Americas

Stock investors vault ahead of housing recovery

15 Oct 2012

Economic signals point to a U.S. property rebound, but the bulls may be chasing a mirage. Last week saw a big bump for a real estate agency’s IPO. Home Depot trades well above its bubble-era highs. Fundamentals suggest the market has bottomed, but a boom still looks distant.

Amped-up Carlyle gulps double dose of muscle milk

15 Oct 2012

After bulking up with acquisitions all this year, its first as a public company, the buyout firm is now stretching the balance sheet at vitamin maker NBTY to pay itself a $720 mln dividend with PIK-toggle debt. Such juicing may be easy again, but can have risky side effects.

Citi’s mediocrity shines through dark quarter

15 Oct 2012

Two big Q3 hits left the mega-bank with just a 1 pct return on equity. Excluding them boosts net income to $3.3 bln, though still with a meager ROE flattered by loan loss releases. Operating leverage progress is welcome, but it’s time for CEO Vikram Pandit to raise Citi’s game.

Sprint shareholders have most to smile about

15 Oct 2012

Softbank’s $20 bln deal to buy 70 pct of the U.S. cellphone operator hands them a premium of about 30 pct. The Japanese group’s owners aren’t keen. Meanwhile, Sprint’s mountain of debt will shrink thanks to an $8 bln cash injection. But it will still be weak compared to rivals.

Nobel economics prize a welcome nod to match-makers

15 Oct 2012

Americans Alvin Roth and Lloyd Shapley won the 2012 Nobel prize for economics for their research on efficient match-making. It shouldn’t come as a shock. Unlike sexier fields like finance, successful matching can claim it fixes systems - and even saves lives.

Bernanke’s Asian defence is an implausible yarn

15 Oct 2012

The Fed chief claims money printing by advanced nations is not the “dominant” force behind surging capital flows to emerging economies, and that they benefit from stronger demand in the West. Evidence suggests his first claim is wrong, while the second is impossible to verify.

Solid quarter doesn’t bust ghost of Dimon’s whale

12 Oct 2012

The JPMorgan boss has $5.7 bln of Q3 profit to crow about - a third more than a year ago. Dimon’s standing took a drubbing earlier this year after dodgy trades cost the firm about $6 bln. Now he can breathe easier, but it’s too early to go back on the anti-regulation offensive.

Review: Bairing the strain of failed regulation

12 Oct 2012

Former U.S. bank regulator Sheila Bair is by no means perfect, as several incidents in “Bull by the Horns” demonstrate. But she put taxpayers first and argued for banks to shoulder more of the burden for the industry’s failures, which is how the system is supposed to work.

New York festival features Hollywood’s new finance

12 Oct 2012

Amid blockbuster debuts of Steven Spielberg’s “Lincoln” and Ang Lee’s “Life of Pi,” the Big Apple’s 50th annual movie jubilee is showcasing small-budget productions like “The Last Time I Saw Macao.” Such indie and foreign films are reshaping the industry’s investment model.

Softbank-Sprint tie-up gets bad signal from market

12 Oct 2012

Investors wiped $6.9 bln off the Japanese telco’s value on Oct. 12, three times the boost to its U.S. target. The deal would stretch Softbank financially, and may preclude smaller purchases closer to home. CEO Masayoshi Son has shown chutzpah; he must show discipline too.

Wall Street, City pay still must fall by a third

11 Oct 2012

Morgan Stanley’s boss is right that investment banking is overstaffed and overpaid. The bill for traders, advisers and money managers at seven global firms needs to drop by about $30 bln, a Breakingviews calculator shows, to give shareholders a shot at decent returns on equity.

If buyout firms conspired, they were bad at it

11 Oct 2012

Newly disclosed emails appear to support allegations that Blackstone, KKR and others colluded to keep prices down. Yet many of those pre-crisis mega-deals like Freescale and TXU have turned out terribly. Guilty or not, the case should worry investors in private equity firms.

U.S. banking overhaul gets a second wind

11 Oct 2012

Two years after Dodd-Frank thudded onto desks across Wall Street, regulators are on the stump with ideas from the cutting-room floor. Fresh on the heels of the hoopla to break up banks, the Fed’s top cop is pushing to cap their size. Too big to fail clearly hasn’t been resolved.

Too bad Lagarde’s not credible because she’s right

11 Oct 2012

The IMF managing director has reiterated the organisation’s view that austerity may have been too harsh too fast, crimping growth. She is right, although her case would be stronger if, as French finance minister, she hadn’t been an austerity cheerleader for so many years.

Softbank catches Japanese overseas M&A bug

11 Oct 2012

The $40 bln group may take control of $17 bln Sprint Nextel. Aside from pooling iPhone purchases, combining the No. 3 cellphone carriers in the U.S. and Japan has little industrial logic. It looks like another “get out of Japan” deal fueled by cheap money and docile shareholders.

Executives spared prison should at least lose jobs

10 Oct 2012

With criminal charges unlikely, watchdogs pursue financial fraud by suing the likes of Wells Fargo. But shareholders, not officers, usually foot the bill. Strong deterrence demands honchos pay, too. Banning them from executive suites might best serve corporate governance.

Chilean lender gets tasty-looking Colombian rollup

10 Oct 2012

CorpGroup is building on its purchase of Santander’s Colombian business with a $1.3 bln offer for Helm Bank, probably the last bank of any size available in the hot market. Though the headline price is no steal at 1.7 times book value, possible synergies make it look a bargain.

Wells Fargo in mortgage mire, just like the others

10 Oct 2012

Warren Buffett’s favorite bank trades at a premium to U.S. rivals, partly thanks to a carefully cultivated “not Wall Street” image. But a new government suit against the West Coast bank is a timely reminder that Wells had no trouble cooking up its own questionable home loans.

Ethical economy: Welcome the U.S. relative decline

10 Oct 2012

Whoever wins the presidential election will preside over a relative decline in America’s global economic position. It’s tragic but it is inevitable. A wise leader will adapt to the lesser standing and protect the valuable relics of past glory. Pity neither candidate looks wise.

Romney’s foreign policy doesn’t seem so austere

9 Oct 2012

The Republican indicates a George W. Bush-like interventionist approach, another step away from the party’s pre-World War Two isolationism. That could lead to more Middle East conflict and defense spending, eating savings from thriftier budgets. It’s also just as risky as Obama’s stance.