Americas

Chevron doubles down on Chavez staying power

20 Jul 2012

Venezuela’s bond yields have gyrated with investors’ changing views of the strongman’s cancer survival odds. But Chevron’s $2 bln loan to the state oil giant is a clear bet on Chavez’s re-election and survival. His shadow may darken the nation’s economic outlook for a while yet.

Citi, M. Stanley reveal randomness of M&A advice

19 Jul 2012

The two are trying to set a price for a stake in their wealth management JV. Bankers for Citi, the seller, think the unit is worth over $22 bln. The buyer’s whiz-kids conveniently reckon nearer $9 bln. There may be reasons for the gulf, but it’s a bad advert for merger science.

Google bogged down by shift to mobile hardware

19 Jul 2012

The search giant is pressing hard in computing on the go. Q2 results show strong growth in Android handsets and mobile search. Google’s numbers also now include Motorola Mobility. But the upfront costs of owning the handset maker mean progress isn’t yet translating into profit.

U.S. housing poised to boost economy

19 Jul 2012

The latest data point suggests not, but a recovery looks under way - even if homebuilders are running ahead of the market. After dragging on GDP for five years, housing should boost output and jobs in coming quarters. That will give lawmakers room to change distorting policies.

Quashing human-gene patent could speed cancer cure

19 Jul 2012

Inventors deserve rewards for advances against the disease. But a U.S. company’s claim to own DNA linked to breast cancer goes too far. It takes credit for nature’s handiwork while stifling others’ research. A court ruling against the patent would best serve both law and science.

James Gorman left exposed by dismal showing

19 Jul 2012

Morgan Stanley eked out a paltry 2 pct return on equity, worse than peers. Fixed income trading was particularly weak. Client concerns ahead of a Moody’s downgrade may have contributed. Either way, the success of CEO James Gorman’s strategy is starting to look shaky.

Capital One case heralds end of sneaky fees

19 Jul 2012

The U.S. credit card issuer is paying $210 mln to settle charges of duping customers. The first big enforcement action by the new Consumer Financial Protection Bureau indicates the kind of innovation in its crosshairs. Lenders will have to be creative without being deceptive.

Argentina leader follows reckless Venezuela recipe

19 Jul 2012

President Cristina Fernandez is cooking up the same short-sighted economic soup as Hugo Chavez. So far her intrusions on private enterprise and the central bank look relatively minor. But Chavez’s history suggests more is to come. And Argentina isn’t as well placed to stomach it.

Romney’s company tax plan may flood U.S. with cash

18 Jul 2012

The Republican candidate wants to tax corporations only on their U.S. income. If he wins the White House, it seems Congress might just go along. Such a change would encourage U.S. companies to repatriate up to $1.4 trln held offshore to avoid tax under the current global regime.

Purge likely after U.S. obesity drug binge

18 Jul 2012

Two drugs for weight loss from biotech firms have been approved by the FDA in the last month. With American obesity rates rocketing, analysts are eyeing fat sales and bankers are weighing mergers. But history suggests the enthusiasm may last about as long as the typical diet.

BofA needs top line growth, not just cost cuts

18 Jul 2012

The U.S. mega-bank’s plan to reduce costs is paying off. Brian Moynihan is now targeting annual cuts of $8 bln altogether by 2015. On recent form that would boost tangible equity returns to around 10 pct - probably just enough. But without revenue growth, BofA will look mediocre.

Vivendi will struggle to get clean Activision exit

18 Jul 2012

Shareholders in the French conglomerate will be glad it’s mulling options for its $8 bln controlling stake in the U.S. software developer. The snag is the sheer size of the desired deal. Vivendi may have to sell the holding in pieces - or simply wait for a stronger M&A market.

U.S. student debt on scary trajectory

18 Jul 2012

New statistics from the New York Fed show education loans piling up at an unsustainable rate and delinquencies staying high even as the economy improves. The path to serious trouble is becoming more obvious. Rather than tackling it, though, policymakers are fueling the problem.

Goldman’s pay-earnings balancing act looks wobbly

17 Jul 2012

The firm has tweaked capital and trimmed costs to boost returns to shareholders. But it still set aside 44 pct of Q2 revenue for pay. With return on equity running at just 5.4 pct, that looks unsustainable. Absent a market rebound, cutting comp is the least investors will expect.

Global gloom is overdone

17 Jul 2012

The IMF is pessimistic about a “weak” world and that’s prompted calls for more stimulus. But the economy is adjusting. Cheaper oil has just cut UK inflation. Europe is weak because Italy and Spain are trying to live within their means. Amid it all, global growth persists.

Calpers’ 1 pct return is grim for pension savers

17 Jul 2012

One miserable year won’t ruin the $233 bln California fund. And 20-year returns for Calpers and fellow Calstrs still meet 7.5 pct targets. But with today’s low interest rates it gets harder for funds to keep up. Future retirees everywhere need to put more away.

Yahoo tackles existential problem with engineering

17 Jul 2012

Google’s Marissa Mayer is one of the few accomplished females to rise to the top echelon of Silicon Valley’s geek hierarchy. She’s certainly qualified, and probably eager, to become CEO of something. But Yahoo’s problems won’t be so easily solved by rewriting code.

Libor jailbirds would be hollow symbols

16 Jul 2012

Rate-rigging sentences might assuage public lust for Wall Street scalps. But U.S. prosecutors have missed big on financial-crisis villains. Al Capone was nailed for tax evasion. Libor convictions would also miss the point - and might only get real banksters’ distant cousins.

IMF takes forecasting lesson from Wall Street

16 Jul 2012

Sell ratings from stock analysts are rare. So is pessimism from the IMF, which has reduced its outlook for global growth by only a fraction. But the fund has to make the case its crisis loans will be repaid. So it should be no surprise if, as with Greece, it proves too optimistic.

Brazil risks throwing good money after bad

16 Jul 2012

Its central bank is contemplating a state-guaranteed fund to buy structured loans from small banks. That looks misguided. It introduces moral hazard into already weak loan markets, may not boost available credit and could leave taxpayers holding a bag of worthless loans.