Americas

Difference between "and" and "or" could undo Fed

12 Dec 2012

As well as saying it will buy more bonds, the U.S. central bank replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.

TripAdvisor deal excludes regular shareholders

12 Dec 2012

Barry Diller sold shares in the internet travel group to Liberty Interactive at a 63 pct premium. John Malone’s group paid up to regain voting control over its other shares. As so often where there’s supervoting stock, the moguls’ games have left ordinary owners powerless.

Too big to fail looks on its way to being licked

12 Dec 2012

The Bank of England and FDIC sound pretty confident they could resolve a massive bank failure. It’s hard to know without a test case. But by making bigger U.S. banks pay more to fund themselves in the capital markets, investors may be showing they agree with the watchdogs.

Michigan opens up to good and bad of globalization

12 Dec 2012

The home of the U.S. auto industry has joined 23 other states that allow workers to opt out of union membership. That could attract jobs, but is also likely to bring lower average wages. In a global market, becoming sustainably competitive isn’t necessarily comfortable.

SolarCity IPO valuation approaches earth

12 Dec 2012

The U.S. solar panel installer slashed its expected sale price by more than 40 pct at the last moment. The old price, some six times 2012 revenue, always looked starry-eyed - even with the involvement of Tesla guru Elon Musk. The new price merely requires optimism.

Criminal charges aren’t corporate death sentences

11 Dec 2012

Arthur Andersen’s post-Enron demise made U.S. prosecutors skittish about indicting the likes of HSBC, which just settled for $1.9 bln. But new research suggests convictions don’t cause company failures. Banks may be special cases, but enforcers should question their assumptions.

Delta buys premium Heathrow seat for economy fare

11 Dec 2012

Being Richard Branson’s junior partner cost Singapore Airlines two-thirds of its investment in Virgin Atlantic. Delta, however, is buying the 49 pct stake at a discount to what slots at London’s premier airport usually command. That should help the new joint venture take flight.

Diageo’s M&A machine misfires with Jose Cuervo

11 Dec 2012

The spirits giant, once abstemious in M&A, has been lifted by a series of smallish takeovers. Now lengthy talks to buy the $3 bln-plus Cuervo have failed. Diageo might claim this shows it remains disciplined. But this is a meaningful setback in the United States.

AIG exit ties up one loose end for Geithner

11 Dec 2012

The Treasury secretary can rest a tad easier. He can now claim to have extracted the U.S. from its contentious $182 bln bailout of the insurer with a profit of $23 bln. But other Geithner legacies will weigh on his successor - notably an unreformed housing finance system.

Record fine shows some banks are too big to indict

11 Dec 2012

HSBC’s $1.9 bln fine may look big, but for the bank it’s small beer. Regulators reportedly wanted to go the whole hog and indict the UK lender, but backed down on systemic risk fears. Yet another sign that four years after Lehman’s collapse, finance is far from fixed.

Bank fines go from irritant to hefty business cost

11 Dec 2012

HSBC’s $1.9 bln money-laundering bill is the biggest ever, but StanChart and ING have been forced to hand over a similar proportion of earnings. Legal expenses and tougher internal compliance add to the burden. Even if such giant fines are infrequent, the bar is now set high.

Fannie, Freddie employees don’t need outsized pay

10 Dec 2012

Whatever their quasi-private sector past, they’re now managing Uncle Sam’s money. The Treasury secretary and the Fed chairman take home just under $200,000. There’s no reason for dozens of housing agency staff to pocket multiples of that. Pay scale reductions are overdue.

Diamond Foods still can’t get its story straight

10 Dec 2012

The scandal-ridden U.S. snack producer dodged a delisting by issuing earnings in the nick of time. But even after Diamond’s yearlong cleanup effort, auditors still found weak controls. New capex claims also seem to contradict earlier ones. Investors shouldn’t be surprised.

Bank crisis plans strike discordant note

10 Dec 2012

U.S. and UK regulators are sensibly singing from the same hymn-sheet on how to deal with failing global banks. Yet they sound out of tune with other regulatory calls for subsidiarisation. More global conducting is needed to create workable cross-border resolution schemes.

Weaker Chavez is no sign of strength for investors

10 Dec 2012

With his cancer back, Venezuela’s president for the first time named a successor if he dies or can’t serve. A transition will test the power of Chavez’ big-state legacy, but voters will probably embrace it even after he’s gone. That makes the country’s debt no more appealing.

How could HP find a $5bln gap in Autonomy’s value?

10 Dec 2012

Hewlett-Packard paid $11 bln for the UK software maker. Now it effectively says it would have paid $5 bln less had it known about dodgy revenue recognition and hidden hardware sales. But the U.S. tech giant won’t explain its numbers. Breakingviews does some reverse-engineering.

China Inc helps AIG streamline, at a price

10 Dec 2012

Selling its aircraft leasing arm to a Chinese consortium will raise $4.2 bln - half the value of the U.S. government’s remaining stake in the insurer. The cash could help fund a later buy-back. But the price looks mean next to similar deals, and AIG isn’t getting a clean exit.

Canada gets worst of both worlds with oil verdict

10 Dec 2012

Premier Stephen Harper sent a confused signal by approving two bids by foreign state oil firms, but saying no more are welcome. By clearing CNOOC’s $15.1 bln Nexen purchase he misses out on a populist lift. Yet his rhetoric may slow crucial energy investment. It’s a no-win, eh.

Enjoy cheerier U.S. jobs figures while they last

7 Dec 2012

The 146,000 new positions in November were more than expected while the 7.7 pct unemployment rate is the lowest level since the end of 2008. But the labor force participation rate also sank to a 30-year low and fiscal austerity looms. That portends a workforce reversal of fortune.

Netflix row opens a Pandora’s box on disclosure

7 Dec 2012

The SEC warned it may sue the online video company and CEO Reed Hastings over a Facebook post. What he wrote hardly looks material and it reached more people than if he had said it on CNBC. It’s a bad test case on the question of investor protection in the age of social media.