Americas

U.S. mortgage lessons lost in student debt policy

30 Apr 2012

Lawmakers are close to making the same mistake on college loans they did with housing. When government subsidies help send prices soaring, borrowers should be restrained. To curb the crazy growth of higher education costs demands less, not more, of Uncle Sam’s involvement.

Microsoft gives Barnes & Noble a big brother lift

30 Apr 2012

The bookseller’s Nook e-reader ambitions looked a day late and many dollars short. Microsoft’s $300 mln injection isn’t just a one-time hand up. The agreement gives Barnes & Noble time, capital and a path to follow - even if it may sadden fans of bricks-and-mortar bookstores.

Sirius XM could yet reclaim the soul it sold

30 Apr 2012

When staring down bankruptcy in 2009, the U.S. satellite radio service pledged a 40 pct stake and say-so on big decisions to wily negotiator John Malone. He gave Sirius life and is now coming to collect. But there may be another deal to be done to skirt creeping control.

China and U.S. should avoid human rights fight

30 Apr 2012

A dissident takes refuge in the U.S. embassy in Beijing. It’s a diplomatic crisis, but both sides have reason to want a face-saving resolution. Though Washington defends human rights, it needs a stable and cooperative China. Beijing, meanwhile, has a chance to improve its image.

Lazard investors getting two for the price of one

27 Apr 2012

The firm’s Q1 results confirm asset management is its quiet powerhouse. Yet investors give Lazard virtually no credit for it - or else negatively assess the high-profile M&A advice business. A sum-of-the-parts analysis suggests Lazard is worth twice its $3.5 bln market value.

U.S. GDP shows profit-investment disconnect

27 Apr 2012

Company profits are at a new high as a share of GDP, yet the first estimate of Q1 output showed a 2.1 pct rate of decline in private sector non-residential investment. True, the non-government sector grew at a solid 3.4 pct pace, but weak investment bodes ill for the medium term.

Review: Distilling Mulally’s managerial mojo

27 Apr 2012

Ford’s bickering execs quickly learned in 2006 not to underestimate their new CEO. Behind Mulally’s affable exterior lay a bright, mercurial mind. As Bryce Hoffman’s “American Icon” shows, it wasn’t Mulally alone who saved Ford. But without him, bankruptcy was far more likely.

Lawyers play high-low game with costly M&A suits

27 Apr 2012

Nationwide Mutual is paying investors too little for a rival U.S. insurer, unless it’s paying too much. Attorneys are hedging their bets, challenging the deal on both counts. While merger litigation may be hitting record highs, this transaction shows just how low legal eagles can go.

Amazon’s investment habit looks less healthy

27 Apr 2012

The Internet retailer’s quarterly sales grew 34 pct and income was better than expected as sales of the Kindle Fire soared. That sent the stock spiking. But Amazon’s returns on its heavy investment are turning more and more anemic. Investors should be wary.

Samsung moves on from Japan to nibble at Apple

27 Apr 2012

The Korean company learned by pulling apart Japanese electronics, then reverse-engineering the business model. Having taken the lessons, it has built a commanding position in TVs and smartphones. As Apple tackles emerging markets, Samsung is showing it is still hungry.

Chesapeake tangle goes far beyond CEO

26 Apr 2012

Aubrey McClendon’s dubious dealings have the $12 bln U.S. energy giant on the back foot. But investors should also question the company’s monstrous complexity. It has convoluted off-balance sheet liabilities, hedging gains have dwarfed profit, and cash flow is steadily negative.

Detroit needs a bail-in, not a bailout

26 Apr 2012

Motown’s carmakers have roared back to life - Chrysler just posted a $473 mln Q1 profit. But there’s no such joy for Motor City itself. It’s plagued by debt, decay and despondency. Emergency cash can help. But Detroit really needs to attract new businesses. That’s a long road.

Exxon playing catch-up with dividend hike

26 Apr 2012

The oil giant’s 21 pct higher payout is a step in the right direction. But Exxon’s Q1 earnings miss suggests the move was partly a sop for shareholders. The company still made $9.5 bln, but weak U.S. gas prices, declining output and surging capex will keep investors on edge.

Evercore’s giddy ambitions look risky

26 Apr 2012

The boutique bank has been growing by leaps and bounds despite its Q1 blip. Now CEO Ralph Schlosstein wants Evercore to be in a league with older and bigger Lazard and Rothschild. Such competitive aspirations are laudable, but history suggests they can backfire on Wall Street.

Watchdogs coming up short on ETF risks

26 Apr 2012

It’s heartening to see Finra going after brokers for mis-selling complicated variants of exchange-traded funds. But investors need more protection earlier on in the process. That means ensuring potential buyers are well-informed of the risks and the fees before they jump in.

Fed’s rising growth, falling inflation are wishful

25 Apr 2012

The U.S. central bank sees a pick-up in growth even as the annual rise in prices declines from the current run-rate above the Fed’s 2 pct target. These trends aren’t apparent from recent data, and the Fed needs contingency plans if they don’t pan out so conveniently.

Can hedge funds help save the GOP from itself?

25 Apr 2012

These big money backers of Mitt Romney have also been leading the charge to legalize gay marriage. Although their social liberalism may turn off the Republican base, it could also bring in swing voters who agree with the party on fiscal policy but not its cultural conservatism.

Florida example could help drowning Dewey lawyers

25 Apr 2012

Ruden McClosky kept its business going by pulling off a unique pre-agreed bankruptcy and merger. Dewey & LeBoeuf might do the same, if partner and client defections don’t swamp it first. But the maneuver is tricky, and the New York firm could learn from Ruden’s experience.

Be wary of Santander’s Mexican fiesta

25 Apr 2012

The Spanish lender hopes to boost capital by listing its Mexican unit, which should fetch a higher valuation than the parent. Santander did the same in Brazil in 2009. But given the bank’s knack for selling at the peak, investors will have to be convinced there is some value left.

BofA-UBS job swap offers symbolic snapshot

25 Apr 2012

The U.S. group has poached old-school investment banker Alex Wilmot-Sitwell from UBS, just after bold dealmaker Andrea Orcel went the other way. As the Swiss lender shakes up its culture, BofA is also reshaping Merrill. The moves are emblematic of firms adapting to a new reality.