Fed liftoff will reinvigorate key market gauges 15 Dec 2015 Everyone used to watch fed funds futures like hawks (or doves). Seven years of zero rates made them a less important indicator. Along with Eurodollar futures and other traded hints on rates and inflation, though, they are due fresh attention – even if their meaning has morphed.
Disney awakens the financial power of the Force 15 Dec 2015 The media conglomerate appeared to have fallen for a hokey religion when it paid $4 bln for Star Wars maker Lucasfilm. Now, as it prepares to unleash the first of six new movies, it could more than triple its money. Even Jabba the Hutt would be happy with that payoff.
From Caterpillar an activist butterfly may hatch 10 Dec 2015 The $39 bln earth-moving machinery conglomerate is in a pickle. Deals struck at the peak of the commodities and Chinese investment booms trashed the stock and hurt management’s credibility. An investor seeking changes, even a breakup, could play well in Peoria and on Wall Street.
Oil’s reckoning invites a U.S. mega-deal 10 Dec 2015 Conoco, Chevron, Kinder Morgan and the state of Alaska are modifying capital strategies amid another lurch down in crude prices. If these conditions persist, something like Shell’s $70 bln takeover of BG should look appealing. Occidental and Anadarko could make tempting targets.
Alternative lenders facing first major disruption 9 Dec 2015 Lending Club, OnDeck and others in the competitive market will probably experience rising interest rates for the first time next year. That’ll test their performance, funding and credibility. Prosper’s loan to one of the San Bernardino shooters may speed regulatory scrutiny, too.
The Uber or Airbnb of finance will prove elusive 8 Dec 2015 In 2015 more than $15 bln has poured into so-called fintech startups embracing blockchain, peer lending, payments and the like. While each can disrupt an element of the status quo, their scale will be hindered by the deep moat that protects the banking industry: regulation.
Europe’s least bad option: ditch Schengen 4 Dec 2015 The 26-country free border zone is struggling to cope with refugees and security risks. Abolishing Schengen would be expensive and wouldn’t solve migration problems. Yet it might dampen the populism in continental Europe and the UK that threatens Europe’s economic integration.
Yahoo CEO has run out of time for a turnaround 2 Dec 2015 After three years, it’s clear neither Marissa Mayer – nor maybe any top executive – can save the flailing internet company. The board’s job now should be to determine the best way to tidy up the firm’s affairs. Mayer’s best legacy may be that she got a good price for the core business.
Bank rule zealots will be forced to back down 2 Dec 2015 Basel-based standard setters are finalising capital adequacy reforms that banks call “Basel IV”. But they clash with European policymakers’ growth plans and their Anglo-Saxon counterparts’ push for regulatory easing. The Bank of England’s newfound leniency will embolden others.
Cox: Two signs of M&A bacchanal’s last hurrah 1 Dec 2015 The boom just topped $4 trln, helped along by one telltale massive deal and another much smaller one. Pfizer’s takeover of Allergan is clearly predicated on exploiting tax loopholes while a U.S. retailer is getting into the pizza racket. Both indicate a cycle well past its peak.
Climate will supplant shale as top energy disruptor 27 Nov 2015 The world’s politicians may be about to get serious on cutting greenhouse gases at the U.N. Paris confab. And shareholders are pushing Big Oil to disclose global warming risks. The consequences for the industry will be longer lasting than the recent oil production revolution.
Brazil crisis may have silver lining: rule of law 25 Nov 2015 Latin America’s biggest economy will get worse before it gets better. The arrest of billionaire banker André Esteves suggests room for further nasty surprises from the Petrobras corruption probe. But feisty independent courts and stronger institutions point to a brighter future.
Chancellor: The illusion of debt-fuelled earnings 18 Nov 2015 Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.
Cox: Quarterly reporting to get a major rethink 17 Nov 2015 From BlackRock’s Larry Fink to presidential contender Hillary Clinton, “quarterly capitalism” has become a four-letter word. Big publicly traded asset managers could change habits by abandoning their own three-monthly results. Watch for that in the coming year.
Cox: Drought, not just of ideas, challenges Africa 12 Nov 2015 The sub-Saharan region, once a bright spot for global growth, faces a worrying triple whammy. A lack of rainfall threatens agriculture and hydropower. Low commodity prices are taking a bite. Fold in sliding currencies, and inflation threatens stability and economic prospects.
U.S. election complicates Puerto Rico repair job 3 Nov 2015 President Obama wants Congress to help the island out of a $72 bln hole. His calls for debt restructuring, better oversight, tax and healthcare tweaks make sense, but risk falling prey to candidate posturing. It may take a full financial meltdown for D.C. to roll up its sleeves.
Recession probably awaits next White House chief 18 Sep 2015 It’s been six years since the U.S. economy was in recession. Usually slowdowns come sooner than that. Though the sluggish rebound since 2008 may forestall the next downturn, the chances are high that the winner of the 2016 race will face one - no matter what the Fed does next.
Numbers add up to HSBC leaving London 31 Jul 2015 The global bank is reviewing its head office location based on 11 criteria such as economic importance, transparency and tax. A ranking based on data compiled by Breakingviews shows Singapore, Hong Kong and even Toronto are more attractive than HSBC’s current home base.