Year: 2009

VW-Porsche truce doesn’t solve governance problem

23 Jul 2009

An agreement seems to be at hand in the two German carmakers longrunning family feud. The forced exit of Porsche s boss will let the larger VW take over Porsche's car business. New outside investors will help Porsche, but won t be enough to create a clear corporate structure.

Derivatives are largely an insiders’ game

23 Jul 2009

Five big banks account for 80% of the total derivatives held by 100 large US companies, a new report says. That could be bad news for those trying to stave off greater regulation, because it undermines the idea that derivatives are crucial to the health of corporate America.

Stars aligning for IPO revival in Europe

23 Jul 2009

Investors are warming up to risk and bankers are pitching IPOs furiously. It all points to a return of IPOs late this year. But bankers salivating for an avalanche of new issues might be disappointed.

Turkey’s bluff pays short-term dividends

23 Jul 2009

Many investors were horrified six months ago when Turkey backed away from talks with the IMF. But the country has averted economic disaster without the fund s help. Still, unemployment is high and exports are weak. The economy will stay vulnerable for some time.

Amazon spends about $1bn on clever apparel push

23 Jul 2009

The internet retailing giant has snapped up Zappos.com a firm best known for selling shoes on the web. Few think of Amazon as a place to buy clothing. So buying fast growing Zappos and keeping the brand may be the best way forward in the $220bn US market.

US corporate profit surprises may not last

23 Jul 2009

A third of the way through the US reporting season, secondquarter earnings look far better than expected thanks to cost and inventory cuts. But those are relatively quick, easy fixes. Longer term, profits depend on economic growth and rising sales. Those will come more slowly.

Ford still needs to accelerate restructuring

23 Jul 2009

The Motown carmaker has already made progress, which shows in its Q2 earnings. And it has been winning market share. But Chrysler and GM are back in contention and streamlined by bankruptcy. To compete longer term, Ford needs to slash its debt and the sooner, the better.

Asian recovery could be unfettered by bank woes

23 Jul 2009

The ADB expects emerging east Asia to recover quickly in 2010. That sounds reasonable. Trade has bounced and domestic growth remains strong. The region's manufacturingoriented economies with modest budget deficits may now fare better than the centres of financial meltdown.

UK banks shouldn’t panic over capital yet

23 Jul 2009

The postcrunch drive to rein in volatile bank trading books has yielded some punchy new rules. While that means more capital will have to be set aside, the impact won't be too painful for UK banks. But with the regulatory environment febrile, investors should remain cautious.

Credit Suisse finally joins the big leagues

23 Jul 2009

The Swiss group posted a second straight quarter of solid results. Trading profits pushed underlying return on equity to a sizzling 27%. Two decades after buying out First Boston, Credit Suisse is at last in the top tier. The trick will be staying there while taking less risk.

Obama’s plan a double blow for derivatives dealers

22 Jul 2009

US regulators want to oversee all firms that deal in unlisted derivatives. That makes sense and could head off future AIGlike meltdowns. Dealers won t like the scrutiny, but they re more afraid of the government s other big idea forcing derivatives to be traded on exchanges.

Money supply points to worse crunch in eurozone

22 Jul 2009

Despite the best efforts of the ECB, bank lending growth has slowed to a crawl. It s especially bad in Germany . Industrial orders are weak and deflationary pressures may worsen. No wonder the German finance minister is rumoured to be contemplating extreme measures.

S&P flip-flop worsens rating credibility problem

22 Jul 2009

The rater reversed weekold downgrades of certain structured securities. The fact that S&P is even now making modeling mistakes underlines why investors should be extra wary of structured finance ratings and why distinguishing them from others makes sense.

Blankfein chooses discretion on Tarp warrants

22 Jul 2009

Goldman has bought back its warrants for $1.1bn, the US Treasury's asking figure probably a very full price. JPMorgan's Jamie Dimon is taking a less humble tack. But then, his firm isn't under quite the same scrutiny over profits and pay as Blankfein s.

Morgan Stanley Q2 much better than it looks

22 Jul 2009

Strip out all the oneoff funnies and the Wall Street firm s results were actually tolerable. But with asset management still suffering and rivals minting far more cash in fixed income trading, the pressure is on Morgan Stanley to do better.

What’s the right structure for UK financial regulation?

22 Jul 2009

The government and the opposition have both got it halfwrong. The best approach is to give a new independent BoE committee responsibility for preventing bubbles, while leaving the FSA in charge of regulating banks and markets.

GE shrugs off some US bond guarantees

22 Jul 2009

The company has found it can fund itself in the commercial paper market more cheaply without the government s backing due to the fee charged for the insurance. That reflects an encouraging market revival but one that still partly depends on implicit US support.

Equities find a silver age

22 Jul 2009

The 9% gain in world stock markets in a sevensession rally doesn t mean the golden era of easy credit and stable growth is coming back. But with stocks still 40% below the peak, valuations look reasonable. This rally could last, if central banks and the economy cooperate.

Fiat’s Marchionne moves into reverse

22 Jul 2009

The Italian automaker s boss thinks big, but after failing to get Opel, Marchionne is backtracking on his rhetoric. Restraint fits with Fiat s modest quarterly trading profit and the big challenges the company still faces. Number one is creating a healthy Chrysler.

Continental struggles under its E11bn debt mountain

22 Jul 2009

The German car parts maker is trying to strengthen its highly leveraged balance sheet. A rights issue could probably only raise E1.5bn. But that s enough to dilute majority holder Schaeffler significantly and keep a mooted merger of the two debt junkies at bay.

US stress test of Wells Fargo not so wide of mark

22 Jul 2009

The bank s bosses didn t like the government's process one bit. And they re pointing to bumper earnings to prove their point. But shareholders cared more about the spike in troublesome loans. They d have been more spooked if the stress test hadn't forced Wells to raise capital.

Bonus-bashers could face uphill struggle

21 Jul 2009

The UK s FSA is questioning multiyear guaranteed bonuses. But banks, including statecontrolled ones, are paying up for talent. While in theory regulators could enforce restraint, the mood has changed over the last few months. Wily bankers could well keep getting their high pay.

Fourth CEO in a year unlikely to rein Freddie in

21 Jul 2009

Charles Haldeman will try to control the US mortgage giant. But the company's political masters are still stuffing the beast with assets. Striking a balance between serving government and longsuffering shareholders has eluded managers with stronger track records.

Lloyds, RBS shouldn’t be broken up in wrong way

21 Jul 2009

Both UK opposition parties are talking about using the government s stakes to split the rescued banks. They may be too big. But if so, the state s shareholdings are the wrong tool to use for cutting them and other industry giants down to size.

Recession forces reality on California lawmakers

21 Jul 2009

The US state's deal to close its $26.3bn budget deficit includes accounting gimmicks but also genuinely painful cuts, which appear to reverse a longterm bloating of state spending. It shows how, if outside constraints are tight enough, crisis can bring real opportunity.

CIT pays heavy price for reprieve

21 Jul 2009

Creditors will give the struggling US lender a $3bn lifeline. But the rescuers have extracted tough terms. The loans have a hefty interest rate and good security. CIT gets more time to struggle on, but it probably won't survive without some luck and help from the government.

HSBC asks investors to look through phony losses

21 Jul 2009

A $4.7bn reported loss on the $17bn rights issue is set to bring the bank into the red for the first half of 2009. The accounting is a nonsense, like losses from narrowing market spreads on the bank s own debt. But HSBC s unsophisticated shareholder base may need some convincing.

Wall Street’s up-and-comer gets ahead of itself

21 Jul 2009

Sure, Jefferies is one of the few investment banks that s building and hiring. It just became the newest primary dealer for US government debt and posted good secondquarter earnings. But it s a long way from being the global fullservice firm boss Richard Handler thinks it is.

Bernanke’s exit strategy requires expert timing

21 Jul 2009

The Fed chief told Congress he can drain liquidity by boosting interest on banks reserve deposits. Those recently topped $800bn. If bank appetite for making loans returns, the Fed could have a hard time keeping that money from flooding into the economy.

Paul Allen tries rule quirk to gag Charter lenders

21 Jul 2009

The billionaire owner of the bankrupt US cable company is pushing a plan that would defang senior lenders, led by JPMorgan. It relies on a rule that allows borrowers to keep some existing loans in place, which could let equity holders like Allen retain control of the process.