Americas

Will Wells Fargo get hooked on Wall Street crack?

10 Oct 2011

The California-based lender has mostly resisted lower Manhattan’s siren call. New rules would make it even costlier. But Wells kept Wachovia’s investment bank and is hiring. Ailing Morgan Stanley could even be a good fit. But such temptation can become a debilitating addiction.

Sprint’s splat opens up U.S. wireless dance floor

10 Oct 2011

Bodies are piling up in the industry’s increasingly complicated waltz. Cash concerns tripped up Sprint and partner Clearwire, after AT&T and Phil Falcone’s LightSquared stumbled earlier. That makes space for a possibly jilted T-Mobile and a surprisingly dexterous Dish.

Oil trader, stock investor variance is opportunity

10 Oct 2011

Economic fear has taken a heavier toll on U.S. oil company shares than on crude itself. Either there are bargains among the stocks of oil explorers, or commodity investors are too bullish. The difference of opinion ought to mean there’s room to make money.

Wall Street dealmakers get trampled by PIIGS

10 Oct 2011

The fear and uncertainty over Europe has sent the cost of U.S. credit skyward. By one closely watched gauge, junk bonds are yielding almost five percentage points more than they reasonably should. Given the bureaucratic dithering, bankers and buyout barons may be idle for a while.

Sinopec shows quirks of Chinese resource M&A

10 Oct 2011

The Chinese energy group has offered a massive 120 pct premium for Canadian producer Daylight. Like similar Chinese deals, the $2.2 bln offer works because of strategic necessity, still-high commodity prices, cheap capital and a shareholder none too fussed about value creation.

Volcker Rule draft still leaves many gray areas

7 Oct 2011

U.S. regulators have made a good stab at trying to minimize the prop-trading ban’s impact on market-making. But their 200-page draft still raises many questions. It confirms that the former Fed chairman’s know-it-when-you-see-it mantra was too simplistic for this complex task.

Latest U.S. tax on rich would be counterproductive

7 Oct 2011

A 5.6 percent millionaire’s surtax is being pushed by Senate Democrats. Unlike Obama’s original scheme to limit deductions, which would help fix part of the tax code, this one doesn’t. The high marginal rates would encourage avoidance and risks dinging the already ailing economy.

U.S. jobs data confirm economy is muddling along

7 Oct 2011

The six-figure increase in employment in September beat expectations but wasn’t enough to cut long-term unemployment, which increased. Still, alongside positive manufacturing data, it suggests the outlook is for slow, patchy growth rather than a relapse into recession.

Del Monte settlement quantifies cost of conflicts

6 Oct 2011

Barclays will surrender a big slug of fees from the $5.3 bln buyout, where it advised the seller and financed the buyer, KKR. Wall Street read the writing on the wall after a judge’s slap. But when banks get spanked on the bottom line, the message resonates loud and clear.

Apple effect far greater than $350 bln market cap

6 Oct 2011

The company changed the world several times. It introduced the spreadsheet, made computers into consumer goods and its phones helped make the Cloud realistic. Jobs’ genius for design and user-helpfulness turned IT from nerdish to uber-cool. Apple has been tech’s good Pied Piper.

Goldman bankers may need to sacrifice more spoils

6 Oct 2011

A rare loss possibly looms after the market’s tumultuous Q3. But that assumes Goldman keeps socking away 44 pct of revenue for compensation. Cutting the pool, perhaps by a lot, would keep returns above water and shareholders sweet. And this solution may not be a short-term one.

Jobs, no ordinary CEO, leaves no ordinary company

6 Oct 2011

The force behind the iPod, iPhone and iPad not only created and then rescued Apple, building it into the most valuable tech company on the planet. He also changed the way people live. It’s a rare entrepreneur who leaves that legacy – and a company that can thrive without him.

Can Microsoft be trusted not to buy Yahoo?

5 Oct 2011

The Internet group is gently looking for buyers for bits of its business or the whole shebang. Microsoft boss Ballmer would be remiss not to run the ruler over his strategic partner. But shareholders may justifiably wonder if he can refrain from another overpriced acquisition.

SEC may deter more cheats by lowering sights

5 Oct 2011

The U.S. regulator faces criticism over its record nailing financial rogues. Ponzi-schemers aren’t the only ones who should pay for wrongdoing. Suing for negligence rather than harder-to-prove fraud could make a difference. Penalties would be smaller but punishment more certain.

BNY Mellon lawsuits more Spitzer than slam-dunk

5 Oct 2011

The current New York AG’s $2 bln suit against the biggest custodian bank may boost him politically. But BNY’s clients had a decade to take forex business elsewhere if they didn’t like the terms. The state and federal claims smack of settlement-seeking rather than legal certitude.

Keynesian consensus may win by default in 2012

5 Oct 2011

With Chris Christie out, Mitt Romney looks more likely to win the GOP nomination. He professes a wish to change policy, but his history shows him swayed by the big-government consensus. The Tea Party’s Austrian, hard-money views seem destined to fade from view in the election.

Losing Luster: Goldman Sachs Under Lloyd Blankfein

5 Oct 2011

No firm has attracted more envy within the financial industry or scorn from outside it. The latest e-book from Breakingviews chronicles Goldman’s ups and downs over the five years Blankfein has been in charge - and the challenges it now faces at a pivotal moment for Wall Street.

A manifesto for Occupy Wall Street

5 Oct 2011

The wannabe protest movement has only vague complaints. “A feeling of mass injustice” may be understandable, but it doesn’t bring crunchy soundbites to match the Tea Party’s “taxed enough already.” Breakingviews offers a more sharply defined, if partial, set of objectives.

Trade war remains a distant prospect

5 Oct 2011

The U.S. and China are once again raising the spectre of mutually destructive protectionism. But globalisation has gone so far that trade restrictions would have painful and immediate consequences in every country. That’s why the threats won’t go far beyond angry skirmishes.

Overbearing Brasilia at fault in ethanol shortage

4 Oct 2011

Lack of investment and squeezed margins mean Brazil’s biofuel production is not keeping up with demand. Government efforts to change that are now affecting oil giant Petrobras. It’s the kind of tangle of unintended consequences that follows excessive government meddling.