Brazil pulls monetary levers while G7 pushes 3 Apr 2014 In contrast to the U.S., Japan and the EU, Brazil’s money is tight with short-term interest rates now up to 11 pct. The problem is that budget leakage is causing price surges. Rates could usefully come down, but Brasilia needs a dose of German-style fiscal discipline first.
Oi’s botched offering besmirches Brazilian markets 3 Apr 2014 The telecom firm’s $10 bln share issue grants favors to top owners while severely diluting minority holdings. And the CEO’s big mouth almost derailed the deal. Still smarting from the failures of tycoon Eike Batista, Brazil can’t afford to test investor patience much further.
Carlyle descends into a public-private inferno 3 Apr 2014 The mayor of a U.S. city once called Hellgate is using eminent domain to try and seize the local water utility the buyout firm acquired in 2011, a deal he backed. The clash shows why joint efforts between governments and investors to improve infrastructure don’t proliferate.
A field guide to shareholder-friendly activism 3 Apr 2014 Agitators like Carl Icahn say they operate for the benefit of all investors. It depends on the goals and methods. Critiquing lax governance or nominating qualified new blood to a dozy board fits the bill. Special dealing doesn’t. Breakingviews shows how to spot the right animals.
Blythe Masters could chair Glencore 3 Apr 2014 The derivatives mastermind is leaving JPMorgan’s commodities unit after its sale to Mercuria. Her next stop could be Glencore. The trading house’s all-male board looks anachronistic. It needs a chair to keep Ivan Glasenberg in check. And her banking nous would be useful.
GM could use a tip from BP on contrition’s risks 2 Apr 2014 The automaker hinted it might compensate victims of faulty cars, despite the legal shield of its bankruptcy. The energy giant made similar concessions after the Gulf oil spill, with disastrous financial results. The cases differ, but both are reminders of conciliation’s perils.
Market health gives Obamacare long life 2 Apr 2014 The president’s insurance scheme secured the 7 mln registrants it was targeting. Stocks in the healthcare sector also have soared by 81 pct since the Affordable Care Act was enacted. The Republican budget may ignore the plan, but strong forces have entrenched it.
Chilean quake spares economy, as do tax reforms 2 Apr 2014 Tuesday’s huge tremor has brought blessedly limited loss of life and property. That’s good for all involved, including investors. President Bachelet’s tax plans, unveiled on Monday, also avoid harm to Chile’s prospects. Falling copper prices remain the biggest risk.
Virtu IPO blocked by high-frequency trading cloud 2 Apr 2014 The “technology-enabled market maker” may say it’s different, but much of what it does sounds similar to the controversial trading method that’s back in the spotlight. Delaying the float could protect a mooted $3 bln valuation – and anyway, there’s no obvious rush to go public.
Edward Hadas: Wealth buys less lifestyle, more power 2 Apr 2014 President Obama calls inequality the defining issue of our time. The general public isn’t persuaded. That could be because the gap in lifestyles has hardly widened. The real problem is the relative power of the elite. That is dangerous – it threatens to undermine democracy.
Rob Cox: GE should put itself up for sale 1 Apr 2014 April Fools’ Day joke? Nope. It’s a shareholder proposal on the ballot at GE’s annual meeting. Setting aside the absence of buyers for a $260 bln company, it illustrates the kind of shareholder democracy gone wild that many boards and an SEC commissioner would like to squelch.
GM can find small comfort in Toyota’s ride 1 Apr 2014 The U.S. automaker recalled more cars and doubled the estimated cost for the first quarter ahead of boss Mary Barra’s Capitol Hill grilling. Even so, Toyota’s recent fiasco suggests the financial fallout should be manageable. GM’s culture will be harder to repair.
Goldman’s NYSE exit further stokes HFT debate 1 Apr 2014 The Wall Street bank may yank its last humans from the exchange floor. It has also invested in electronic venues like BATS and is a big customer of newcomer IEX, which aims to neutralize high-frequency traders. Goldman’s timing is apt for the latest bout of market scrutiny.
Banking goliaths can indeed be tamed 1 Apr 2014 No country has ended the problem of maybe needing to rescue a hulking financial institution. A new IMF report, though, shows the United States has done a better job than most with stronger rules and less concentration. A $600 bln subsidies figure also gives lawmakers a target.
Deflationary world can still stoke asset inflation 1 Apr 2014 The U.S. economy is a test case for the baffling coexistence of inflated asset prices and disinflation in consumer prices. Poor capital utilization and wonky income distribution – a sharp drop in workers’ share, a jump in financiers’ take – help resolve the mystery.
High-speed traders just latest market rent-seekers 31 Mar 2014 In “Flash Boys” Michael Lewis claims they are rigging equity markets. Even the Goldman COO acknowledges concerns. New rules, taxes or structures could reduce unfair advantages. While someone has to make money making markets, profit shouldn’t be allowed to grow unchecked.
GM, regulator dabble in Wall Street shortcomings 31 Mar 2014 A combo of laziness, greed and incompetence characterized the response by the carmaker and its overseer to the ignition switch fault. In this sense, the Detroit saga echoes many of the corporate and regulatory failings that preceded - and contributed to - the financial crisis.
Mike Cavanagh takes a pushmi-pullyu pay cut 31 Mar 2014 Jamie Dimon’s protégé at JPMorgan is working for less at Carlyle, estimating his new incentive pay using recent results. On the one side, Cavanagh may have really wanted out of the banking grind. On the other, if he can help Carlyle grow a lot he could score a mega-payday.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
Official attention will make or break bitcoin 31 Mar 2014 Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.