Americas

Jefferies douses Wall Street hopes with reality

20 Sep 2012

The bulge-bracket wannabe beat earnings forecasts in its third quarter as markets improved. But its stock tanked, as did rivals’. Returns, though higher, remain low and costs aren’t falling. Until that changes, even trading at book value looks a stretch for most investment banks.

Obama may find an exceptional friend in Facebook

19 Sep 2012

The social network’s No. 2, Sheryl Sandberg, should be on the short list for a top economic job in a second Obama term. But she’d give up some $130 mln in unvested equity to leave. Current boss Mark Zuckerberg’s largess could bridge the gap. But it may cost Facebook shareholders.

Boeing could play BAE-EADS spoiler on many fronts

19 Sep 2012

Europe’s $45 bln defense deal needs U.S. security clearance and perhaps a nod from Congress. Boeing wields enormous clout in Washington and has a history of using it against rivals. Valuations and looming military cuts also mean a bid for all or part of BAE can’t be ruled out.

Greek Coke bottler may find life sweeter in FTSE

19 Sep 2012

Coca-Cola Hellenic is now worth 22 pct of the entire Athens bourse. The world’s second-biggest Coke bottler isn’t obviously undervalued. But adopting a UK primary listing could shield investors from any Greek euro exit, and yield a profile-boosting perch in the FTSE.

Goldman’s Mr. 25 Standard Deviation hard to follow

19 Sep 2012

Despite his wacky crisis characterization, David Viniar played a big role saving Goldman from the mortgage rout and is the rare banker to succeed in the CFO role. Losing him hurts even if replacement Harvey Schwartz is no slouch. Viniar’s guidance from the board will be welcome.

The letter Carlyle’s Bill Conway didn’t write

18 Sep 2012

Missives from the U.S. buyout firm’s co-founder are eagerly anticipated each year, especially after the early 2007 edition foresaw a credit crisis. Conway hasn’t produced one for 2012 - with Carlyle seemingly bullish on new investments - so Breakingviews has drafted it for him.

Leveling bank playing field just got jostled

18 Sep 2012

The FDIC’s Thomas Hoenig urged a revamp of global capital standards a year after Jamie Dimon called them anti-American. Risk ratings are flawed and simpler rules better, as BoE’s Andy Haldane says. But signs of resistance only stoke fears about the U.S. commitment to new rules.

Leap off fiscal cliff is bad option, but not worst

18 Sep 2012

If U.S. politicians can’t compromise, higher taxes and spending cuts will kick in at year-end. That could bring recession. But it would also reset the political battle lines, improving the chances of a real fix. That’s better than Washington continually deferring tough decisions.

Inept Fannie/BofA deal highlights US mortgage mess

18 Sep 2012

A new report shows the agency paid too much to pull some loan servicing business from the mega-bank for doing a bad job. This double incompetence doesn’t just reflect badly on the two firms. It’s a reminder that the backbone of U.S. housing finance is in dire need of repair.

Brazil banks need better handle on consumer credit

18 Sep 2012

Banco Cruzeiro’s failure stems from fraud, but it specialized in loans to Brazil’s middle class - a group that grew by 40 mln in 10 years. That’s as short a record as U.S. subprime mortgages had in 2008. The comparison is extreme, but Brazil’s banks need both data and caution.

U.S. Treasury stake not the millstone GM makes out

17 Sep 2012

The automaker argues the government’s 26.5 pct ownership hurts its image and its ability to hire people. The former is overblown, the latter manageable. And Uncle Sam isn’t weighing heavily on the company’s stock price, either. The Treasury can afford to exit on its own schedule.

Falling income should be Occupy rallying cry

17 Sep 2012

A year after protests began on Wall Street, the movement lacks momentum and focus. Yet middle-class American incomes are going down. More than inequality itself, that’s reason to want change. Oddly, neither Occupy nor the Tea Party has grabbed what could be a defining issue.

Key ingredient missing for M&A revival

17 Sep 2012

Glencore-Xstrata and BAE-EADS might set bankers’ hearts racing. Bulls have financial fuel: QE3 makes debt cheap. They have economic logic: revenue pressure from sluggish growth makes scale more valuable. But a wave of mergers won’t come until confidence rises too.

Obama trade hypocrisy good politics but bad policy

17 Sep 2012

The U.S. president is accusing China of an unfair $1 bln subsidy for its auto industry. That might resonate with voters. But the Asian giant, a vital trading partner for the U.S., has already hit back. And lauding his own $80 bln bailout of Detroit leaves Obama on shaky footing.

Motorola: the breakup that keeps on giving

17 Sep 2012

Splitting the company has been good for shareholders. Google bought the cellphone arm for a chunky premium. Motorola Solutions, its emergency communications business, has done even better. And there’s room for more. It could buy back a third of its stock without financial strain.

Inefficient Market: The Devil’s Dictionary of Finance

17 Sep 2012

Roughly a century ago, the American writer Ambrose Bierce compiled ”The Devil’s Dictionary”. In his celebrated lexicon, Bierce displayed a profound understanding of finance, which he defined as “the art or science of managing revenues and resources for the best advantage of the manager.” Below are several other of his definitions touching on the subject of money.

Embassy attacks underline Mid-East transition risk

17 Sep 2012

Arab governments eventually condemned the violence, but the U.S. embassy attacks highlight their vulnerability to radical minorities. This isn’t new in the Middle East, but investors will weigh the risk more heavily when considering opportunities in the Arab spring economies.

Fed’s approach to monetary policy looks Chinese

14 Sep 2012

Critics accuse the People’s Republic of using an artificially low exchange rate to promote job creation at home. Now the U.S. central bank says it will keep on stimulating until unemployment falls. The approach is the same, but the Fed’s domestic bias carries more global risks.

Uncontrollable gas troubles U.S. energy firms

14 Sep 2012

U.S. production keeps rising even though companies like Chesapeake promise to cut it. Blame efficient techniques and bad luck. But failure to curb supply means low prices, depriving large producers of cash to drill for more profitable oil and leaving smaller players vulnerable.

Review: "Bond Girl" goes for broke, ends up short

14 Sep 2012

“Bond Girl” moves from the modest heights of corporate expense accounts to the imagined depths of the financial crisis. With an eye drawn more toward the decadent than the daily deal, let’s hope this is more soft-core fantasy than Wall Street reality.