Americas

Brazil’s Rousseff was asking for real’s selloff

23 Sep 2011

Concerns about adventurous monetary policy, central bank independence, disco-era industrial policy and even insider trading are conspiring to make the Brazilian currency the biggest loser on forex markets. While some weakness was desired, it’s tough to regain lost credibility.

Meg Whitman is unjustifiable choice for HP CEO

22 Sep 2011

The former eBay boss only joined the tech company’s board this year. The feckless body has ousted three previous outsiders, damaging HP each time. Whitman’s experience in hardware and business software is limited. Her powers of persuasion will take HP only so far.

Fed’s Twist puts Wall Street in a spiral

22 Sep 2011

Extra stimulus pushed 10-year Treasury yields to a new low and could leave them under 2 pct for a while. That doesn’t just crimp interest margins for retail banks; it also squeezes already struggling debt traders. Financials now look nothing but a super-long-term investment.

Madoff trustee earning his eye-popping keep

22 Sep 2011

Irving Picard’s fees now top $224 mln, with the meter still running. Cleaning up the sprawling Ponzi scheme doesn’t come cheap. But it’s peanuts compared with the Lehman bankruptcy tab, and Picard is getting more than twice the return on the dollar. He could turn out a bargain.

United Tech’s $16.5 bln buy relies on debt markets

22 Sep 2011

The nearly 50 pct premium it’s paying for Goodrich might have been lower if United Tech’s intentions hadn’t been leaked. But low interest rates, strong demand for blue-chip debt and a good fit should make the deal easier for shareholders to swallow despite the jet-fueled price.

Monetary moves have lost their magic

22 Sep 2011

Markets spurned the Fed’s latest love offering. The Twist was seen correctly as a small manoeuvre that can do little to speed up growth. It could even be more dangerous than helpful. Central banks should not try too hard - the pains of economic rebalancing cannot be avoided.

Bernanke’s twist may not be much to shout about

21 Sep 2011

The Fed’s revival of a 50-year-old idea to reduce long-term interest rates is four times heftier than the original. It adds to Fed balance sheet risk and to price pressures; more helpfully, it could boost small business lending. Overall, though, it’s unlikely to achieve much.

IMF issues timely warning on ultra-low rates

21 Sep 2011

Just as Ben Bernanke and his crew contemplate further easing, a new IMF report lays out the multiple threats created by such loose monetary policy. In rich nations, small firms suffer while in emerging markets, capital inflows produce bubble conditions. The FOMC should pay heed.

IMF financial crisis indicator bodes ill for China

21 Sep 2011

The fund has found a measure of credit growth that could predict crunches. It makes the Middle Kingdom look precarious and heralds problems for Turkey and Vietnam. The IMF’s crisis-spotting record is lousy. But overheating nations shouldn’t dismiss what seems a sensible metric.

New CEO wouldn’t fix dysfunctional HP board

21 Sep 2011

The tech group’s directors are thinking about jettisoning yet another boss, Leo Apotheker, after less than a year and right after green-lighting his $12 bln purchase of Autonomy and other radical changes that have rattled shareholders. But the board may be the real problem.

Can the BRICs save the PIIGS?

21 Sep 2011

Brazil’s limited offer of $10 billion of support is pure posturing. But its idea to channel it through the IMF has merit. But why limit the effort to the BRICS? Other large holders of reserves - such as Japan and Saudi - should also join the club.

Netflix’s clumsy divide could have one step to go

20 Sep 2011

The once-soaring video service angered customers again by separating mail-order from streaming. It will take far more subscribers to justify even its vastly shrunken valuation and to pay off rising obligations. Netflix may yet need to sell the DVD arm to preclude a cash crunch.

Ponzi bluff may yet help weak legal poker hand

20 Sep 2011

U.S. prosecutors seem to face long odds in a case against the Full Tilt Poker website. Gussying up fraud charges against the firm and some famous players by evoking Madoff sounds a stretch but could prove an ace in the hole. At least it shows the feds aren’t ready to fold.

Jefferies shows bank investors are braced for pain

20 Sep 2011

Rather than punish the growing investment bank for its 85 pct crash in Q3 debt trading revenue, the market shrugged. True, a tough quarter was expected. But such nonchalance about this and JPMorgan’s earlier warning implies investors reckon fixed income will suffer for some time.

IMF’s education remedy won’t cure rich world ills

20 Sep 2011

The fund’s flagship yearly outlook laments a jobs crisis and rising inequality in wealthy nations. But its prescription of more education spending is unlikely to do the trick. Though desirable in many ways, such outlays aren’t the golden ticket economists often claim.

Proxy advisers’ clout is overstated

19 Sep 2011

When it comes to say-on-pay, director elections and the like, some U.S. companies fear that shareholders just parrot ISS and other purveyors of sometimes flawed advice when they vote. New research suggests the worriers should relax: company owners are more thoughtful than that.

Slashing tax deductions a big help for U.S. budget

19 Sep 2011

Forget the provocative Buffett Rule. Obama’s simpler proposal to cut tax deductions could add up to $9 trln to the government’s revenue over 10 years. There’s even a hint of common ground with the GOP. Best of all, killing off many deductions would do little economic harm.

SEC’s Abacus rule shuts several stable doors

19 Sep 2011

Banning middlemen from betting on the failure of asset-backed bonds they create sounds worthy. And the regulator’s new rule at least looks fairly narrow. But between the Volcker Rule and the exposure Goldman already found it had over Abacus, this issue already looks covered.

Tyco sets new example for conglomerate bondholders

19 Sep 2011

When the industrial group last broke into three in 2007, an ugly fight with creditors ensued. This time, Tyco’s paying them more heed. It plans to spread $4 bln of debt evenly rather than dump it into one unit. Lenders to other breakup candidates may want to gird themselves.

Masters of synergies create few for themselves

16 Sep 2011

To support the M&A ambitions of their clients, investment bankers routinely claim 1+1=3. Yet since JPMorgan, BofA and Barclays bought Bear, Merrill and Lehman, respectively, each has shed, not gained, market share. These numbers, at least, undermine Wall Street’s deal math.