Americas

Confidence in cloud, cybersecurity key to growth

29 Dec 2011

They’re both hot $60 bln markets. But faith in cloud computing took a blow in 2011 with outages at Amazon and elsewhere. And the hacking of targets from Sony to Scarlett Johansson showed shortcomings in security. The tech industry needs to stay ahead if it wants to keep growth going.

Imagined Goldman Sachs memo that wouldn’t shock

28 Dec 2011

It has been a rough year for Wall Street’s pre-eminent firm. Its stock has even underperformed the likes of Citi and Morgan Stanley. With regulatory and other headwinds still strong, big changes can’t be ruled out in 2012. Breakingviews envisions some of the possibilities.

Next digital tidal wave target: 3D objects

28 Dec 2011

The ability to turn music, books, films and newspapers into easily transferable electronic files up-ended these industries, destroyed old businesses and created new ones. The rise of printing technology now threatens to wreak similar havoc on producers of physical things.

Time for Lampert to admit defeat running Sears

28 Dec 2011

The latest bad news should end the hedgie’s retail experiment. After 18 quarters of falling sales, his capex-light strategy hasn’t turned Sears into a retail winner - or into a cash cow. A good 2012 resolution for Lampert would be to go back to managing money, not stores.

U.S. protests won’t stop Japan’s yen meddling

28 Dec 2011

The Treasury has rightly criticised Tokyo for weakening the yen. Currency intervention has limited impact, and exporters have learned to live with a strong yen. But fears that traders see the yen as a one-way bet mean more meddling is likely, whether Washington approves or not.

New Fed governors may bring new policy solutions

28 Dec 2011

President Obama may have laid a clever election-year trap by naming the balanced pair of Jeremy Stein and Jerome Powell Fed governors. Both are well qualified, while Stein’s views on financial regulation might even help prevent future MF Globals from emerging.

Investors may find Citi’s the joke on them in 2012

27 Dec 2011

The bank now boasts a trimmer figure and some $65 bln of capital it should be in a position to start handing back, on top of any earnings. If Vikram Pandit can be the first CEO to steer Citi clear of crisis next year and beyond, he may even best JPMorgan in the payout department.

Where the investment banking jobs may be in 2012

27 Dec 2011

The industry is shrinking globally, but opportunities abound for enterprising financiers. Sovereign debt crises are forcing companies to hedge risk. Regional banks need consolidating. Private equity is awash in cash. And forex traders may have some new currencies to play with.

Main Street bonuses may again outdo Wall Street

27 Dec 2011

Investment bank chiefs bear most criticism over outlandish bonuses. But several of their Main Street cousins outdo them, paying big salaries or bonuses on terribly low hurdles. At least new U.S. say-on-pay rules better equip shareholders to push back.

Gingrich’s volatility should worry Wall Street

27 Dec 2011

Former U.S. House of Representatives Speaker Newt Gingrich is among the front runners in the GOP presidential race. His erratic beliefs separate him from the other candidates. This should worry Wall Street, as markets will be unable to predict how he would react to a crisis.

LBO debt gluttons have now gorged on equity too

23 Dec 2011

Buyout barons are sitting on nearly $400 bln of cash committed by investors - or over $1 trln of purchasing power. A big slug of it belongs to mega-funds at or approaching their use-by date, pressuring firms to deploy capital or return it. Expect some overpriced deals in 2012.

Brazil’s Itaú is the bank to watch next year

23 Dec 2011

It bills itself as “The Global Latin American Bank.” Thing is, it’s not - or at least not yet. But solid finances, determined management, a robust stock-market value and a wealth of opportunities from the misfortunes of others could make Itaú’s bold ambitions come true in 2012.

IMF needs to keep powder dry for usual suspects

23 Dec 2011

The fund is getting an extra $200 bln to aid with the rescue of wealthy Europe. But the downgrade of Hungary’s credit rating is a reminder that there could be more traditional middle-income demands for aid, too. The IMF will have to allocate its growing pot of money carefully.

Mercosur searching for alternatives to Adam Smith

23 Dec 2011

With members led by leftists, it’s not surprising the Latin trade bloc is raising tariffs and promoting anti-market policies. Mercosur has lots of commodities but relatively uncompetitive manufacturing, even in Brazil. One risk of economic experimentation is a return to poverty.

Jack Ma could pay high price to be rid of Yahoo

23 Dec 2011

The Alibaba founder wants to buy back most of Yahoo’s stake in his e-commerce giant. An earlier spat over their payment unit Alipay showed Ma has nuisance value and may deter other bidders. But financing it won’t be easy. After selling at the bottom, he risks paying a peak price.

The poorly performing, must-have 2012 investment

22 Dec 2011

It’s hedge funds. The typical one has lost 4 pct so far in 2011, lagging stocks and bonds. Investors aren’t deterred, though. They want 8 pct annual returns but face low debt yields and dim prospects for stocks. If fundamentals again guide markets, hedgies could bridge the gap.

Missing at the New York Times – a dividend?

22 Dec 2011

The Gray Lady has regrouped since flirting with oblivion three years ago. After purging non-core assets, cutting debt and parting ways with its CEO, the Times looks ready for a deeper digital dive. Before it can take that plunge, the firm may need to pay its controlling family.

Fan/Fred mortgage forgiveness would be weak potion

22 Dec 2011

After resisting the idea for years, the regulator of the U.S. home loan giants is humoring a new policy effectively reducing principal on loans. The plan could slow the enterprises’ near-term losses, but would prolong their agony and do little to heal the housing market.

SEC’s ballplayer cases no substitute for homeruns

22 Dec 2011

The U.S. regulator is on a streak of fraud suits against retired athletes and other minor celebrities. That may help deter wrongdoers, but it doesn’t improve a thin record against big-league financial miscreants. If the watchdog wants respect, it needs to swing for the fences.

Corporate bonds push for sovereign status

21 Dec 2011

Finance directors may start giving finance ministers a run for their money. The woeful state of national balance sheets will push risk-averse investors into highly rated companies such as Microsoft. Corporate bonds could prove more attractive than even top quality sovereigns.