Americas

Tesco will expose itself by removing U.S. fall guy

5 Dec 2012

The UK-based supermarket group has finally admitted that its American dream has gone sour. But the likely exit from the U.S. will focus investor concern on a much bigger issue: the health of its core grocery business in Britain and its hotchpotch of other international markets.

Judges affirm that greed is perfectly legal

4 Dec 2012

A U.S. court tossed a tax shelter case against two Ernst & Young partners, even though they helped deny Uncle Sam $2 bln. The decision shows how hard it is to prove that dodgy financial conduct is criminal. It’s a reality check for those still baying for Wall Street blood.

Baxter’s $4 bln deal is curious deja vu

4 Dec 2012

The U.S. drugs company is buying dialysis specialist Gambro. Strategically and financially the Swedish target looks a decent fit, for instance soaking up some offshore cash. But Baxter largely exited the segment in 2005, and its record of errors ups the risk of getting back in.

IMF yields to reality on capital controls

4 Dec 2012

The traditional defender of liberal economics has endorsed some limits on cross-border money flows. That makes sense. In theory, total capital freedom is desirable. But in the unbalanced real world, it looks less a source of prosperity and more like a recipe for disruption.

Pharma lands one-two punch on government finances

4 Dec 2012

A U.S. court has ruled a drug salesman was exercising his right to free speech by promoting a drug for non-approved uses. That’s worrying. And if upheld by the Supreme Court, companies will pay fewer multi-billion dollar fines and useless healthcare spending will increase.

SEC learns true cost of China accounting goodwill

4 Dec 2012

The U.S. regulator’s attack on China’s uncooperative auditors is fair, but enforcing it could lead to a chaotic wave of de-listings from American markets. The time to protest about China’s heavy-handed state meddling was a decade ago. Now the cost of doing so is high.

Wall Street deal-making has lesson for Washington

3 Dec 2012

U.S. budget talks have become the equivalent of an ugly merger proxy battle, with leaks and messaging trumping substance. While investment bankers are often too eager to push for a deal, they also know one important thing: negotiating in public usually only makes things harder.

Mexico’s new president cools energy reform hopes

3 Dec 2012

A day after taking office Enrique Peña Nieto signed a pact with three political parties, committing them to reforms. That’s good, but the deal limits liberalization of the energy sector. Pemex asset sales, for example, are off the table. The needed overhaul looks a long way off.

SandRidge CEO sets bar even lower for oil patch

3 Dec 2012

Tom Ward isn’t the first energy boss to live large at shareholders’ expense. But his record at $3 bln SandRidge would make TV’s J.R. Ewing blush. Aside from lavish pay since the company went public, the CEO has upgraded to a fleet of jets. Angry owners are right to want him out.

Groupon discounts dual-class share structures

30 Nov 2012

CEO Andrew Mason and Chairman Eric Lefkofsky are locked in a dysfunctional drama over how to run the flailing company. Super-voting shares like the ones both men own are meant to give founders flexibility. But Groupon is a reminder of just how dangerous the arrangement can be.

US utility watchdogs should flex muscle more often

30 Nov 2012

A state regulator has forced Duke boss Jim Rogers to retire after he pushed out the intended CEO following an $18 bln merger. The episode shows watchdogs’ power. A better use of it would be ensuring electric and gas monopolies invest enough and don’t abuse captive customers.

Temporary tax hike could end U.S. fiscal stalemate

30 Nov 2012

A decade ago, a budget surplus inspired an intended short-term tax cut. Why not do the same thing in reverse now there’s a deficit? The new revenue paired with reform of entitlements could put the debt on a safer path. And an expiry date should help Republicans come around.

Argentina should grab chance for hedge fund peace

29 Nov 2012

A U.S. court has put on hold an order forcing the nation to pay holdout bondholders. That creates a window to settle an 11-year debt dispute that has blocked Argentina from global capital markets. Compromise could help the country’s economy and affirm that a deal is still a deal.

Infrastructural upgrade belongs in US fiscal talks

29 Nov 2012

Before long, Democrats will want to throw economic stimulus into the budget discussions. And it’s not just a useful negotiating variable. Disgust over America’s crumbling roads, bridges and sea walls is bipartisan. The White House could build on this middle ground.

Corporate America fears taxes more than recession

28 Nov 2012

Hence the flurry of special dividends. If the “fiscal cliff” of tax hikes and spending cuts really risks a downturn, companies ought to hoard cash. Instead Costco and others are giving it to shareholders while tax rates are low. That’s fine, but suggests the hype is overdone.

Musk elan powers SolarCity IPO valuation

28 Nov 2012

The solar panel installer backed by Tesla’s billionaire founder is clouded by complex accounting and government-related risks. The mooted share price puts SolarCity at six times revenue, far exceeding what similar business models elsewhere fetch. Elon Musk moon dust costs extra.

Equities bankers get hit again where it hurts

28 Nov 2012

It has been a lousy year for IPOs. Fees are down by a third and Facebook was a painful flop. Losing the Archstone deal to M&A colleagues is the latest blow. Despite some consolation business issuing shares for the buyers, ECM is cementing itself as a Wall Street weak spot.

U.S. student loan trouble discredits their value

28 Nov 2012

If pricey education provided the hoped-for labor market edge, then 11 percent of student loan balances shouldn’t be overdue. The proportion of delinquent education debt has surpassed even late credit card balances. Maybe students need better vetting.

SAC investors set to stew alongside founder Cohen

28 Nov 2012

The $14 bln hedge fund received notice that the SEC may take civil action against it. Those with money at SAC need to weigh the risk. The law moves slowly, but so does the redemption process - it would take investors months to withdraw cash. And they’d risk never getting back in.

One crime in SAC probe is letting snitch go free

27 Nov 2012

An ex-trader at Steve Cohen’s hedge fund firm faces criminal insider-trading charges. But the doctor who allegedly gave him secret data won’t, after agreeing to help prosecutors. Flipping suspects to land bigger game is standard. Going easy on serious wrongdoing shouldn’t be.