UK auditor competition drive comes at a price 9 Oct 2018 The UK Competition and Markets Authority wants to break the grip of the Big Four accountants. It may duck radical measures, like forcing them to separate bookkeeping and consulting. Even simple ones, like market share caps and joint audits, will mean higher costs for companies.
The Exchange: Jeff Lacker 9 Oct 2018 The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.
Google inadvertently makes case for data crackdown 9 Oct 2018 The search giant kept secret a security hole to avoid regulators’ scrutiny, the Wall Street Journal says. The lack of transparency underlines that such disclosures should be out of managers’ hands. U.S. lawmakers eyeing a law similar to Europe’s GDPR have an extra argument.
UK tries shock therapy for fund liquidity disease 8 Oct 2018 Britain’s FCA is clamping down on open-ended funds that invest in hard-to-sell assets. One suggestion is to force funds to suspend redemptions – as happened in the chaos after Brexit – more frequently. That might eventually lead investors to pick less ropey fund structures.
Hadas: Nobel rewards pointless economic modelling 8 Oct 2018 Paul Romer won half the 2018 prize for recognising that education and governments help growth. William Nordhaus won the other half for condemning man-made climate change. Obvious? Maybe, but their work has complex equations. Unfortunately, these obscure more than they clarify.
Facebook is late to fight second existential crisis 5 Oct 2018 User and government annoyance at poor security, low-quality content and excessive advertising is as big a danger to Mark Zuckerberg’s company as the 2012 growth of mobile. Facebook finally appears focused on the threat, but it won’t be as easy to solve.
Shale gas industry hopefuls face rock-hard barrier 5 Oct 2018 Fracking is about to make its debut in the UK. The practice of extracting gas from shale rock is hailed as likely to put the country on the road to fuel self-reliance. But the industry faces many obstacles, and investors should be sceptical of the scope for gushing returns.
Cyber risks deserve top billing more often 4 Oct 2018 Global trade tensions have dominated recent economic news. Thursday’s revelations of possible Chinese computer-hardware meddling and Russian hacking of a world chemical-weapons body and sports-doping watchdogs give justified prominence to what may be a bigger threat to growth.
Danske’s best-case scenario may be a painful fine 4 Oct 2018 The Danish bank said it faces a U.S. criminal probe over suspicious payments in Estonia. That raises the risk that it could be blacklisted in America, which sank Latvian peer ABLV, or be fined. Even a plausible $5 bln hit would send Danske’s capital ratio below its minimum level.
M&A bankers better off hunting pheasant than elk 3 Oct 2018 The value of deals above $10 bln popped by 150 pct in the first nine months of the year. Some, like Comcast’s purchase of Sky, come with chunky financing fees. Still, the glory is spread less thinly on smaller deals, which are also growing quickly, and are easier to close.
Hadas: Why houses are not like pigs 3 Oct 2018 Farmers respond to high pork prices, so the hog cycle keeps turning. It’s different for housing. An excess of money, not a shortage of buildings, usually turns prices upwards. And the cycle reverses when the money runs out, sometimes because lenders take fright at new supply.
Credit Suisse LBO defence is a hostage to fortune 3 Oct 2018 The Swiss bank’s asset management arm lauded the attractions of the leveraged loan market in a letter to clients last month, according to the FT. The pitch will do little to reassure those who are alarmed by the erosion of lenders’ rights and could backfire when the market sours.
Italy’s 5G auction is an $8 billion smash-and-grab 3 Oct 2018 The cash-strapped country raised more money than expected thanks to the canny way it sold mobile spectrum. The consequences are for others. If operators raise prices, it’s effectively a stealth tax. If they can’t, there will be less cash to build new networks in Europe.
Proxy plumbing is bigger problem than advisers 2 Oct 2018 The SEC has withdrawn its decade-old backing for the likes of ISS and Glass Lewis. Yet worries about the firms’ influence and potential conflicts are overblown. Modernizing proxy procedures would be a better way for the U.S. securities regulator to bolster shareholder democracy.
India stems liquidity crisis with IL&FS rescue 2 Oct 2018 New Delhi’s decisive move to take charge of an infrastructure lender that started to default on a $13 bln debt pile brings short-term relief to the money market. Yet rising interest rates will bring more pain: the country’s shadow banks are still highly vulnerable.
Tesla investors get unsubtle hint from SEC 30 Sep 2018 The watchdog is using its settlement with CEO Elon Musk to impose some much needed adult supervision. The $45 bln electric-car maker must install an independent chair and find two new unbiased directors. It's up to shareholders to push for a broader governance overhaul.
India’s private lenders face a fiercer watchdog 1 Oct 2018 The RBI has put Bandhan in the sin bin for flouting ownership rules, sending its shares down 20 pct or some $2 bln. A central bank clampdown on these overvalued lenders, and their backers, provides welcome clarity. But the timing adds to turmoil in the country’s financial sector.
Trump-friendly trade reform is a hard ask 1 Oct 2018 A trio of international bodies want to tackle some of the U.S. president’s gripes with the WTO and enable more side deals. Yet the proposals do little to bridge differences between Beijing and Washington that threaten the trading system. They also face big headwinds on services.
Data is new beat for transatlantic antitrust cops 28 Sep 2018 The U.S. DOJ’s Makan Delrahim and the EU’s Margrethe Vestager worry concentrations of personal information may be used to stifle competition. She has been the tougher so far, but the shared focus could hurt tech giants like Facebook and Alphabet that depend on data for profit.
Musk suit could uncover Tesla’s true value 27 Sep 2018 The U.S. securities regulator wants Elon Musk removed as CEO and director, saying he lied about a plan to take the $53 bln electric-car maker private. His exit would leave Tesla much depleted, but also more rationally valued – if it can motor past a looming liquidity crunch.