Americas

Vacate Wall Street movement tests protest strength

15 Nov 2011

Zuccotti Park has been temporarily returned to its owners. Mayor Bloomberg spoke of sanitation, but the eviction reflects a political calculus, that the protest isn’t gathering steam. While that may be right, the resulting trail of tears up Broadway runs the risk of backfiring.

MF Global could finally help SarbOx prove itself

15 Nov 2011

The Enron-inspired Sarbanes-Oxley Act helped clean up U.S. companies’ books, albeit at a cost. But approaching 10 years on, enforcers have filed few cases, despite glaring failures in the crisis. Jon Corzine’s fallen firm may at last offer a chance to test the reform’s teeth.

Buffett’s IBM has rare mix of growth and value

15 Nov 2011

Berkshire Hathaway’s investment success is built on common sense stock picks such as the tech-turned-consultancy firm. But only four other global large-cap stocks match Big Blue’s downhome growth-and-value qualities of a sort so admired by the Sage of Omaha.

Sino-Forest pays high price for valuable lessons

15 Nov 2011

An independent committee cleared the Chinese group of major accounting worries. But $3 billion of lost market value won’t be easily recouped. Sino-Forest could have helped itself with a simpler structure, more disclosure and by focusing on quality as well as speed of growth.

Iran conflict would worsen bad economic situation

15 Nov 2011

After sanctions failed to end Tehran’s nuclear ambitions, a U.S. or Israeli-led attack on the Islamic Republic would come at a steep cost for the global economy. Sky high oil prices would delay any recovery, and threaten financial chaos across an unstable region.

Insider trading another reason to Occupy Congress

14 Nov 2011

Forget Wall Street for a bit. Politicians, especially those keen on light regulation, did much to create the financial crisis. Fresh news of U.S. lawmakers trading on inside information is further reason for mistrust. Public ire could usefully target this big problem.

IBM bet doesn’t mean Buffett’s tech spots changed

14 Nov 2011

The Oracle famously avoids tech stocks but bought a $10.7 bln stake in Big Blue. Once at the cutting edge of supercomputers, IBM just pulled out of a next-generation project. It’s now a predictable, well-branded consulting firm. IBM’s investment profile evolved, not Buffett’s.

Obama’s healthcare gets help on way to top court

14 Nov 2011

U.S. judges have ruled on the divisive law largely along party lines. But a right-wing icon helped break that pattern last week with a powerful opinion in support. The Supreme Court has a mind of its own but the precedent will be hard to ignore, even for conservative justices.

Music gods again divert EMI’s destiny

11 Nov 2011

With both EMI and Warner under new owners, it seemed the stars might finally uncross for their long-awaited union. But Sony and Universal brought their own karma and cash to the EMI auction, and Warner is again alone at the altar. Further twists of fate are in regulators’ hands.

Biotech firm Verastem’s IPO carries some big risks

11 Nov 2011

Founded by the man who sold GSK his last creation for $720 mln, the firm wants to raise $50 mln. Yet it has no revenue, no drugs in trials and looks predicated on unproven science. Verastem may deserve funding - but from venture capital, not public market, investors.

Sinopec’s M&A strategy gets a little smarter

11 Nov 2011

The Chinese oil major’s $5.2 billion investment in Brazilian oil resembles a deal it did last year – but at 20 pct less per barrel. Non-financial considerations explain some of the difference. But state-owned Sinopec appears to be learning more tricks of the M&A trade.

Life continues sweetly for the .001 percent

10 Nov 2011

Hours after another market meltdown, plutocrats spent over $300 mln at Sotheby’s in what connoisseurs called an epic auction of contemporary art. Celebrity chef Mario Batali also learned that even besieged bankers wield clout. This time doesn’t seem all that different.

Green Mountain shows how momentum works both ways

10 Nov 2011

The coffee company’s stock is the latest to crash down from a nose-bleed trading multiple, following Netflix and OpenTable. Fast growth can help paper over valuation or accounting worries, but in time they often catch up. Chipotle and Salesforce.com investors should take note.

Mark-to-market rethinks imply bank pain goes deep

10 Nov 2011

Fear of losses isn’t what’s prompting Goldman and Morgan Stanley to reconsider hallmarks of their accounting. Rather, it’s a need to juice profit. Though it may not amount to much, every dollar counts nowadays. As long as the shift stays at the margins, it’s not terrible policy.

Jefferson County isn’t a recession victim

10 Nov 2011

The Alabama county’s bankruptcy stands to be the largest in U.S. history, but investors shouldn’t see it as a sign of more to come as municipalities suffer in the wake of the recent downturn. Corruption and woeful mismanagement sank the county, not recession and falling revenue.

U.S. money funds may not be players in next crisis

9 Nov 2011

Money market funds have a bit part in the euro zone crunch as short-term lenders to European banks. U.S. regulators, meanwhile, want to end the fiction that they are just rebadged savings accounts. The industry won’t like that, but the global financial system could be safer.

Ohio vote shows deficit realities haven’t hit home

9 Nov 2011

The state’s voters overturned Republican attempts to limit bargaining rights of public sector organized labor. Even when they accept the need for cuts, Americans - like Greeks - are struggling to embrace structural change. The fight over national entitlements is looking grimmer.

Old ghosts still haunt new GM

9 Nov 2011

The Chevrolet centennial is reason to celebrate tradition. And GM’s Q3 profit reflects well on the recent past - its quickie bankruptcy. But the automaker is still cutting costs, has big unfunded liabilities and a gloomy end-of-year outlook. History may still be holding GM back.

Citi risk measurement scheme warrants closer look

8 Nov 2011

CEO Vikram Pandit is touting a plan for financial firms to disclose regularly how risk scenarios play out for a standard, hypothetical portfolio, as well as their own assets. Such a comparative tool might have raised red flags about MF Global -one reason it deserves attention.

Citi’s CDO settlement now seems to pass muster

8 Nov 2011

Judge Jed Rakoff raised tough but fair questions about the bank’s $285 mln deal with the SEC. Though Citi initially appeared to get off light compared to Goldman, its responses to the court show the case’s many gray areas. The watchdog may in fact have exacted all it could.