Americas

Colombia faces bigger threats than guerrillas

25 Jan 2013

FARC’s resumption of hostilities after a two-month ceasefire is disappointing. But peace talks continue. Colombia’s solid economic growth, though, is being infected by hot money from abroad distorting the currency and heading to the wrong sectors. That seems the greater worry.

Wall Street finds new way to put investors second

24 Jan 2013

Banks may finally be bowing to pay pressure, but they’re still shirking shareholders. JPMorgan wants to stop them from voting on a breakup while Goldman Sachs wants a chairman/CEO split off the ballot. It sounds like these supposedly master sellers are afraid they can’t close.

Law firms face real disruption from virtual rival

24 Jan 2013

Already under threat from pickier clients and cheaper alternatives like LegalZoom, the profession now confronts Clearspire. Flat fees, salaried attorneys and online advice upend the traditional business model. This U.S. upstart’s approach could be the way of the future.

Bigger U.S. economic woes lurk beneath joblessness

24 Jan 2013

Even as the unemployment rate has fallen under 8 pct, the number of Americans receiving disability payments and food stamps has grown at a breakneck pace. With at least 15 pct of the nation needing such aid, the extent of underlying workforce shifts may not be fully appreciated.

Obama’s SEC pick is just what doctor ordered

24 Jan 2013

Ex U.S. Attorney Mary Jo White is slated to be the watchdog’s new boss. She’ll have to mend fences between fellow commissioners and show that her skills tackling mobsters can be turned to financial crime. But her prosecutorial zeal is what an SEC seen as soft on Wall Street needs.

M&A boutiques show signs of staying power

24 Jan 2013

Greenhill’s 4 pct revenue drop last year suggests smaller shops are weathering a deal-making decline even better than bigger rivals. The type and size of transactions help. But experience and a desire for independent advice means merger specialists should keep holding their own.

Davos desperately seeking the next Internet

24 Jan 2013

Delegates at this year’s World Economic Forum want solid reasons to be bullish. And so the U.S. shale gas revolution has taken on an undeserved status as a Web-like catalyst for global change. In the echo chamber of Davos, semi-logical conclusions quickly become common wisdom.

Apple finally succumbs to uncreative destruction

23 Jan 2013

The iPhone and iPad catapulted Apple to investment royalty, but that five-year run is ending. Some $50 bln of value just vaporized after Q4 profit was flat. Copycats have caught up and margins are shrinking. CEO Tim Cook needs a real innovation to escape this Red Queen’s race.

Washington downgrades debt threat to DEFCON 3

23 Jan 2013

The House has passed a GOP motion to raise the nation’s borrowing limit for four months. That implies Republicans will use fear of a government shutdown to try to cut the deficit. It’s akin to putting a gun to a kneecap rather than a head. It’s less messy and might just work.

Toothless MACs giving way to deal terms with bite

23 Jan 2013

Exceptions have all but neutered material adverse change clauses. That’s why some recent transactions like Freeport-McMoRan’s purchase of Plains Exploration spell out specifically when a buyer can bail. Change may not come easily to dealmakers, but they should welcome clarity.

Big Oil and MLPs on verge of beautiful friendship

23 Jan 2013

The likes of BP own mature wells that often don’t generate a decent return. Until now they had few options for offloading them. But the emergence of tax-exempt partnerships that pump oil and gas provides buyers that can pay top dollar and extract fat returns for investors.

Ethical economy: The demographic effect

23 Jan 2013

From a narrow economic perspective, low birth rates are nothing worse than a minor nuisance. That is one lesson from Japan. But the rigidity of ageing populations could cause financial and political problems. For society as a whole, the new generation gap looks impoverishing.

U.S. companies need to get real about pensions too

23 Jan 2013

As lawmakers wrestle over how to fix the nation’s ailing retirement benefit programs, AT&T and Verizon took a whopping $17.2 bln of charges for theirs. Return expectations remain too rosy and deficits are rising. The private sector isn’t exactly leading the way on the issue.

Google’s mobile pain coming to end

23 Jan 2013

The search giant’s fourth-quarter results imply advertisers are having a change of heart. They are overcoming their reluctance to pay top dollar to promote their wares and services on smartphones. With searches on these devices proliferating, that’s a boost for Google.

Microsoft shows why tech cash needs a discount

22 Jan 2013

The software giant may put up $3 bln to fund a leveraged buyout of Dell. The PC maker is cheap and Microsoft’s investment record, including Facebook, isn’t bad. But a Dell financing would divert money that could be returned to shareholders to plug holes and postpone obsolescence.

U.S. Bancorp puts rivals big and small to shame

22 Jan 2013

The Minneapolis-based bank with $350 bln of assets cranks out better returns than giants like JPMorgan and midsize lenders like PNC. Its success is no secret: a good mix of business, no stretching for profit and costs kept in line. The shock is that so few others can pull it off.

Pfizer spins, but not completely off

22 Jan 2013

The pharma giant’s $2.2 bln IPO of its animal health unit, Zoetis, should cheer investors. Those contemplating buying the stock, however, will want to read the warning labels closely. Super-voting shares could mean Pfizer retains board control even if its stake goes below 50 pct.

Global currency war would lack euro fighter

22 Jan 2013

Jens Weidmann is afraid that major central banks are bowing to their governments’ pressures to push down currencies. The Bundesbank head wants Europe to stay above the fray. For once, he and Mario Draghi agree. Japan’s new policies won’t tempt the ECB to take up arms.

Hugo Dixon: When is it OK to avoid tax?

21 Jan 2013

It is clearly wrong to infringe the letter of the law as, for example, many Greeks do. It is also wrong to infringe the spirit of the law. But, as last week’s Goldman Sachs UK bonus row shows, it is also important to take account of the spirit of the times.

Caterpillar’s Chinese lesson: dig below top line

21 Jan 2013

Getting stung by accounting fraud is unfortunate. But Caterpillar’s $580 mln write-down - three-quarters of the price it paid for ERA Mining just last year - suggests a bigger misjudgment. The Chinese machine maker’s potential was clear, but so was the low quality of its growth.