Americas

At least Obama has a mandate – he really needs it

7 Nov 2012

Barack Obama’s decisive electoral win over rival Mitt Romney means the divisive Bush-Gore battle won’t be repeated. The U.S. economy, however, is in much worse shape than in 2000. Having a mandate helps, but the president, and the country, can’t get by with that alone.

New banking sheriff will aim further to the right

7 Nov 2012

Texas Republican Jeb Hensarling is likely to be the next chairman of the agenda-setting U.S. House Financial Services Committee. He wants to gut Dodd-Frank but is also keen to get Uncle Sam out of housing and refocus the Fed. Such a bold agenda could be tough to advance, though.

Sandy fiasco reveals investor-customer disconnect

7 Nov 2012

The storm that created up to $50 bln of damage across the East Coast left 8 mln customers without power, and ornery. Politicians are hopping mad, too. Yet the market values of the region’s major power utilities barely took a hit. If regulators do their job, that won’t last.

Wall Street takes wicked big thumping in U.S. vote

7 Nov 2012

Elizabeth Warren triumphed in Massachusetts in a duel over who could be tougher on the banks.  The unalloyed election of the financial industry’s Public Enemy No. 1 to the Senate is a clear indication the anti-bank message still resonates strongly.

Vodafone-Verizon fantasy M&A may stay just that

7 Nov 2012

Merger speculation always follows U.S. mobile giant Verizon Wireless. But 55 pct owner Verizon Communications would find buying out partner Vodafone a stretch. A full merger of the parents wouldn’t fly with Europe-averse investors either. The status quo looks pretty secure.

BTG Pactual’s Q3 showing not as good as it seems

7 Nov 2012

Big investment gains flattered profit at Brazil’s top investment bank. And the firm had to pump up leverage to help match second-quarter revenue while costs jumped. Pactual won’t always have such levers to pull. And with risk-taking so dominant, its valuation looks expensive.

Obama’s legacy depends on second-term compromise

7 Nov 2012

The president won’t have time to celebrate before confronting a mandatory raft of tax increases and spending cuts. To avert recession, he’ll need to channel Bill Clinton and bring together a divided Congress on fiscal reform. A grand bargain could assure his place in history.

The right Romney might have succeeded as president

7 Nov 2012

The Republican didn’t want for credentials, but he lacked an identity. Americans rejected the hydra he became, a moderate state governor turned severe conservative turned late-campaign pragmatist. The U.S. could have used the problem-solving Romney, but he flip-flopped to a loss.

Big election loser: Uncle Sam’s global status

7 Nov 2012

Barack Obama was the world’s darling four years ago. But America’s image has suffered from currency wars, China-bashing and pushy foreign policy. Campaigns run by the president and Mitt Romney underscore the decline of U.S. exceptionalism. The trend won’t easily be reversed.

Recycled legal claims make banks look like victims

6 Nov 2012

Wells Fargo says the U.S. Justice Department sued it twice over the same dodgy mortgages. If true, that’s unfair as well as a waste. Yes, Wall Street still must answer for the crisis. But duplicative suits from state and federal watchdogs promote resentment, not deterrence.

Hudson’s Bay IPO: more attractive in 1670 than now

6 Nov 2012

At its debut, the company was the world’s largest landowner, at the frontier of technology with dynamic royal and scientific backing. The Hudson’s Bay returning to the Toronto market is an overleveraged second-tier department store. That’s what 342 years of bad decisions will do.

The biggest winner in U.S. election: Mr. Uncertainty

6 Nov 2012

As voters hit the polls, it’s becoming increasingly evident that whether Obama gets another shot or Romney takes over neither will have much of a mandate. It doesn’t take a worst-case, recount scenario to foresee an outcome of extreme gridlock that dampens financial markets.

Pre-crisis rating laxity still has power to shock

6 Nov 2012

An Australian court has held S&P and ABN Amro liable for investor losses on AAA-rated CPDOs sold at the height of the credit bubble. S&P will appeal. Whatever the result, the ruling exposes the interplay of cynical bankers and inept raters. Today’s watchdogs should take note.

U.S. taxman should give credit where credit’s due

6 Nov 2012

Companies can typically subtract foreign levies from their income tax. But a hyper-technical IRS decision puts that rule, and investment abroad, at risk. The Supreme Court is taking the case, getting a rare chance to tell federal pencil pushers that form doesn’t trump substance.

GM’s ex-lender closer to repaying U.S. – on paper

5 Nov 2012

GM and Ally owe taxpayers $42 bln. GM is profitable but trades way below break-even. Ally’s combination of a solid core business, asset sales and reduced mortgage risk values it above what it owes. But only an outright sale would recoup taxpayer aid fast. That looks remote.

Room for rollups as big investment banks shrink

5 Nov 2012

With large groups like UBS getting smaller, pint-size Stifel keeps expanding. Its latest deal is to buy financial institutions specialist KBW for $575 mln. No matter how bad things get in the industry, there are always gaps to fill and an abundance of ambition.

Colombian stock market dominance up for grabs

5 Nov 2012

The government’s seizure of Bogota’s top broker leaves Latin America’s hottest securities market without a clear leader. But Interbolsa’s failure may highlight Colombia’s financial and regulatory charms, and make way for new players with ambitions of regional dominance.

Morgan Stanley thumbs its nose at UBS approach

5 Nov 2012

CEO James Gorman is tapping fixed-income boss Colm Kelleher to run the investment bank. Picking him over M&A counterpart Paul Taubman, who is leaving, reinforces Morgan Stanley’s belief it can make a serious go of FICC. The clock’s already ticking, though, on whether it can.

Lies, damned lies and elections: Obama has an edge

5 Nov 2012

Forget the spin. Economy-based models and U.S. national polls show the president and Mitt Romney neck-and-neck. But under the state-by-state system that picks the winner, Obama leads. That doesn’t mean he’ll win for sure. But his odds look at least twice as good as Romney’s.

Chris Christie may soon feel Barack Obama’s pain

5 Nov 2012

New Jersey’s Republican governor faces a Sandy-related revenue hit that will make it hard to balance the budget, as mandated. Deeper cuts to services or even a tax hike may be needed. Christie gets his chance to show the president he opposes how leadership and compromise work.