Americas

Citadel shows some moats are still hard to cross

12 Aug 2011

Ken Griffin’s hedge fund is abandoning its foray into investment banking. Internal clashes didn’t help and adding a middle man to a trading business creates conflicts, too. But bulge-bracket firms also held up better than expected. Wall Street turf has some solid defenses.

Fretting frackers restrain economic opportunities

12 Aug 2011

Critics of the controversial drilling process contend its hazards have been downplayed and the benefits exaggerated. A new U.S. report suggests just the opposite. Yet until safety concerns are tackled, as with New York’s proposed cleanup fund, shale’s potential won’t be realized.

Financial lifeboats starting to get crowded

11 Aug 2011

Safety from sinking stocks has been sought in Treasuries, and even bonds backed by U.S. homes. But other places of refuge like the Swiss franc and gold showed on Thursday how quickly they can be rocked when too many investors pile in. Havens aren’t immune to mania either.

Nomura’s Wall Street push will be tough to pull off

11 Aug 2011

The Japanese broker is focusing its investment banking ambitions on the United States while trimming its European headquarters. Nomura reckons it can establish itself by hiring rather than buying. But it’s hard to see it succeeding where so many others have failed.

U.S. debt-cut panel already poisoned by politics

11 Aug 2011

It hardly matters who sits on the new “super committee” seeking $1.5 trln of savings over 10 years. Wall St. will struggle to convince lawmakers of how important it is to reach a compromise when both parties are eyeing 2012 elections. Credit raters, however, may not wait so long.

News Corp cash finds the right target: investors

11 Aug 2011

After phone-hacking pay-offs and allegations of payments to UK police, News Corp cash is going in the right direction - dividends and buybacks. News also pledges deal discipline. But governance neglect and Murdoch’s unyielding passion for newspapers still hold the company back.

BofA boss deserves slack on style

10 Aug 2011

U.S. banks don’t look cheap yet

10 Aug 2011

Defeat for U.S. public unions sets stage for more

10 Aug 2011

Organized labor picked a fight it couldn’t finish in Wisconsin. It won two battles, but lost a recall vote war for the state Senate. Anti-union Republicans remain in control. The outcome may inspire other cash-strapped states to squeeze the power and wages of their workers.

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.