Merging Big Board takes its moniker literally 15 Feb 2011 The Deutsche BoerseNYSE boardroom crew will be 17strong, against an S&P 500 average of 11. Board size can reflect the need for different skills or, as with NYSE's existing board, compromises that make M&A more palatable. The latter effect should be temporary.
Saudi isn’t immune to the Egypt effect 14 Feb 2011 The House of Saud itself isn't under immediate threat. But unrest is rising in two border states: Bahrain, which could come under Iran's influence; and Al Qaeda infested Yemen. Regime change in either would increase the Saudi risk premium, potentially driving up oil prices.
VTB’s privatisation fails to live up to the hype 14 Feb 2011 Russia is trumpeting its $3.3 bln secondary offering in lender VTB. While the deal got away, that was thanks to a slump in VTB's share price. True, Moscow won't care about sacrificing a few hundred million dollars. But so much for the supposed benefits of a bigger free float.
Promise still trumps risk in emerging markets 14 Feb 2011 Egypt's turmoil raises awareness of emerging market risk. Some investors are running scared and many developing world equity prices are falling. But while jitters are understandable, asset managers should keep their nerve. Brazil, Korea and Turkey look the best picks at present.
China may spur growth with Panama Canal rail idea 14 Feb 2011 A railroad across Colombia, carrying coal westward and Chinese semimanufactured goods eastward, looks plausible. Colombia's infrastructure shortage is a major barrier to growth; efficient and rapid Chinese help in providing it could have a huge multiplier effect.
Obama budget skips pain for now, chooses growth 14 Feb 2011 His new budget is no Valentine's Day love note to fiscal hawks. It ignores the costcutting ideas of the president's deficit panel and will add $2.7 trln in new debt over the next two years. It's an economic and political bet that invites a fight with congressional Republicans.
Corruption comes second in China rail scandal 14 Feb 2011 Sacking the railway head for disciplinary violations looks less like a new dawn in fighting graft, and more like a move by the centre to rein in China's biggest monopoly. At least that should increase accountability, and curb the railway operator's worrying obsession with speed.
Mubarak belligerence ups risk of chaotic upheaval 11 Feb 2011 The reluctance of Egypt's President Hosni Mubarak to go quickly and quietly is destabilising for the region. It reduces the chance of orderly transition and prolongs uncertainty. Meanwhile the growing force of protest increases the risk of tumult in the Arab world.
Frannie is dead – long live something similar! 11 Feb 2011 The U.S. Treasury finally unveiled ideas for reforming mortgage markets. Fannie Mae and Freddie Mac are to be euthanized eventually but everything else is still up for grabs. Disappointingly, the path of least resistance, and least real change, is looking most likely.
Ireland may yet draw senior bond blood 11 Feb 2011 Irish opposition leaders, favoured to win in the polls, want to inflict losses on banks' senior creditors. Radical writedowns wouldn't help much, and could destabilise banks across Europe. But a targeted haircut of the debt at Anglo Irish Bank may not roil markets that much.
End of Mubarak rule isn’t end of problem 11 Feb 2011 The forced resignation of Egypt's president has reassured markets, as it may help avoid a violently chaotic transition. But democracy is still far away, and the protesters' success could give ideas to others in the oilrich region. Investors shouldn't expect a smooth ride.
Bernanke can’t be the sorcerer behind every ill 11 Feb 2011 So far, the Fed chairman hasn't turned anyone into a newt. Yet detractors do seem to think his policies have bewitched the world in realms far beyond central banking. Bernanke is influential and his policies open to criticism. But not every global problem can be laid at his door.
Brazil’s new boss is keeping the money flowing 10 Feb 2011 President Dilma Rousseff's first budget plans up to 50 bln reais in trims but offers no cutbacks in state company spending or BNDES lending. In this inflationary boom, Brazil should run a real budget surplus. It's a long way off that, storing up trouble for future rainy days.
Vast U.S. housing lobby ready to stall GSE fixes 10 Feb 2011 Fannie Mae and Freddie Mac, seized by the government in 2008, don't wield the political clout they used to. But the mortgage giants still have a network with shared interests. That's a big reason they or possibly similarlooking offspring will be around for a while longer.
Kevin Warsh could become the next Paul Volcker 10 Feb 2011 His departure from the Federal Reserve board removes one of Ben Bernanke's closest advisors and almost certainly the most hawkish of his inner circle. If current policies produce inflation in 70s fashion relative spring chicken Warsh could be well placed to take over.
UK banks got better end of government showdown 9 Feb 2011 Imposing targets for small business loans and basing executive pay on whether they are met smacks of state intervention. But the reality is the targets aren't enforceable and bonuses will still be paid. If the UK coalition does not meddle further, banks have got off lightly.
Brazil can ill afford to join U.S. China-bashing 9 Feb 2011 Washington wants Brazil to join the call for China to strengthen the yuan. Yet the Latam economy's problems, including its strong currency, are not China's fault. There is little to gain from taking on its largest customer and investor. If anything, Brazil should blame the U.S.
Leadership void plagues U.S. mortgage reform 9 Feb 2011 The White House has had more than two years to sketch out a future for the $11 trln market. Now leaked reports suggest a punt to Congress where once decided Republicans now want more debate. Sure, housing is practically and politically complex. But taxpayers deserve a plan.
U.S. could put its creditors first in line 8 Feb 2011 If Uncle Sam's selfimposed debt cap is reached, some Republicans want to make debt service the priority. That could happen anyway, and it might only buy time. But contrary to the Treasury's view, a government shutdown would spook markets far less than missing interest payments.
Desperate bribes deepen Egypt’s financial mess 8 Feb 2011 The 15 pct hike in publicsector pay buys the support of a small section of the population and further pushes up the deficit. It also comes on top of costly pledges to tackle high food prices. With financing costs rising, it's another big strain on the public purse.