HSBC reassures with $2.4 bln credit card sale 10 Aug 2011 At just twice 2010 earnings, the gain on selling its U.S. cards unit to Capital One isn’t brilliant. The sale will also lower returns and raise the bank’s cost ratio. Still, a clean exit shows CEO Stuart Gulliver is serious about getting back to HSBC’s trade-bank roots.
Groupon IPO can now be judged with half the grief 9 Aug 2011 The daily-deal website is abandoning its nonsensical profit measure, ACSOI, which excludes marketing costs. Chalk one up for the SEC, which was scrutinizing the practice. Regulators can’t prevent all bubbles from inflating, but stopping firms from duping investors pricks one.
Why Apple just might be the first $1 trln company 9 Aug 2011 The iPhone maker’s sales have been surging 80 pct a year, and profit faster. While its $342 bln value overtook Exxon’s briefly, it trades on par with the sluggish market - and at half the multiple it fetched in 2006. Relatively, at least, Apple looks worth far more.
Italy still vulnerable despite ECB covering fire 9 Aug 2011 The European Central Bank’s bond buying has brought down Italian yields, yet Rome is still in markets’ sights. The government plans to accelerate fiscal measures and labour reform, but real change could take time, and growth may disappoint. Italy cannot afford to delay.
London riots strike another blow to confidence 8 Aug 2011 A third day of violent clashes and looting around the city are being put down to anti-police sentiment, social division, summer boredom and BlackBerry-coordinated unrest. Whatever the causes, the images from the financial capital can only hurt already fragile markets.
Global equity sell-off ignores fundamental value 8 Aug 2011 Stocks have been clobbered by the latest leg of the global economic and financial crisis. But falling share prices are a symptom of fears: they are not, as yet, a cause. Long-term investors unburdened by leverage still have good reasons to hold their nerve.
Timing of S&P U.S. downgrade couldn’t be better 6 Aug 2011 Markets may be wobbly, but interest rates are at historic lows and buyers of U.S. debt plentiful as the world braces for another economic slowdown. There may be some initial turbulence, but it would be worse for Uncle Sam if the rating agency waited until markets acted first.
Asia emerges as refuge from global fears 5 Aug 2011 The region’s government bonds have soared amid this week’s panic. Not that investors are buying the theory it has decoupled from the West - Asian stocks are weakening. But with balance sheets that look pristine next to the U.S. and EU, Asian sovereigns are seen as a safe haven.
Panic and crisis need different solutions 5 Aug 2011 Markets are panicking amid fears of world recession. That looks overdone for now, and falling commodity prices support growth. So policymakers should keep cool. The euro zone faces systemic crisis but conventional policy would help: Italy and Spain must tighten fiscally - fast.
RBS’s uncertain road ahead gets even bumpier 5 Aug 2011 Though the UK bank met expectations in the first half, its shares are being savaged in the broader market sell-off. The balance sheet clean up is going well, but euro zone exposure is starting to hurt. The bank’s goal of 15 pct return on equity by 2013 is also looking vulnerable.
EU bank funding headed back to emergency room 5 Aug 2011 The 2008 liquidity squeeze triggered a credit crunch and massive bailouts. Though Europe’s banks are in better shape today, turmoil in the euro zone means some lenders can once more only get overnight funding. That leaves the European Central Bank squarely on the hook - again.
Plunging markets reflect ugly political paralysis 4 Aug 2011 This, rather than any particular headline, seems to be driving Thursday’s market freak-out. Brinksmanship in Europe and the U.S. makes for great theater, but it has done little to resolve what most troubles the global economy: too much debt and no clear plan to pay it off.
Reform bill could make "incoherent" SEC irrelevant 4 Aug 2011 From Madoff to mortgages, the U.S. regulator has had its misses. But a Republican bid to reshape it seems designed to hinder, not help. There’s room for improvement, but with its duties growing the self-funding watchdog needs more staff, more money and a buffer against Congress.
Euro zone isn’t ready for true euro bonds 4 Aug 2011 Could a common bond solve Europe’s sovereign crisis? The region’s bailout fund is already functioning like a joint debt issuer. But for now the zone lacks the political unity needed for a proper debt union. Euro bonds can’t be a quick fix.
Japan stems yen’s rise but only buys time 4 Aug 2011 Selling the currency saw the central bank push its price down. But with the EU, U.S. and China looking frail, global investors still want yen. Slowly, companies are adjusting to a stronger yen. That’s wise. Intervention can bring some relief but Japan needs deeper reform.
Global fear could force Fed’s hand on QE3 3 Aug 2011 Markets are panicking. Safe-haven assets reflect extreme risk aversion, pushing Switzerland and possibly Japan to intervene. Asia fears a weak U.S. and worsening euro zone. Macro worries look overdone; more money printing would be regrettable. But the Fed may feel it has to act.
China’s train crash sets new tests for freedoms 3 Aug 2011 Authorities’ attempt to censor coverage of China’s rail tragedy has backfired. Even official media defied orders or found ways to circumvent the ban. If Beijing now clamps down harder, the impact will be economic as much as social.
UK should tax the rich more intelligently 2 Aug 2011 Fresh calls for the 50 pct top rate to be abolished ignore political reality. Financially, tax cuts for the poor would do more to stimulate the economy. The real issue is that the tax system is a mess, and a property levy might tax the rich more effectively.
Italy overtakes Spain as euro zone’s main worry 2 Aug 2011 Yields on Italian bonds are soaring as the political vacuum fuels fears the government won’t be able to implement its fiscal plans. Spain is suffering too. But Madrid is tackling its problems, while Rome is stalling. Given the sheer size of Italy’s debt, that’s a major concern.
Loss of bankruptcy card would weaken cities’ hand 2 Aug 2011 In high-stakes talks with unions and bondholders, the threat to file for protection in U.S. court gives local officials leverage. But states are blocking that option, fearing it spooks markets. For teetering local governments, the alternatives may be costly defaults or bailouts.