Americas

HSBC reassures with $2.4 bln credit card sale

10 Aug 2011

At just twice 2010 earnings, the gain on selling its U.S. cards unit to Capital One isn’t brilliant. The sale will also lower returns and raise the bank’s cost ratio. Still, a clean exit shows CEO Stuart Gulliver is serious about getting back to HSBC’s trade-bank roots.

Groupon’s odds of success may wilt with market

10 Aug 2011

The online coupon company’s Q2 sales increased 10-fold from a year ago. Yet its net loss also swelled to over $100 mln as it financed growth with cash owed to merchants. If investors shunning risk close the window for an IPO, it would leave Groupon less financial wiggle room.

Fed’s "QE lite" another dent in dollar’s crown

10 Aug 2011

Ultra-low interest rates alone won’t knock the dollar off its perch as the world’s reserve currency. The greenback remains the lingua franca of global commerce and foreign central banks’ holding of choice. But the bleeding from a thousand cuts will eventually end its dominance.

Financials investors brace for the worst

9 Aug 2011

They wiped $100 bln off the 20 largest U.S. institutions on Monday. It may be panic selling. But most big banks are back below book value. Shareholders might not believe a 2008-like crash is coming, but the rout suggests they’d rather get out first and ask questions later.

Cheaper oil may be last best stimulus

9 Aug 2011

Falling crude prices are the silver lining to market woes. While governments lack economic ammo, one estimate says each cent off gas adds $1 bln to US pockets alone. OPEC is unlikely to intervene any time soon, meaning lower fuel costs could be the only economic booster for now.

Why Apple just might be the first $1 trln company

9 Aug 2011

The iPhone maker’s sales have been surging 80 pct a year, and profit faster. While its $342 bln value overtook Exxon’s briefly, it trades on par with the sluggish market - and at half the multiple it fetched in 2006. Relatively, at least, Apple looks worth far more.

Asian equity sell-off reflects three flavours of fear

9 Aug 2011

While the region’s economies are in good shape, investors fear the impact of a U.S. recession - both on exports, which remain key to growth, and on closely linked capital markets. A third worry is that plunging asset prices could cause a real pullback in credit and investment.

Fed’s firm compass setting puts it all at sea

9 Aug 2011

The FOMC’s decision to keep rates ultra-low till mid-2013 suggests excessive faith in its forecasting power. Inflation, jobs and growth have already surprised the Fed this year. Locking in a course for two years as a sop to markets only makes it harder to navigate choppy waters.

China’s diatribe on U.S. debt could backfire

8 Aug 2011

Official media’s sharp criticism may help shift domestic focus to U.S. economic woes and away from China’s train crash. But using the situation to attack Washington’s military policy in Asia won’t work. If anything, the tirade risks inviting U.S. pressure on trade and currency.

ECB’s bazooka has a limited shelf life

8 Aug 2011

The central bank’s decision to buy Italian and Spanish bonds has calmed investors’ nerves. But the ECB is only buying time until the euro zone governments’ bailout facility is ready to step in. And the repercussions of Friday’s U.S. ratings downgrade could limit future rescues.

BofA leads banks back into mortgage abyss

8 Aug 2011

Its shares fell 15 pct after the U.S. debt downgrade and AIG’s $10 bln home-loan lawsuit. Other mortgage-heavy banks were hit, but none as bad as BofA. Investors now reckon it’s worth $135 bln less than breakup value. That’s a huge housing hole for CEO Brian Moynihan to escape.

Don’t blame S&P for the madness of markets

8 Aug 2011

The credit rating agency targeted U.S. debt, but it was stocks not Treasuries that got clobbered. The counterintuitive reaction is less bonkers than it seems. An economic slowdown combined with dithering leaders and limited central bank resources is a bad mix for risky assets.

Different duty may call for U.S. Treasury boss

8 Aug 2011

There was little upside for the president to let Tim Geithner go back to New York. Finding a replacement would be a political pain. And with markets nervous, Obama needs someone with crisis experience. But Geithner may have a smaller role in this latest stage of the crisis.

Timing of S&P U.S. downgrade couldn’t be better

6 Aug 2011

Markets may be wobbly, but interest rates are at historic lows and buyers of U.S. debt plentiful as the world braces for another economic slowdown. There may be some initial turbulence, but it would be worse for Uncle Sam if the rating agency waited until markets acted first.

Credit ratings love-hate has simple answer

6 Aug 2011

The White House doesn’t like S&P’s downgrade of U.S. debt. European officials don’t welcome critiques of sovereign credit, either. Yet governments also mostly want to hold big raters closer by regulating them. The better idea is to push through nascent efforts to cut them loose.

US jobs report reaffirms the pain of a new normal

5 Aug 2011

July’s 117,000 new jobs may have stopped investors from panicking further, but they do little to dispel the gloom about the economy’s prospects. Fears of a double-dip recession look premature. But the data confirm the arduous task ahead of getting Americans back to work.

Investors in Motown see nothing but recession

4 Aug 2011

GM posted its best earnings in years and Ford’s looking solid even with subdued U.S. sales. Both are sitting on piles of cash. Yet shareholders have wiped a combined $49 bln off their value since January amid economic worries. They’re right to be cautious. But it looks overdone.

Petrobras’ bargain barrels pricier than they look

3 Aug 2011

The boss of the $210 bln Brazilian energy giant reckons its shares are the cheapest way to bet on oil. With production growth expected to leave multinational rivals in the dust, Petrobras shares might seem low-priced. But Brasilia’s grip on the firm justifies a big discount.

Voting equality could bring big payoff for Murdoch

3 Aug 2011

Change is needed at News Corp. Scrapping the dual share structure would signal a fresh start and could create a big slug of value. Reform could also reward the Murdochs handsomely for ceding control. A rejig would dilute today’s non-voters, but even they might end up ahead.

Corzine covenant smacks more of PR than protection

3 Aug 2011

Bondholder activism is a good thing. But investors in MF Global’s $300 mln offering have only $3 mln a year to gain and little to obviously lose if the former Goldman Sachs boss and New Jersey governor heads to Washington. This key-man clause benefits Corzine more than creditors.