Americas

Fully-stocked Fed board needed to navigate exit

21 Mar 2012

The White House’s bipartisan duo Jeremy Stein and Jerome Powell could bring the central bank’s board back to full strength in time for what may be a rocky withdrawal from easy monetary policy. The candidates are strong - whether the Senate will also be remains to be seen.

Chevron’s criminal scrape may backfire on Brazil

21 Mar 2012

A prosecutor in Brazil is chasing the oil titan for a spill about 0.1 percent the size of BP’s Gulf gusher. This over-reaction may reflect one lawyer’s ambitions. Still the fact that Petrobras has escaped such punishment will add to worries that outsiders face a double standard.

U.S. justices put hazy patent rules back in focus

21 Mar 2012

A unanimous Supreme Court said reading medical tests is, like gravity, based on a law of nature that can’t be patented. The ruling should cut infringement claims by diluting protections for other fuzzy and overly broad ideas. The upshot could be a healthy boost for innovation.

Saudi words won’t ease pressure on U.S. fuel prices

21 Mar 2012

Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.

U.S.-Russian trade relations need serious reset

21 Mar 2012

The Jackson-Vanik amendment linking U.S. trade rules with the former USSR to emigration policies is obsolete and must be repealed. Some want it replaced with a new law pressuring Moscow on human rights. But bundling the two issues together is naive and counter-productive.

Farmland promises real investment harvest

21 Mar 2012

The hunt is on, among fearful long-term investors, for inflation protection. History suggests that agricultural land could provide part of the answer. But ownership brings responsibilities, costs, and risks that need close management.

Judges’ words can speak as loudly as actions

20 Mar 2012

Leo Strine and Jed Rakoff have become known for their tough and snarky rulings, including recent ones thumping Goldman Sachs and Citigroup. Jurists don’t always have the full force of the law needed to up-end the status quo. But the bully pulpit is proving just as powerful.

Student debt may land double whammy on US growth

20 Mar 2012

Graduates are forking over far more in loan repayments than a decade ago, easily outstripping salary growth. Over time, that’ll dent GDP. Defaults are rising, too. With Uncle Sam now holding $450 bln of student debt and rising, that puts taxpayers on the hook - again.

Glencore tiptoes onto the Canadian prairies

20 Mar 2012

The commodity trader has roped in two local partners for its $6.1 billion purchase of Viterra, the Canadian grain firm. That setup nearly halves its outlay and takes out some unwanted businesses. It also reduces the risk of a BHP-style political backlash.

Amazon hedges against the rise of the machines

20 Mar 2012

That’s one way to explain the kooky $775 mln purchase of Kiva. Either that or Jeff Bezos has a robot fetish. It’s not clear what the deal offers shareholders. Automating Amazon’s warehouses makes sense. Buying Kiva droids, rather than their maker, seems the more rational approach.

Jefferies heralds Wall Street return to mediocrity

20 Mar 2012

The New York securities firm reported a one-third jump in revenue powered by fixed income. That’s a welcome relief for the industry at large. But it only lifts Jefferies’ ROE to 9.5 pct. Absent all the juice from Europe’s bailouts it looks like another so-so year in finance.

U.S. housing hangover finally wearing off

19 Mar 2012

Six years into the downturn, the overhang of housing inventory no longer looks so overwhelming. Population growth and reduced construction continue to cut the glut of buildings. Throw in rising employment and improved affordability, and at last a rebound is in sight.

So what’s Apple really going to do with its cash?

19 Mar 2012

It will hand about $45 bln to shareholders over three years, mainly as dividends. That’s a good start. Yet Apple could make $50 bln in free cash flow this year. With sales and profit rocketing - and the bulk of its $100 bln hoard still stuck overseas - bigger payouts will follow.

Activists land rare European win with TNT

19 Mar 2012

The Dutch courier’s $6.8 bln sale to UPS is a rare victory for activist investors after a lean patch in Europe. They are likely to score again with the $2 bln buyout of Britain’s Misys. Corporate stragglers: beware. Results like these will embolden troublemakers.

Goldman Sachs history shows resignation naivete

19 Mar 2012

A week has gone by since Greg Smith quit the firm with a New York Times op-ed. While its resonance has been striking, its revelations, in their historical context, aren’t. Greed has always struggled with duty to clients in finance, even if it ballooned post-IPO at Goldman.

Hedge funds show banks how to recoup loans to Gulf

19 Mar 2012

Bahraini investment house Arcapita has been forced to file for U.S. bankruptcy protection after pressure from non-bank creditors – a first in the region. That won’t end “extend and pretend” debt deals, but it may deliver one of the Gulf’s first effective restructurings.

Safe haven tremors signal big investment shift

19 Mar 2012

The first cracks are appearing in the high edifice of safe haven bonds. Sovereign yields are rising, gold weakening and the dollar advancing after a decade of weakness. Global investors should assume that we are on the cusp of change.

Dollars everywhere – so where’s the inflation?

16 Mar 2012

U.S. consumer prices rose 0.4 pct in February, but that was mostly gasoline. Year-on-year, inflation is above the Fed’s 2 pct target but not by much. But money supply is going through the roof. Either inflation is on the way, or Milton Friedman should lose his Nobel prize.

Greedy law schools taught jobless grads too well

16 Mar 2012

Disgruntled lawyers are suing their alma maters for exaggerating employment prospects. That seems fitting for a litigious lot with buyers’ remorse over a $120,000 education. A lousy job market isn’t the schools’ fault, but training these cheeky legal eagles may be.

State bank won’t turn California’s economy around

16 Mar 2012

The Golden State, Hawaii and 15 others want to copy North Dakota’s state-owned bank. But that institution thrives because of the small Midwestern state’s fracking-driven growth and its rural and uncorrupted politics. Elsewhere, state banks risk becoming politicized money-pits.