Year: 2009

US petrol tax makes sense – even to Big Oil

21 Oct 2009

John B Hess s call for a $1 per gallon petrol tax is profitseeking. He s a big Hess stockholder and fears the political obloquy from a near$150 oil price. A tax helps by reducing oil consumption and cuts $120bn from the US budget deficit, deflating money market bubbleblowing.

China shouldn’t sweep bad loans under the rug

21 Oct 2009

Amid a $1.3 trillion lending spree, the banking regulator says lenders might avoid bad debts by rolling them over or securitising them. Either could work and the first may already be happening. But such sleight of hand only creates bigger problems later. It should be avoided.

Galleon wind-down at least shows market at work

21 Oct 2009

Unlike their bailedout brethren in the banking world, hedge funds live and die on their performance and reputation. Founder Raj Rajaratnam s indictment on insidertrading charges is an extreme case. But at least Galleon isn t too big to fail, and investors can move on.

Altria could be cigar butt – in a good way

21 Oct 2009

Warren Buffett reckons some dogeared stocks can deliver more puff than expected. USfocused Altria's cigarette volumes are falling and healthcare reforms could further burden smokers and manufacturers. But investors could be underestimating the Marlboro Man's resilience.

Deutsche’s October surprise gets cool reception

21 Oct 2009

The German bank has preannounced Q3 figures that look impressive but which are flattered by unexpected tax gains. The market has frowned, perhaps anticipating a capital hike ahead of two deals. Given Deutsche's previous reluctance to tap markets, the fears may be unfounded.

Gucci fails to carry PPR through slump

21 Oct 2009

PPR and LVMH are archrival French luxury conglomerates. The recession has treated them quite differently. PPR has just posted lacklustre quarterly revenues. Its Gucci subsidiary's sales have been dropping. But larger LVMH s reliance on emerging markets has proven a shield.

Morgan Stanley chooses long haul to profitability

21 Oct 2009

The Wall Street firm made money for the first time in a year and beat consensus. But the firm oozes caution, holding a third of its capital on the sidelines. And increasing leverage hasn t added much juice. That, along with integrating Smith Barney, is keeping returns low.

Cadbury’s Q3 puts little new pressure on Kraft

21 Oct 2009

The UK confectioner has lifted revenue and margin guidance. Anything less would have been a big setback in its defence against Kraft s unwanted £10bn approach. Kraft now has a convenient excuse to raise its lowball offer but shouldn t stretch itself.

Ferrovial’s loss on Gatwick is price of past excess

21 Oct 2009

The Spanish construction group will take a E142m hit selling the London airport to infrastructure rival GIP at below regulated asset value. The deal is the cost of Ferrovial being allowed to keep flagship airport Heathrow. And it's a reminder of the crazy prices paid in the boom.

MGM Mirage investment would be risky bet

21 Oct 2009

Kirk Kerkorian may sell part of his 37% stake in the casino company. He could be looking for a little valuation validation. But the investor would have to believe in MGM's unfinished Las Vegas shopping centre or count on a rebound in gambling revenues. Both are chancy.

Pritzkers’ Hyatt IPO priced to sell

20 Oct 2009

The Chicago family is selling around $1bn of stock in a deal that puts a $4bnplus valuation on the hotel group. That's a big discount to Marriott. But given internal family squabbles and a stock overhang, that's probably warranted.

US gun sale spree running out of ammo

20 Oct 2009

Private equity shop Cerberus plans to float gun maker Freedom Group. It had better hurry. President Obama s victory sent weapon sales and firearm valuations shooting upward. Falling backlogs could trigger a plunge in sales.

Icesave deal won’t bring instant diplomatic thaw

20 Oct 2009

Iceland is close to agreeing a revised plan to reimburse the UK and the Netherlands for the bailout of Icesave depositors. But the deal still leaves Iceland with a debt burden equivalent to half of its GDP. Relations with London and Amsterdam are likely to remain cool.

Brazil using 2009 boom to roll back free market

20 Oct 2009

At first glance, the country has a good case for its capital inflow tax. It s fighting hot money from sloppy global monetary policy. But the tax violates market axioms and hits foreigners, as does the new oil regime. President Lula may no longer deserve the benefit of the doubt.

Gatwick auction back from the dead

20 Oct 2009

Spanish infrastructure group Ferrovial postponed the sale of the London airport in May. The conditions for an auction are now more favourable and BAA, the subsidiary that owns Gatwick, is in better shape. Still, that doesn t mean the asset will fetch the £1.6bn its vendor wants.

Credit Suisse takes up bonus challenge

20 Oct 2009

The Swiss bank, lately forward thinking on pay, has moved first to set out details based on G20 guidelines. Higher base salaries might raise eyebrows and upside on deferred cash seems a bit rich. But clawbacks and the use of return on equity as a benchmark make good sense.

Banks should perfect their art

20 Oct 2009

Not the art of trading, deals or lending, but the paintings decorating hallways or clogging storerooms. Deutsche, JPMorgan and UBS own 130,000 works. Their collecting urge is hard to explain or justify. Taxpayers are helping banks so much. They should get to see the pictures.

BlackRock-lite deal inches Morgan Stanley forward

20 Oct 2009

Morgan Stanley's sale of retail asset management isn t as big a deal as Merrill s tieup with BlackRock. It will hardly affect Morgan s bottom line. But it s the right move at a decent price, and it allows chiefinwaiting James Gorman to focus on more pressing issues.

China’s African investment: both change and bubble

19 Oct 2009

In Africa, China increasingly rivals and even outguns the US as a trading and investment partner. Africa undoubtedly benefits from the competition. But China s domestic boom has encouraged scattergun investments. A bubble may have to burst before the relationship becomes healthy.

Pound’s technical bounce belies weak prospects

19 Oct 2009

Sterling enjoyed a sharp rally last week amid an apparent short squeeze. But the currency s ultimate fate will be determined by the UK s still frail fundamentals. Further weakness seems in store, as the UK seeks a rebalancing which megastimulus may have delayed.

Bankers’ tax is justifiable – as last resort

19 Oct 2009

The industry has enjoyed a windfall on the back of taxpayer support and is now proving extraordinarily insensitive in pushing ahead with plans for megabonuses. A windfall tax is normally a bad idea. But unless the banks rapidly get onmessage, it will be unavoidable.

Citigroup’s loss could be Banamex’s gain

19 Oct 2009

The Mexican supreme court just might force the troubled US bank to divest the profitable Banamex. Citi might not like that, but the Mexican bank might benefit. Citi doesn t help its funding costs much, while nonUS ownership could help it attract previously reluctant customers.

Citi’s Banamex is worth fighting for

19 Oct 2009

The beleaguered megabank conceded defeat to the US government and sold Phibro. But executives shouldn t cave so easily if Mexico s supreme court decides Citi must hive off Banamex. The unit isn t just profitable. It s also the model for Citi's international ambitions.

Dollar might yet take bite out of Apple

19 Oct 2009

The US tech company s dominance of the market for digital music devices is clear in its sparkling results. More surprisingly, Apple says the dollar's weakness didn't cause any real benefit. That's good, but a strengthening dollar could hurt.

Banks dodge mortgage loan-to-value caps

19 Oct 2009

The UK regulator trusts chastened lenders and tougher capital rules will prevent a resurgence of housing loans with low or no equity. This indirect approach may be justified for now. But the FSA should not be too afraid of imposing blunt rules if the market starts to heat up.

Galleon scandal teaches fund governance lesson

19 Oct 2009

Not just because administrators at the hedge fund founded by Raj Rajaratnam, now accused of insider trading, may have missed a trick or two. But also because fund investors shouldn't tolerate the kind of dominant role Rajaratnam seems to have played at Galleon.

National Express shouldn’t count on Stagecoach

19 Oct 2009

The struggling bus and coach operator has received an allshare merger proposal from rival Stagecoach, after a takeover bid fell through in the eleventh hour. The news may have stopped a rout in the National Express share price. But it doesn t address the company s real problems.

Hot money is cost of frozen renminbi

19 Oct 2009

Some $60bn of mystery funds crept into China s currency reserves last quarter. The culprit isn t spivvy foreign investors, but a toocheap renminbi. It entices those who can to swap US dollars for their Chinese counterparts, adding to the central bank s $2.3 trillion headache.

BofA Q3 shows Merrill wasn’t Lewis’s only fumble

16 Oct 2009

The messy purchase of the Wall Street brokerage ultimately cost the Bank of America boss his job. But the firm is also suffering from earlier deals, including Countrywide and LaSalle. BofA's quarterly loss is a timely reminder that Merrill wasn't the only reason Lewis had to go.

Bill Gates advances his economic conversion

16 Oct 2009

The Microsoft founder s $30bn nonprofit foundation started with his hightech DNA. Its latest focus is quite different. Small family farms are the simplest of economic activities. But Gates entrepreneurial skills remain useful. He has identified a huge underserved market.