Americas

India and U.S. try for uneasy alliance over Iran

7 May 2012

A visit from Hillary Clinton on the same day as a trade mission from Tehran highlights the diplomatic tightrope that New Delhi is on. While good U.S. relations are important, India’s trade deficit makes Iran’s cheap oil too attractive to pass up. A compromise looks likely.

Buffett Rule divides Berkshire Hathaway faithful

6 May 2012

Ideological squabbling marred the annual Omaha love-fest this year. Ice-cream bars and newspaper tosses weren’t enough to distract shareholders angry about the politically charged tax plan with Warren Buffett’s name on it. It may even be an unplanned liability to Berkshire.

M&A spin doctors take a thumping on the record

6 May 2012

Judge Leo Strine has called them out for blabbing confidential data in Martin Marietta’s hostile $5.3 bln offer for rival Vulcan. The sand and gravel outfit will pay the price of an order blocking the bid. But the reputation of deal flacks may also take a lasting hit.

Review: Exxon’s shareholder fetish, good and bad

4 May 2012

A single-minded devotion to shareholders has helped the oil giant earn high returns. But Steve Coll’s “Private Empire” shows how this obsession also made it easy to make some bad decisions: cozying up to nasty regimes and a crusade against global warming science.

Too much transparency could muddy trading waters

4 May 2012

Wall Street critics tout more disclosure as a universal good. Often, they’re right. But new rules for the $700 trln derivatives market could prove the exception. These risk handing savvy traders some easy profits while pushing up costs for others. That loophole needs plugging.

China throws a juicy bone to foreign brokers

4 May 2012

The likes of Goldman Sachs and Morgan Stanley will be able to own 49 percent of their China securities ventures, from 33 percent. It still doesn’t match the heavy lifting they do, but is progress. Given the securities market’s potential, the extra investment should be worth it.

U.S. gains leverage from Chen Guangcheng fight

4 May 2012

Chinese leaders may be irritated at the American willingness to protect the blind lawyer, and Beijing doesn’t want the U.S. embassy to become a refuge for dissidents. But fear of global shaming on human rights will make Beijing more pliable in economic and political conflicts.

Resumé lies have longer shelf lives than degrees

3 May 2012

Yahoo’s CEO embellished his accounting sheepskin with a computer science major. It’s easy to see the temptation in Silicon Valley’s engineering culture, even if tech degrees are quickly outdated. But the lesson to learn here isn’t a new one: dishonesty has a stubborn longevity.

Dependence on Facebook spreads beyond its users

3 May 2012

It’s not just social networking junkies that have grown reliant on Mark Zuckerberg’s firm. Businesses such as Zynga have been created on its back. Bankers are pegging their careers on floating the firm. And California needs the impending IPO to help close its yawning budget gap.

Investors risk missing emerging market sweet spot

3 May 2012

As developing nations mature, investors will want to harness consumers’ economic power. But the widely followed developing-market equity indexes are dominated by big beasts of finance and resources. The juiciest consumer-led returns may come via sector bets and smaller companies.

Warning: emerging economies can go backwards, too

3 May 2012

Bolivia has followed Argentina in the pointless nationalisation of Spanish-owned assets. Argentina is fiddling with its central bank, as Hungary tried to. The obstacles to growth in emerging economies can be large. Investors should beware. Emerging economies can go down as well as up.

Earnings surge only superficial relief for Pemex

3 May 2012

A 20-fold jump in Q1 paper profit obscures the fact that little has changed at Mexico’s oil monopoly. Production continues to slide and its profit potential is crushed by the government’s tax take. Only election season talk of oil industry openness offers a glimmer of hope.

Apple’s valuation isn’t at risk any time soon

3 May 2012

Its $550 bln market cap is mind-boggling, but the fast-growing iPhone maker nevertheless trades at an absurdly low 12 times earnings. A new Breakingviews calculator shows how even if growth and margins decline improbably fast, Apple should still be worth far more in 2016.

Carlyle’s wan IPO affirms private equity thesis

3 May 2012

The firm’s underwhelming $6.7 bln value shows carried interest isn’t prized by markets the way it is by co-founder David Rubenstein and his partners. Carlyle and its ilk may have selfish reasons to float, but their model clearly still diverges from the public investor mindset.

Spare a thought for GM boss Dan Akerson

3 May 2012

The U.S. automaker delivered another decent quarter under his leadership. But on the same day, Akerson’s former employer Carlyle went public. The IPO wasn’t great, but he still surrendered some $100 mln to work for GM. It’s a 1 pct problem, but his loss has been taxpayers’ gain.

"Scream" now a symbol of easy money and easy life

3 May 2012

Munch’s pastel has long been an icon of the modern age’s dark side. Now this image of isolation, fear and madness has become emblematic of post-modern financial excess. Its sale for a record $120 mln betrays lax monetary policy and a mood of insouciance among the new hyper-rich.

BG investors right to be nervous about cost creep

3 May 2012

Profits are up, production is the envy of peers and a $5 bln disposal plan is on track with the $1.8 bln sale of Comgas. But the dip in BG’s shares after the gas giant raised capex guidance shows that even the best aren’t immune to the spiraling cost of big petroleum projects.

Nerds may get revenge on Woodstock of Capitalism

2 May 2012

Spreadsheet-wielding analysts have been invited for the first time to ask questions at Warren Buffett’s annual powwow. That should at least subtly tilt the discussion more to financial nitty-gritty from folksy wisdom. It’s the latest sign that Berkshire’s times may be a-changin’.

Bolivia shows funny way of wooing investors

2 May 2012

President Evo Morales’ seizure of the biggest local power grid operator from Spain’s Red Electrica pales next to Argentina’s move on YPF. But for a nation preparing its first global bond sale since the 1920s, Bolivia’s decision sends a strong warning signal to prospective buyers.

Dissident solution bodes well for China and U.S.

2 May 2012

The blind activist is safe and still in China. Beijing and Washington avoid a diplomatic incident and can each claim victory. The U.S. comes out as a defender of human rights and China can uphold the rule of law while complaining about interference.