FirstGroup’s Greyhound activist gets it half-right 11 Dec 2013 Tom Sandell is right that First has cheap stock and a bad track record. It should also take any good offer for Greyhound buses. But his proposed spin-off of other U.S. units looks less useful. The onus is now on First to defend its existing routemap for value creation.
U.S. budget mini-bargain beats no bargain at all 11 Dec 2013 A deal reached between the House and Senate replaces $63 bln in planned cuts and slices another $23 bln from deficits – but it fails to deal with long-term issues. It’s as close as this dysfunctional Congress gets to compromise, just in time for a midterm election year.
Edward Hadas: How not to do healthcare 11 Dec 2013 Prices and rationing are generally effective tools for economic management. Not in healthcare. The U.S. pricing system is chaotic and British rationing has created a bureaucratic monster. But the two contrasting models are both valid – and could be made to work better.
Time Warner Cable could play a little Pac-Man 10 Dec 2013 Being bought by smaller rival Charter would create a debt-laden $100 bln cable giant. Turning the tables would require less borrowing and keep the cost savings. If nothing else, according to a Breakingviews calculator, the idea could point to a higher price for Time Warner Cable.
Watchdogs make Volcker Rule rod for own backs 10 Dec 2013 It bans U.S. banks from outright prop trading and from London Whale-style hedging. But banks have plenty of room to mint coin, including being allowed to bet on government bonds. Wall Street might still complain. But the onus is on regulators to prove if banks step over the line.
GM navigates smart route to CEO succession 10 Dec 2013 New boss Mary Barra has a reputation for both good design and keeping a firm handle on costs. That’s what the automaker, freshly liberated from the U.S. government, needs as it chases more profitable rivals. GM also appointed an independent chairman for good governance measure.
Fading reform hopes take gun shares with them 10 Dec 2013 As the chances of new firearms legislation dissipate a year after the Sandy Hook school shooting, so too should the anxieties that propelled gun sales and the stocks of Smith & Wesson and Sturm, Ruger. Short sellers already have their sights set on a downturn.
Silicon Valley healthcare hubris no match for DC 9 Dec 2013 Google-backed genomics startup 23andMe harnessed the twin philosophies guiding the new economy: technological disruption and regulatory arbitrage. Selling unproven medical tests and ignoring regulators failed to impress the FDA, which essentially shut down the service last week.
Eddie Lampert’s shrinking empire takes another cut 9 Dec 2013 The Sears boss and hedge fund manager is shedding Lands’ End, 11 years after the retailer bought the clothing brand for $1.9 bln. Leaving the division trapped inside Sears was bad portfolio management. Shareholders will be lucky if a spun-off Lands’ End is worth half that.
Food deal shows how investors eat up synergies 9 Dec 2013 Sysco’s $3.5 bln purchase of US Foods received a rapturous reception with the buyer’s stock surging by as much as a quarter, or $5 bln. Hefty cost savings help the merger math. With this sort of reaction to deals, acquirers’ animal spirits won’t remain suppressed for long.
WTO’s small victory saves it from irrelevance 9 Dec 2013 The Bali deal to simplify customs rules lacks the drama of previous rounds. But after more than a decade of fruitless negotiation, it shows global agreements are still possible. The next challenge is to prevent future progress being confined to competing regional blocks.
U.S. economic malaise may at last be wearing off 6 Dec 2013 America added 203,000 jobs last month and the unemployment rate dropped to 7 pct, adding to strong data like the third-quarter GDP growth rate of 3.6 pct. Reduced labor participation and sluggish wages are headwinds to a full-on recovery. But even a little normality is a relief.
Anti-troll bill missing patently obvious fixes 6 Dec 2013 Congress has made a good start on reining in firms that buy intellectual property just to file infringement suits. But true reform would block the vague and self-evident patents that fuel such claims. Lawmakers know the problem. If only they could muster the will to address it.
Benefits of being "G-SIFI" seem to outweigh costs 6 Dec 2013 Since regulators published a list of systemic institutions in 2011, the banks concerned have boosted capital and tamped down their balance sheets. But smaller lenders, particularly in Europe, have done the same. The “too big to fail” club turns out not to be too harsh after all.
Cheap money wrong cure for West’s long-term stasis 6 Dec 2013 Larry Summers seems to think years of negative real interest rates can end “secular stagnation”. That’s too optimistic. If the torpor is demographic and technological, it’s probably incurable. In that case, more money-printing will only bring new financial messes.
Deutsche ditch divines commoditized commodities 5 Dec 2013 The German bank is quitting energy and base metals trading. That should free up capital without hurting results. It’s a helpful step that others like Barclays and BNP Paribas may follow. It won’t, however, fully solve the bigger problem of a swoon making profits elusive for all.
U.S. trading overseer goes a little rogue 5 Dec 2013 Wall Street firms are suing the CFTC for bypassing standard practice when it issued tough guidance last month on overseas buying and selling of derivatives. U.S. dealers may suffer as a result. Absent the usual analyses and consultation, it’s hard for the agency to make its case.
Healthy U.S. GDP growth more mirage than reality 5 Dec 2013 Revising the Q3 estimate up to 3.6 pct sounds promising, but much of the gain came from inventory buildup. That suggests a return to sluggish expansion this quarter. Fueling sustainable growth requires more jobs and less Washington interference for the wealth effect to spread.
Blackstone stock tells similar tale to Hilton’s 4 Dec 2013 The buyout firm’s traded units are at last nearing their $31 debut price of 2007. The recovery coincides with a profitable float of the hotelier, a $27 bln deal Blackstone struck the same year. While the results diverge for investors, both speak to private equity’s timing nous.
Forget museum art – Banksy might help Detroit 4 Dec 2013 Christie’s says artworks owned by the bankrupt Motor City could fetch up to $866 mln. That’s nearly 10 pct of unsecured creditors’ claims. But there’s no need to stop there. With 78,000 abandoned buildings and a Banksy tag worth $1 mln or more, graffiti could save the day.