debt took their toll. It’s a damaging concoction that should be limited to Jefferies.
Uber’s law flouting could bring joyride to a halt 15 Dec 2014 The taxi app company is covering drivers’ fines for illegal pick-ups. That may be just another business expense to a firm that earned a $40 bln valuation by moving quickly and breaking the rules. But the legal, lobbying and PR costs of reckless behavior are accelerating fast.
BT makes biggest possible call on UK mobile 15 Dec 2014 The telco is nearing a 12.5 bln stg purchase of EE from Orange and Deutsche Telekom. That’s a surprisingly high 7.9 times EBITDA. Still, cost savings will help. And if BT wants to be big in mobile, buying the biggest UK network with the best mobile broadband offering makes sense.
Solar upstarts and utilities head for uneasy truce 15 Dec 2014 The soaring popularity of solar panels in the U.S. cuts carbon emissions but upsets utilities trying to make a return on grid investments. The industry’s attempts to slap fees on solar users sparked uproar in 2014. A new cost-sharing approach may take the heat out of the debate.
BC Partners strains at the leash for PetSmart LBO 15 Dec 2014 The private equity firm has come out on top in an $8.7 bln auction of the biggest U.S. pet-store chain. It’s 2014’s largest buyout. But paying 9.1 times trailing EBITDA looks loose. And while plenty of banks are offering financing, the debt levels could make regulators bristle.
European telecoms will dial up more deals 15 Dec 2014 Investors have brightened as M&A has swept the sector. Thanks to BT, Britain is up next. More mergers could follow in France, Italy and Belgium. What’s not to like? Well, windfalls from big cross-border deals looks distant and valuations already price in most of the good news.
U.S. budget spat puts bankers, lawmakers to shame 12 Dec 2014 Wrangling over a change to Dodd-Frank has delayed a deal to keep the government open. The amendment may only weaken financial reform slightly. But it smells bad that Wall Street wrote and lobbied for it. Allowing it to slow a $1 trln bill is another sign of Congress’s dysfunction.
Goldman updates IPOs for the Candy Crush era 12 Dec 2014 CEOs of firms heading for public markets are hooked on the bank’s app, which enables them to track results of roadshow book-building in real time. With Apple and IBM coding mobile software for big companies, the smartphone economy is swiftly moving from living room to boardroom.
Review: "Forgotten Depression" worth remembering 12 Dec 2014 James Grant’s new book on the U.S. government’s response to the 1921 crash is a timely reminder that our forebears knew of other, apparently more efficacious, remedies to cure financial hangovers than the hair of the dog.
LendingClub’s IPO brands it the Tesla of finance 11 Dec 2014 The loan platform’s shares soared after pricing above the range. Like Elon Musk’s electric carmaker, it’s now a disruptor with a good toehold in its sector and a sky-high valuation. As with Tesla, though, LendingClub’s stock market success rests on sentiment, not financials.