Americas

Markets made Ed Koch fiscally successful NYC mayor

1 Feb 2013

Koch was a great showman who helped to reverse the U.S. financial center’s decades of decay. Hizzoner, who died Friday, will go down as a budget balancer who managed to boost headcount. He got lucky: late 1970s inflation cut debt costs and the 1980s finance boom grew receipts.

AB InBev setback may hasten last round of beer M&A

1 Feb 2013

U.S. government opposition to AB InBev’s $20 bln buyout of Grupo Modelo may speed up a last bout of sector consolidation. The world’s biggest brewer may yet find a workable compromise with trustbusters. But an obvious plan B is pouncing on emerging-markets focused SABMiller.

New U.S. trustbuster sprays cold brew on AB InBev

31 Jan 2013

William Baer, the DoJ’s antitrust chief, sued to stop the giant brewer’s $20 bln purchase of 50 pct of Modelo. AB InBev had tried to allay competition fears with the deal’s structure. Baer’s surprise move suggests a thirst for tough enforcement - or at least a tough reputation.

U.S. immigration plan slows brain drain at a price

31 Jan 2013

Congress is edging toward letting illegal immigrants stay, while promising greater vigilance. High-tech companies will like measures to retain more foreign-born graduates, while small firms may struggle with new red tape. Fixes are needed, but economically these are a mixed bag.

Ice cream and vodka could endorse the Oaktree way

31 Jan 2013

The U.S. group has helped pioneer a mixture of private-equity and distressed-debt investing in Europe. Hard cash returns aren’t yet huge but now Oaktree may sell big ice cream and spirits companies, and float an estate agency. That would help affirm the hybrid approach.

Record crude not enough to fuel oil giants’ profit

31 Jan 2013

ConocoPhillips and Occidental both reported 2012 core profit down more than 15 pct from 2011. That’s despite a record price for Brent crude of $112 a barrel during the year. High production costs are a worry for investors and suggest the floor under oil prices is rising.

Uncle Sam should pay heed to troubled niece

31 Jan 2013

A fiscal debacle in Illinois has resulted in harsh consequences. The Land of Lincoln was forced to withdraw a $500 mln bond issue after investors got spooked about the state’s credit. It’s a reminder why America can’t get too complacent about its cheap debt or long-term problems.

Shell shows the flip side of shale nirvana

31 Jan 2013

Full-year results show the oil major broadly on track to meet medium-term production targets and grow cash flows. But its North American business remains a drag, as the lack of export capacity holds down prices. Shell is a relative loser from the much-hyped shale revolution.

Facebook’s heavy investment is worth it

31 Jan 2013

The social network’s costs rocketed about 80 pct last quarter. That’s twice as much as the top line grew. But there’s good reason to give Facebook the benefit of the doubt. All-important mobile ad revenue doubled in 90 days. The potential profit justifies the outlays.

Chrysler’s bumper 2012 confirms Fiat’s stinginess

30 Jan 2013

The Detroit automaker beat its own profit forecast by 13 pct and should do even better this year. Chrysler has its problems. But it could now be worth up to $12 billion. That’s double the Italian majority owner’s recent offer for a small slug of a union trust’s 41.5 pct holding.

SEC could use a few tips from workplace watchdog

30 Jan 2013

The EEOC filed far fewer claims last year than in 2011 but won record penalties. That’s a testament to basing enforcement on solid cases with broad impact. The securities regulator boasts of quantity but seems to be neglecting quality. That’s not as effective a deterrent.

Goldman can’t do much for Russia’s lustre

30 Jan 2013

Moscow has hired the U.S. bank to boost its image among investors. But perception isn’t the problem. Reality is. The Putin government thrives on widespread corruption and the absence of a rule of law. Unless it wants to try regime change, Goldman’s efforts are doomed.

Surprisingly weak U.S. GDP has silver linings

30 Jan 2013

A 0.1 pct Q4 fall defied expectations of a rise. Even so, less government spending accounted for much of the contraction while private consumption and income improved. Shrunken inventories, probably linked to the fiscal fears, also should reverse. There’s little cause for alarm.

Ethical economy: Taxes and human nature

30 Jan 2013

Complex tax codes are supposed to promote justice and efficiency, but they fail, largely because people are too tempted to take unfair advantage of these elaborate systems. It’s time to admit failure and move to ultra-simple taxes. Use spending to express the government’s will.

Chesapeake CEO exit puts energy bad boys on notice

30 Jan 2013

Aubrey McClendon’s abuse of shareholders has finally cost him his job. Defenders claimed he was vital to the gas driller’s future. But the oil company’s stock is already rallying. Fellow Wild West chiefs like SandRidge’s Tom Ward and Hess’s John Hess now look on borrowed time.

Amazon undeservedly absorbs Apple optimism

30 Jan 2013

The online retailer’s profit rose a bit in Q4, but the 1.9 pct operating margin remains as slim as the justification for Amazon’s valuation of 165 times expected earnings. Apple’s 32 pct margin fetches it only a multiple of 10. The discrepancy is now even harder to compute.

Wall Street minnow gets whale-size bonus

29 Jan 2013

Jefferies is paying CEO Richard Handler $19 mln for 2012, a 36 pct increase. That matches the firm’s share price gain last year. But it’s also a whopping 6 pct of earnings - excluding an even bigger retention deal. The same multiple would net JPMorgan boss Jamie Dimon $1.2 bln.

Homebuilder IPO may add to recovery exuberance

29 Jan 2013

The monthly leap in U.S. home prices and a big quarter from builder D.R. Horton underscore buoyant attitudes about the housing market. Developer Tri Pointe could be capitalizing with a richly valued share sale. Investors should beware getting swept up in premature euphoria.

Cut-price Canada crude makes producers look cheap

29 Jan 2013

At $64 a barrel, the nation’s oil is the cheapest on the planet. A lack of pipelines, exacerbated by delays to Keystone XL and a drought along the Mississippi, is the cause. But the sell-off in shares of the likes of Canadian Natural Resources looks overdone.

RBS shares bake in Libor’s known unknowns

29 Jan 2013

The UK bank is off 6 pct amid fears of criminal liability for Libor-fixing. The worst-case scenario - a U.S. indictment - is less likely than prosecution in another jurisdiction or a big fine. But the risk of sizeable fallout from a nasty American surprise justifies the jitters.