SAC charges challenge hedge fund model 26 Jul 2013 The U.S. government’s indictment suggests recruitment should focus on compliance over money-making ability, turns investment “edge” into a dirty word, and implicitly questions the “mosaic” technique of information-gathering. It’s a worry for Steve Cohen’s industry peers.
UBS $885 mln payout is big win for FHFA’s DeMarco 26 Jul 2013 Among the most reviled regulators inside the beltway, Fannie Mae and Freddie Mac overseer Edward DeMarco merits Washington’s respect. One of the 18 suits filed under his watch against lenders who sold the agencies dodgy mortgages hit pay dirt. And there’s probably more to come.
Vivendi compromises to get shot of Activision 26 Jul 2013 The French conglomerate is selling most of its stake in the video games maker for $8.2 bln. With this and the sale of Maroc Telecom, Vivendi’s promised reinvention is finally underway. But in neither case do its shareholders get the premium that usually comes with ceding control.
Latest US mortgage kickstarter’s clever but costly 25 Jul 2013 Freddie Mac is selling the first agency home-loan bond that offloads some risk from taxpayers to investors. Such innovations are crucial for reducing Uncle Sam’s exposure to the housing market. But at current rates, investors are getting most of the benefits at Freddie’s expense.
SAC staffers take the bullet meant for Cohen 25 Jul 2013 Unable to nail the billionaire hedge fund boss, the U.S. has charged his firm instead. SAC may be culpable, but the allegations largely involve actions years ago by ex-employees. That leaves current staff to suffer the fallout. There’s too much spite mixed in with the justice.
Lazard shows M&A rankings have few clothes 25 Jul 2013 The Wall Street firm ended this year’s first half in ninth place for its share of completed deals, yet it was in the top five for revenue. Business mix explains some discrepancies like this. Others result from rival banks grabbing credit even when they haven’t done much work.
Merkel a collateral victim of U.S. spying scandal 25 Jul 2013 Widespread U.S. spying on German Internet and mobile-phone users is angering voters. Angela Merkel doesn’t seem to take the debate seriously. It’s unclear what she knew about possible German involvement. Her battered credibility could have electoral consequences.
Baidu digs deeper trench in China’s mobile wars 25 Jul 2013 More than 10 pct of the search engine’s revenue now comes from mobile. Google and Facebook show how heavy investments can pay off over time. Yet the cost is high and margins get squeezed. In China, competitive lines are more blurred. Returns may be even longer in coming.
Facebook answers questions rivals can’t 24 Jul 2013 Big tech firms have reported subpar Q2 earnings, with Microsoft the leading victim of the shift to mobile computing. By contrast, Mark Zuckerberg’s social network is thriving on portable gadgets, and Facebook’s revenue growth was the fastest since its IPO. There’s more fuel here.
Banks needn’t always eat their mortgage cooking 24 Jul 2013 Making them retain risk sounds logical. But U.S. lenders had lots of home loan exposure before the crisis, without such rules. Higher standards and the obligation to take back bad loans bring similar incentives. And cautious flexibility from regulators may revive securitization.
Crazy ethanol policy heads for clash with reality 24 Jul 2013 U.S. rules force refiners to mix more of the stuff with gasoline – or pay not to. That has quickly become expensive and is likely to get worse, crimping gasoline and diesel supplies, jacking up prices and burning $160 bln in consumers’ wallets. It’s time for Congress to act.
Michael Dell tries to crush passive resistance 24 Jul 2013 The minuscule increase in price for his eponymous computer company won’t win many shareholder votes. But he and backer Silver Lake want the board to stop treating abstentions as rejections. If adopted, investors wanting to scupper Dell’s buyout would have to vote against it.
Edward Hadas: Static in the electricity market 24 Jul 2013 It’s hard to assess banks’ legal and moral culpability in the allegations of manipulation made by the U.S. power industry watchdog. But the difficulty in reaching a judgment has much to do with the fundamental futility of using financial markets to set the price of electricity.
Auto bailout may offer fix to Motown pension fight 24 Jul 2013 City workers may have to take a hit in bankruptcy court, but there are ways to ease the pain. GM cut retirees severely but let them recoup some losses in the turnaround. Giving Detroit employees a similar option would be a controversial but fair solution to a thorny legal issue.
Apple overcomes China blues for now 24 Jul 2013 One of the tech giant’s most reliable engines for growth has been Chinese demand. It flamed out last quarter, however, with revenue from the Middle Kingdom shrinking 14 percent. Solid U.S. sales helped compensate, but Apple will need new products if it wants to shine again.
New-age trade clubs: A guide for the perplexed 24 Jul 2013 With the Trans-Pacific Partnership, global trade is going private. Japan has joined economies as diverse as the United States and Vietnam in drawing up a new accord. It looks like fragmentation, but with sensible rules, the TPP could give the bigger WTO a new lease of life.
Ailing U.S. mortgage agency needs stronger walls 23 Jul 2013 The Federal Housing Administration is $16 bln in the red. Now a bipartisan group of senators is trying to boost the agency’s capital and oversight. Their bill, though, doesn’t go far enough. Without more robust rules on lending standards, the FHA will remain a fixer-upper.
Music raves better off in clubs than Wall Street 23 Jul 2013 Just don’t tell Robert F.X. Sillerman, who’s rolling up the electronic dance music business under one big disco ball the way he did rock concerts. Much of the $175 mln SFX Entertainment wants to raise in an IPO is already committed to deals. This party promises a bad hangover.
Shrinking mobile gadgets fuel creative destruction 23 Jul 2013 Microsoft, Intel, and Google all reported disappointing quarters. The shift from PCs to portable devices is the root cause. While all of these firms face problems from the shift, Microsoft – which has lost $30 bln of market cap in under a week – is in the most parlous position.
End of warehousing gravy train is reason to cheer 23 Jul 2013 Low rates, light regulation and a lack of publicity let banks and commodity traders pocket easy profits hoarding metal in their own warehouses. Banks were already eyeing the exit, but U.S. authorities’ fresh scrutiny of the socially useless practice should accelerate its demise.