Month: October 2017

Cox: Next Fed chair will need unusually thick skin

16 Oct 2017

The debate over who will lead the central bank is narrowly about hawks and doves. Policy matters, but the broader economic benefits of the Fed’s relative independence may count for more. Whoever gets the job will have to resist Trump's bullying – and stop doing Congress's job.

Even a distressed sale may not revive Bombardier

16 Oct 2017

The Canadian firm is weighing a sale or new investor for its aerospace division. That’ll be a tough task as its regional jet business is shrinking and U.S. tariffs threaten its bid to compete with Boeing. Bombardier’s cash burn points to a continued decline.

Nordstrom sale season may be long time coming

16 Oct 2017

With large insider stakes and growing revenue, the $7 bln department-store chain was a prime candidate for a buyout. Now it is shelving its sale until after the holidays. It may be hoping for a higher price. But the delay suggests even risk-tolerant buyers are cool on the sector.

Venezuela votes make default tightrope trickier

16 Oct 2017

Regional elections brought President Nicolas Maduro's candidates surprising success, defying polls and economic meltdown. If opposition complaints of fraud are believed in Washington and Brussels, more sanctions may follow. That will make creditors even harder to keep at bay.

Blame for Deutsche Bank woe extends beyond CEO

16 Oct 2017

Reports of boardroom tension at the German bank are adding to unease among investors already rattled by a sliding share price. While boss John Cryan may be in the firing line, Chairman Paul Achleitner helped set the strategy. He shares some responsibility for the bank’s malaise.

China is third-best option for Saudi Aramco

16 Oct 2017

With its $2 trln public offering in the balance, the Saudi oil giant may bring in a Chinese investor. That would provide cash the state doesn’t urgently need. The other perks of an international IPO, like regional influence and financial discipline, aren’t to be found in Beijing.

Europe poorly placed for Austria’s rightward drift

16 Oct 2017

The far-right Freedom Party scored well in the country’s election and may enter government. It has been in power before. However, its presence could make Europe’s immigration problem harder to manage, and further integration harder to agree. Centrifugal forces have not gone away.

FirstRand makes punt on post-Brexit housing market

16 Oct 2017

The South African bank has offered 1.1 billion pounds for Britain’s Aldermore. Shares in the mortgage lender had slipped amid concerns about the slowing property market. At 8 times expected 2018 earnings, FirstRand could be getting a bargain – provided bad loans don’t shoot up.

Toshiba chips let Bain surf a Big Data wave

16 Oct 2017

A group led by Bain is paying $18 bln for Toshiba’s flash-memory unit after a drawn-out sale. The memory industry is cyclical and capital-intensive, and it's also in China’s strategic crosshairs. But a rising tide of demand for bytes will lift Bain's boat first.

Microfinance goes mainstream in India

16 Oct 2017

IndusInd, a bank, has agreed to buy Bharat Financial Inclusion in an all-share deal valuing the poster child of niche lending at $2.4 bln. The 11 pct premium is small but fair given concerns over the long-term sustainability of independent pure-play lenders to the poor.

Aramco IPO logic is going up in smoke

13 Oct 2017

With oil prices under pressure and OPEC potentially extending cuts, the Saudi oil company’s IPO always seemed a stretch. Aramco had yet to pick an exchange, and would have had to get its books into shape. With private capital abundant, there's little purpose to all the hand wringing.

Review: Black Monday infamy obscures 1980s excess

13 Oct 2017

In “A First-Class Catastrophe” journalist Diana Henriques argues the 1987 stock-market crash should have prompted smarter regulatory overhaul. She has a point. But scandals earlier in the decade she covers – and some she doesn't – were the real missed opportunities for reform.

EU banks can tolerate a watered-down capital rule

13 Oct 2017

Global regulators could soon agree on restricting lenders’ leeway to assess their assets’ riskiness. The so-called output floor may be higher than European lenders wanted at 72.5 pct, but the formula involved may prove easier. Less aggressive U.S. watchdogs will help them, too.

Wells Fargo earnings leave CEO more vulnerable

13 Oct 2017

The U.S. mega-bank is alone among peers to have the retail-related top line shrink in the third quarter. Domestic deposit growth also ranked lowest. The numbers along with boss Tim Sloan's poor Capitol Hill showing on fake accounts make it hard for him to justify keeping his job.

BofA shows fellow laggard Citi its tail

13 Oct 2017

Decent loan growth and a strong handle on costs allowed the bank run by Brian Moynihan to crank out its best earnings in years. BofA now seems likely to earn its cost of capital sooner than Citi. That justifies not only trading at book value, but its premium to its rival, too.

ACS faces bumpy road to join Abertis battle

13 Oct 2017

The Spanish builder is planning a cash-and-share offer for the toll-road operator using its German Hochtief unit. Beating Atlantia’s $20 billion bid faces several hurdles. The Italian group has offered more cash. For ACS, taking on a lot more debt could also be problematic.

BASF plants fertile crop from Bayer’s blighted M&A

13 Oct 2017

The German chemicals group will pay 5.9 bln euros for a seeds business that Bayer must sell to clinch a takeover of Monsanto. A pledge to keep staff means few cost savings, but the deal should work in time. BASF shareholders will reap a better harvest by eschewing mega-mergers.

TPG follows Turkish raki feat with Myanmar whisky

13 Oct 2017

The buyout firm has sold out of Myanmar’s largest spirits company in a $1 bln deal. As it did in Turkey, TPG again bought small, scaled up and sold to a big corporate buyer. Making deals in places like Yangon is an acquired taste – but can yield potent returns.

Communist Party assault muddles Chinese capitalism

12 Oct 2017

The government hopes to regain the private sector's confidence even as it tightens its grip, in particular on the critical tech sector. Alignment with state priorities could ease red tape, but bureaucrats make lousy CEOs, and vicious factional politics will distract executives.

Warning signs flash at Samsung after big quarter

13 Oct 2017

The tech group's top executive unexpectedly resigned following record-smashing forecasts for operating profit. An early lead in memory chips has fuelled blistering earnings growth at Samsung despite legal woes. But as rivals circle, a widening leadership vacuum looks worrying.

Fast Retailing tailors a bright future in Asia

13 Oct 2017

Full-year results from the $32 bln fashion retailer behind Uniqlo show it is back on track overseas. Fast Retailing is growing rapidly across Asia, has staunched U.S. losses, and has bold plans for China. After earlier missteps, this Japanese group is going global in fine style.

Effort to kill Obamacare may only make it stronger

12 Oct 2017

After failing to coax Congress to repeal the plan, President Trump now wants U.S. agencies to find ways to offer cheaper options with less protection. It subverts his predecessor's signature policy in the short term, but increases the odds that in time government programs expand.

Viewsroom: Activists keep the fight alive

12 Oct 2017

Nelson Peltz narrowly lost his acrimonious bid for a P&G board seat. Honeywell’s decision to spin off two small units was less than Dan Loeb lobbied for. These are temporary setbacks. Past experience and their financial firepower make shareholder activists a powerful force.

U.S. oil production squabble misses price point

12 Oct 2017

Tycoon Harold Hamm says aggressive government forecasts skew where Texas crude trades. Inventories are falling, but it's a weak trend. Shale momentum will be hard to stop and Shell's electric-car bet sends a fresh signal on future demand. Expect about $50 a barrel to be the norm.

Facebook could do with more Sheryl Sandberg

12 Oct 2017

Mark Zuckerberg's right-hand woman deftly fielded questions about Russia-backed ads and the social network's broader role in society. It was a notable contrast to the bumbling way her boss handles the limelight. Sandberg may be better placed to oversee Facebook's next phase.

Exchange Podcast: Luke Bronin

12 Oct 2017

Hartford is one of America's poorest cities in one of its richest states. And it's about to get worse for Connecticut's capital as Mayor Luke Bronin wrestles with a fiscal crisis that's likely to end in a bankruptcy filing. Rob Cox dropped in to hear his vision for reviving Hartford.

Citi’s new targets will be a fickle friend

12 Oct 2017

The U.S. mega-bank’s earnings beat forecasts in its first quarterly report since Mike Corbat set fresh goals for 2020. Investors mostly want the road map – but they will also ding Citi if it falls short. And in banking, key drivers like interest rates are beyond any CEO’s control.

Wall Street bank owners too optimistic on taxes

12 Oct 2017

Citi and JPMorgan’s results don’t justify the past month’s 12 pct surge in U.S. bank stocks. Tax cuts do, but they're at best some way off. In the meantime, problems like sluggish loan demand, rising credit costs and less effective buybacks will challenge a rosy profit outlook.

UK energy cap is bad economics and poor politics

12 Oct 2017

Prime Minister Theresa May wants to limit the most commonly used gas and electricity tariffs until 2020. Other EU countries show government meddling does consumers more harm than good. As a response to the Labour Party’s threat of nationalisation, it’s too little, too late.

Sky investors choose between profit and principles

12 Oct 2017

Chairman James Murdoch faces a backlash over concerns about his independence as Twenty-First Century Fox, which he runs, tries to buy the UK pay-TV group. Shareholders have legitimate corporate-governance grievances. But financially they’d be better off with Murdoch’s money.