Americas

U.S. mortgage suits inflict super-damages on banks

6 Sep 2011

The latest U.S. regulatory assault for mis-selling mortgage securities has dragged down bank stocks. But damages previously sought from UBS, and the performance of the underlying loans, suggest the impact of this particular banking nasty is now more than priced in.

Brazil can’t solve fiscal woes with rates alone

2 Sep 2011

Cutting the benchmark Selic rate to 12 pct isn’t inflationary, since CPI is only 7 pct and global rates are ultra-low. However the government runs big deficits in a huge boom with high commodity prices. That could boost prices down the road - or worsen any downturn.

Running for president like a hedge fund manager

2 Sep 2011

White House hopeful Jon Huntsman aims to employ a fund-of-funds approach to policy: Combine the best off-the-shelf economic plans on taxes, debt and energy into one broad proposal. Even if Republican voters don’t invest in the underdog’s offering, his opponents might want to.

More winners than losers if AT&T deal fails

1 Sep 2011

The operator’s top brass and lawyers will obviously look awful if the $39 bln deal collapses. It’s not yet obvious how T-Mobile and Verizon would fare. But telecom equipment and handset firms, as well as the likes of Sprint, LightSquared and Crown Castle all stand to gain.

U.S. bank boss ouster undermines cult of CEO

1 Sep 2011

Surprise changes at the top, especially ones with mealy-mouthed excuses, don’t typically go down well with investors. But BNY Mellon became about $1 bln more valuable after the departure of boss Bob Kelly. Evidently investors, like the board, considered him entirely dispensable.

Irene should blow U.S. utility deal off course

1 Sep 2011

The $4.2 bln merger of Northeast Utilities and NSTAR is up for approval. But blackouts following the hurricane have exposed NU’s deficiencies serving customers despite charging America’s highest rates. Regulators should ensure service is on a better track before they OK any deal.

Big pharmacy deal confronts past and now present

1 Sep 2011

Wall Street is betting there’s almost no chance trustbusters will approve the $29 bln acquisition of Medco by rival Express Scripts. Though overly pessimistic, two nixed healthcare mergers in the late 1990s and the challenge to AT&T’s deal provide good reason for skepticism.

More U.S. mortgage help isn’t needed

1 Sep 2011

There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.

Obama’s watchdogs call AT&T’s $39 bln wager

31 Aug 2011

The No. 2 U.S. mobile company bet it could persuade regulators that buying No. 4 T-Mobile would benefit consumers. The U.S. DOJ senses a weak hand. With the industry a near duopoly, the government’s read looks right. AT&T isn’t folding but looks on the verge of a bad beat.

Exxon’s Russian coup rubs salt in BP’s wounds

31 Aug 2011

The U.S. oil group’s Arctic exploration agreement with Rosneft mimics BP’s aborted deal but without the $16 bln share swap. Instead, there’s Russian access to U.S. drilling projects. Assuming no hidden snags, Exxon could become the big winner from BP’s botched Russian strategy.

Tar sands pipeline environment fears are overdone

30 Aug 2011

Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.

Groupon’s gaffes give fair warning to investors

30 Aug 2011

The run-up to the web coupon company’s IPO has been a string of embarrassments. Promised profits disappeared in filings, the chairman put his foot in his mouth and now the CEO has made comments that appear to skirt SEC rules. Forget valuations, this company should be avoided.

Obama’s new economist faces political headwinds

30 Aug 2011

With U.S. unemployment hovering above 9 pct, Alan Krueger - a Princeton labor market expert - is suited to be the next White House chief economist. But his job creation ideas may not get much of a hearing. With Obama campaigning, political pros will have the president’s ear.

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.