Morgan Stanley only inches toward respectability 18 Jul 2013 Results improved across the board for boss James Gorman. Though Q2 profit of $800 mln equates to a weak 5.2 pct return on equity, it’s better after factoring in one-offs and a surprise stock buyback. Even so, parts of Morgan Stanley’s investment bank are still a work in progress.
Dell shareholders get time to come to their senses 18 Jul 2013 With the vote on a $24 bln buyout too close to call, the PC maker put off the decision for a week. The hope of a sweetened bid from Michael Dell and Carl Icahn’s eleventh-hour lobbying proved too alluring. Sleeping on it a bit more, though, should make Dell’s hard reality clear.
Nelson Peltz ends Pepsi’s game of kick the can 18 Jul 2013 The uppity investor went public with a $60 bln plan to crunch together Pepsi’s salty nibbles with the sweet treats of Mondelez, or a carve-up alternative. Both ideas may be Activism 101 but they’re also sensible enough to put the onus on CEO Indra Nooyi to make a strong defense.
Does Ben Bernanke fancy himself a Jedi knight? 17 Jul 2013 The Fed chairman implied his most important duty is to ensure markets understand where monetary policy is heading. The past month has shown how hard that can be when investors hear what they want to hear. Unless Yoda he is, tapering and rate hikes will cause painful lurches.
BofA looks like Wall Street’s biggest loser 17 Jul 2013 Expense cuts and equities helped Q2 profit surge 63 pct. But FICC trading lagged. And compared to fellow crisis laggards Citi and Morgan Stanley, BofA’s returns are poor, its book value stagnant and its stock moribund. CEO Brian Moynihan still has much more flab to shed.
Chevron’s Argentine energy gamble not so reckless 17 Jul 2013 The energy group is wagering $1.24 bln on a shale project just a year after the nation seized assets from Spain’s Repsol. That shows a strong stomach not a short memory. With the world’s No. 2 gas reserves on offer, Chevron’s audacity may help it outflank fainter-hearted rivals.
Barclays’ $453 mln power-trade spat looks lose-lose 17 Jul 2013 The UK bank says the final U.S. regulatory judgment that it fiddled power prices is dead wrong. The fine is too large to count as a cost of doing business. Barclays may win in court, but a lengthy trial will keep the focus on the bank’s racy past, not its sober future.
Billabong pays up for shelter from debt storm 17 Jul 2013 In return for saving the Australian surf brand from a potentially fatal debt crunch, private equity group Altamont gets a 12 pct coupon on loans and up to 40 percent of Billabong’s equity. Existing investors will see scant returns, but without this deal they could have been sunk.
Now comes the hard part for Marissa Mayer 16 Jul 2013 It has been a good first year for the Yahoo boss, whose arrival and geek chic revived investor enthusiasm about the wayward internet company. As Q2 figures show, however, salient financial measures haven’t improved under her stewardship. The honeymoon is officially over.
Wall Street feels filibuster’s double-edged sword 16 Jul 2013 A compromise by U.S. legislators avoids a nasty showdown that could have led to even greater political dysfunction in Washington and roiled financial markets. The price, however, was the confirmation of a watchdog the money industry loves to hate.
Goldman isn’t yet the envy of Wall Street again 16 Jul 2013 The bank’s $1.9 bln second-quarter profit beat estimates. Most of it, however, was generated by a lower tax rate and investments that may prove tough to duplicate. Trading was good, though didn’t outshine rivals. Asset management was flat. For now, Goldman is better but not best.
Brazil’s economy reacting the old-fashioned way 15 Jul 2013 Aggressive monetary policy with the cost of money falling sharply has been followed by an inflation surge causing the central bank to raise rates three times. That’s a cycle all too familiar in the 1970s developed world of public sector overspending and private underinvestment.
Republicans add bricks and mortar to mortgage fix 15 Jul 2013 A new House bill offers some good ways to construct a durable financing market for home loans. It still has warts, but would reduce reliance on taxpayers and entice private capital back in. Together with the Senate’s more politically palatable version, it could be a winning mix.
Citi’s new test: building on return to mediocrity 15 Jul 2013 The bank’s $3.9 bln Q2 profit is its best and cleanest showing in years. The 9.7 pct return on tangible equity almost covers the cost of capital. CEO Mike Corbat now needs to show Citi can be a long-term success and avoid its historical tendency of lurching from crisis to crisis.
Banks dodge a bullet with transatlantic swap deal 15 Jul 2013 A deal between U.S. and European regulators will allow transatlantic swaps to be booked outside America. The CFTC seems to accept Brussels’ own reforms could help stop another AIG-style blowup. Just as well: a tougher U.S. line could have wrecked business at all global banks.
JPMorgan, Wells gains mask potential banking pain 12 Jul 2013 Both banks notched up better than expected Q2 results despite the recent interest-rate spike. Now investors seem confident they will soon profit from higher rates. But loan growth remains tepid and some business will slow. That may lead to disappointment later in the year.
Fruity American M&A saga may be about to ripen 12 Jul 2013 Nearly 25 years after it was carved up, Del Monte could be put back together. Along the way, the food giant became part of dealmaking lore, linked to RJR Nabisco, Polly Peck and a landmark conflicts ruling. Del Monte is almost a textbook unto itself for barbarians and bankers.
Review: "Balance" missing from analysis of decline 12 Jul 2013 Glenn Hubbard and Tim Kane try to draw lessons for today’s United States from the fate of past great powers. The economic analysis of historical falls from greatness is mostly convincing, but the application to America doesn’t stick. Preconceived ideas get in the way.
Microsoft needs focus, gets bigger org chart 11 Jul 2013 Boss Steve Ballmer says the software giant must speed up and focus on what customers want. That at least is the gist of two sprawling memos justifying a sweeping restructuring. Yet the Microsoft organization now looks more complex. And the company is vague about its purpose.
Congress could force Yellen over Summers at Fed 11 Jul 2013 Setting aside their strengths or weaknesses, President Obama needs to figure out who can actually pass muster with cantankerous legislators. Even after Bernanke saved the financial system, lawmakers only weakly endorsed him. Politics, more than skills, may decide the next Fed boss.