Common sense could yet bring U.S. debt limit deal 24 Sep 2013 Republicans who want to torpedo Obamacare are off track. And blocking an increase in the federal debt limit proved bad politics in 2011. But trading a higher borrowing cap for fixes to recent cuts and long-term retirement benefits could help the economy and the GOP’s image.
BofA trial could cut crisis accountability deficit 24 Sep 2013 The bank, like its peers, has paid hefty mortgage settlements without admitting fault. Now it must answer to a U.S. jury for selling Fannie and Freddie bad paper. The lender could beat the fraud charges, but it may finally have to come clean about its role in the 2008 meltdown.
Only PDVSA can make Petrobras look commercial 24 Sep 2013 The unreliable Venezuelan state oil firm isn’t paying its way, so the Brazilian giant is taking over a joint $17 billion refinery project. It shows how political deals can go astray. Brasilia should take note. The more it interferes, the more Petrobras looks like another PDVSA.
Chrysler impasse needs Fiat to make first move 24 Sep 2013 A year-long shareholder dispute about the value of the U.S. automaker has now led to an IPO filing. Listing would be an expensive waste of time. The sensible road out of this boggy no man’s land is marked “compromise”. Fiat is best placed to crank the process into first gear.
M&A diplomacy features in $29 bln tech deal 24 Sep 2013 Applied Materials has heeded local sensitivities and ceded governance duties in its acquisition of Tokyo Electron. At the same time, most of the financial benefits will accrue to its own shareholders. The merger is a tactful inauguration of Abenomics-style corporate reform.
BlackBerry shares finally find bottom of sorts 23 Sep 2013 Backer Fairfax has made a $4.7 bln buyout offer for the beleaguered smartphone maker. That might be justified by the company’s $2.6 bln of cash plus the market value of its IP. But a meltdown in demand for its phones makes the case for a successful turnaround a fragile one.
Supreme Court’s Wall Street bias needs redress 23 Sep 2013 The U.S. justices are hearing more securities law cases than ever. Yet they too often block investors and watchdogs from pursuing financial fraudsters. The court’s new term will start with suits involving Ponzi schemer Allen Stanford. It’s a chance to set tougher precedent.
Fixed income lull could be more than flash in the pan 23 Sep 2013 Investment banks are warning that third-quarter revenue from trading debt, currencies and commodities will be down. That partly reflects a knockout quarter last year. But Fed tapering and tougher leverage requirements are good reasons why activity may settle at a lower level.
BlackBerry washout leaves a white-collar stain 23 Sep 2013 The original smartphone arrived at the dawn of the new millennium as the gadget of choice for a mobile Wall Street class. This spawned an aspirational boom among consumers. Fittingly, its demise is occurring with the BlackBerry as a symbol of the professionally indentured.
Fed politics may just preserve Fed’s independence 20 Sep 2013 Inadvertently, that may be the case. The president’s guy, Larry Summers, was torpedoed by Congress, suggesting political meddling. But if the Fed’s internal choice, Janet Yellen, gets the job, isn’t the central bank’s power maintained? It’s a messy way to the right outcome.
Brazil’s pushy oil nationalism five years late 20 Sep 2013 Costs, poor terms and state meddling persuaded the likes of Exxon to avoid the auction for the country’s largest field. Brasilia may have gotten away with it before the jump in global reserves from the shale revolution. Now playing hardball may mean lower output – and less lucre.
Failed petrostates threatened by new oil bounty 20 Sep 2013 Oil majors are becoming less tolerant of the political risks and corruption they’ve coped with in the past. That’s bad news for the likes of Nigeria or violence-prone Libya. With safer crude on offer in the U.S. and elsewhere, troubled states risk an exodus of expertise.
Activist would contest Obama’s capital allocation 19 Sep 2013 The U.S. president is spending the biggest stock of his political fuel on security and defense, a Breakingviews analysis shows. If he were a CEO, an uppity shareholder would want more focus on the economy, jobs and fiscal challenges. Obama can deploy his dwindling capital better.
JPMorgan’s management failings beggar belief 19 Sep 2013 Many of the Whale fail’s gory details were already known. But U.S. and especially UK watchdogs have given the most jaw-dropping account yet of how the bank mismanaged the trading book, responded to the crisis and misled its regulators. CEO Jamie Dimon has even less wiggle room.
Fed does to Europe what ECB, BoE couldn’t 19 Sep 2013 The U.S. central bank’s non-taper has done more for European money market rates in one day than the ECB and the Bank of England’s “forward guidance” policies did in weeks. Policymakers across Europe will be glad for the help, but it makes them look weak. That is a problem.
Old HP sets breakup example for new HP 19 Sep 2013 Agilent is considered by Silicon Valley veterans as the “real Hewlett-Packard.” Spun off in 1999 with the company’s original testing products and research DNA, it has outperformed its former parent and is now splitting to create yet more value. HP can learn from its progeny.
Bernanke is trapped by a discredited assumption 19 Sep 2013 The Fed chairman’s continued bond-buying pours fuel on market fires. The dire legacy of the last credit boom is yet to be overcome but Ben Bernanke still seems to believe he can ignore the dangerous side effects of easy money. He needs to embrace macro-prudential regulation.
Fed brings Asia short-term relief, long-term risks 19 Sep 2013 The U.S. central bank’s decision to keep printing money eases the pressure on India and Indonesia to cure their dollar addiction by squeezing domestic growth. But if the reprieve lasts more than a few months, it may encourage complacency. That poses fresh dangers for the region.
Fed’s non-tapering amounts to bigger money-drop 18 Sep 2013 Despite an improving economy, the U.S. central bank stuck with buying $85 bln of bonds each month. With government borrowing needs and mortgage volumes down, Ben Bernanke is effectively increasing monetary stimulus. No wonder markets were taken pleasantly aback.
Sports betting case may draw ace at top U.S. court 18 Sep 2013 A New Jersey law allowing gambling on the Super Bowl and the like was blocked in a lower U.S. court. But one judge countered that the ruling undermines state constitutional rights. That’s a rare, high-stakes issue that could tempt the Supremes. The Garden State needn’t fold yet.