CCB sale underlines BofA’s slow road to recovery 30 Aug 2011 Offloading some $8 bln of the Chinese bank’s shares is a double boost to capital. Along with Buffett’s investment and future earnings, it should help put BofA back on track. But none offers a quick fix. Economic and mortgage woes will leave shareholders dangling for some time.
Mother Nature threatens another mark on markets 30 Aug 2011 Just days after a rare earthquake, Wall Street faces a more serious disturbance from Hurricane Irene. The storm may still fizzle out. But it’s heading for a region with $12 bln of daily output and could cripple finance’s capital at a time when investors are already jumpy.
Bernanke’s inaction, even if temporary, is welcome 30 Aug 2011 Stock investors may have been briefly underwhelmed, but the Fed chairman was right not to promise new easing in his Jackson Hole speech. Aside from its likely ineffectiveness, he faces dissent at the Fed. That’ll make the now extended September meeting a new focus for markets.
Temasek’s smart CCB trade may have strategic costs 30 Aug 2011 Singapore’s state investment fund is buying shares in China Construction Bank from Bank of America - at a valuation 21 pct below where it dumped the stock last month. That has financial logic. But it may look too clever for Beijing, and hurt Temasek’s access to deals in China.
Apple wouldn’t be first to weather succession 26 Aug 2011 IBM, Wal-Mart and General Motors show how an obsessive focus on design, customer needs and tight control over supply chains can be ingrained in a company by a visionary creator. But these examples also provide some warning signals about how the post-Steve Jobs era could go wrong.
Demand Media takes cake with galling stock buyback 26 Aug 2011 The content farm’s shares have halved since Goldman and Morgan Stanley took it public in January. Now it’s spending a third of the cash it raised to repurchase stock. That contravenes the promised use of proceeds in its prospectus - and does nothing to fix its damaged business.
Goldman chips away at fixed cost problem 26 Aug 2011 The bank is trimming base pay for some senior UK bankers. The 2009 shift from bonuses to higher fixed comp was a bit slippery, but the move back rightly reinstates pre-crisis flexibility. Rivals should follow but may struggle unless they, too, foresaw the need in the small print.
Buffett’s $5 bln endorsement won’t end BofA’s woes 26 Aug 2011 Winning the Sage of Omaha’s backing is a coup for CEO Brian Moynihan - and the terms aren’t painful. But the deal offers no fix to BofA’s mortgage black hole nor does it immediately boost common capital. Those concerns may prove to be more enduring than Buffett’s thumbs up.
Bloomberg LP spares no expense on first big deal 25 Aug 2011 The New York mayor’s financial information company is paying $1 bln for legal publisher BNA. At 36 times earnings, no public company could reasonably compete. But the price also reflects Bloomberg’s ardor to expand its influence and build a cushion against Wall Street.
Now investors can focus on just how good Apple is 25 Aug 2011 No CEO is as indelibly linked to a company as Steve Jobs. But his unfortunate health issues have been a distraction for yearsll-seeded orchard. Handing over day-to-day operations is still a blow. After the initial shock, though, investors should see more clearly the powerhouse Jobs built.
Bernanke should leave any new stimulus to Congress 24 Aug 2011 The anti-deflation rationale for the Fed’s last bout of bond-buying won’t wash this time. Anyway, its effectiveness was questionable. And the U.S. central bank is already in uncomfortably deep. Fiscal action might be equally unhelpful, but at least it’s easier to reverse.
BofA blues is bottling up U.S. credit 24 Aug 2011 The Fed still wants to keep credit as easy as it can. But worries, rational or not, over Bank of America’s stability are getting in the way. If credit investors continue to fear for the nation’s largest bank by assets, that will outweigh any policy options Ben Bernanke might try.
CBO deficit slash reveals DC financial wonderland 24 Aug 2011 Congress may have done a deal to cut costs, but the new, relatively upbeat 10-year prediction for U.S. finances also relies on some rosy long-term assumptions. Budget experts know next year’s numbers matter most. Washington policymakers need more focus on the here and now.
Aging population another headwind for U.S. stocks 24 Aug 2011 Meager economic growth is one thing. But share valuations could also suffer for a decade or more as retiring baby boomers sell off their equities. It’s one more reason for pension funds, younger savers and investors at large to make sure they aren’t expecting too much.
America’s too big to fail just keep getting bigger 23 Aug 2011 The FDIC’s latest quarterly roundup suggests, in aggregate, that the U.S. banking industry is recovering. But dig into the details, and it’s pretty clear that massive institutions are continuing to thrive at the expense of the small fry. That’s not necessarily healthy.
BofA shareholders resigned to life on skid row 23 Aug 2011 Fears of a dilutive capital hike may prove overblown. Even so, BofA’s long-running mortgage saga has moved a seemingly endless list of litigants ahead of equity investors in the pecking order. Until the claims are resolved, the stock price looks set to stay in the gutter.
Companies should resist buyback temptation 23 Aug 2011 Share repurchases are creeping back into fashion, and are easier to like when markets are on their knees. But boards have often sanctioned buying programmes that have destroyed value. Share buybacks make more sense in a bear market, but the investment case remains unconvincing.
Next wave of patent rulings could ease tech wars 23 Aug 2011 Google, Apple and others are spending billions on invention rights. But they’re really buying legal protection. That’s because federal judges have approved broadly defined patents, exposing firms to infringement claims. The courts need to sync up the law with the real world.
Private sector drag sheds harsh light on stimulus 23 Aug 2011 Because it’s included at cost, government spending increases GDP by definition. But as Washington wrote more checks in 2007-11, private sector output slowed down, suggesting a possible crowding-out effect. When the U.S. economy is sick, bigger government looks like bad medicine.
HP stock sell-off looks like overkill 19 Aug 2011 The tech giant has seen about a quarter of its market value, almost $16 bln, vaporized in two days. Shareholders have fled following another profit warning, a huge and pricey acquisition deal, and a strategic U-turn. That makes for plenty of warts - but HP now looks too cheap.