United States of America

Fiat pegs Chrysler as most undervalued carmaker

14 Jan 2013

CEO Sergio Marchionne’s latest offer to buy a stake in Chrysler from the UAW trust sets the U.S. manufacturer’s worth at $6 bln. True, it lacks the cash and margins of Ford or GM. But it’s a purer play on a recovering U.S. market. Fiat can safely value Chrysler more generously.

Europe brings the pain for UPS and TNT

14 Jan 2013

Competition watchdogs are barking again, after killing DB-NYSE last year. A likely EU veto has led the U.S. courier to drop a $7 bln bid for its Dutch peer. TNT’s stock is down 50 pct. If the group’s strategy since its demerger has been to get bought, it needs to think again.

Wells Fargo productively bides time

11 Jan 2013

The San Francisco-based bank generated a record $5.1 bln quarterly profit even as its net interest margin tumbled another 10 basis points. Wells Fargo, like its peers, can’t lend out the deluge of deposits fast enough. It’ll be an ongoing challenge until the Fed reverses course.

Breaking debt cap is best of bad options for Obama

11 Jan 2013

He must meet U.S. obligations, and he can’t cut spending without Congress’s say-so. But some lawmakers want to stop him borrowing more. Trillion-dollar coins aside, breaching the debt ceiling is legally the president’s safest bet. That could force his critics into hard choices.

Big U.S. banks have plenty to prove in 2013

10 Jan 2013

Wells Fargo aside, valuations have languished below book value. After a strong 2012 for stock markets and with Q4 reports imminent, JPMorgan and Goldman are again near that level. Getting there will be a relief rather than anything to crow over, and investors rightly remain wary.

Public choice theory will outlive its founder

10 Jan 2013

While Keynesians see government as an impartial economic problem-solver, James Buchanan, who died on Jan. 9, assumed public sector decision-makers were self-interested. The lessons - big government comes with big risks, and firm rules can improve behavior - are essential.

U.S. mortgage rules herald a kind of housing turn

10 Jan 2013

Five years after the real estate bust, regulators have set out provisions to shield lenders from home-buyer lawsuits. In an industry plagued by litigation, it should help lure investors back. The rules may not stop another bubble, but are an integral step to reshape the market.

Obama pick for Treasury more tweaker than reformer

9 Jan 2013

Jack Lew knows budgets and helped balance America’s books under Clinton. But he may be too liberal for today’s Republicans, and his boss wants to cut entitlements with a scalpel, not a cleaver. That makes it unlikely Lew will preside over a long-term answer to U.S. deficits.

Goldman typically quick to read money fund omens

9 Jan 2013

The U.S. bank will publish the value of its money market funds’ assets daily, rather than only months later. That’s a step forward in transparency, and might also help shape reforms that watchdogs and the industry can both accept. It’s an example for other fund managers.

Governance fixes don’t let Chesapeake CEO off hook

9 Jan 2013

New directors are cutting back outsized pay and perks at the U.S. gas driller. But cleaning house is separate from holding boss Aubrey McClendon to account for dodgy personal dealings. The only credible result of a lengthy board probe into conflicts of interest would be his exit.

Sprint and Softbank forced into tactical warfare

9 Jan 2013

U.S. pay-TV company Dish put forward a highly conditional $2.3 bln offer for Clearwire, a spectrum owner integral to the ambitions of Sprint and its Japanese buyer. Though the Dish bid is unlikely to go far, it could pressure Sprint to pay more - or strike a deal with Dish.

Big-shot banker class of 2012 gets back to work

8 Jan 2013

Though it’s not the top job at Barclays, JPMorgan’s Jes Staley is joining hedge fund BlueMountain for what could be a less stressful but lucrative role. He’s not the only Wall Streeter seeking a gig. Diamond, Taubman, Pandit & Co may find power and glory similarly elusive.

Tim Geithner wore more than firefighter’s hat well

8 Jan 2013

While part of the establishment that allowed the financial system to self-immolate, the departing Treasury secretary helped douse the flames effectively. While that should be his main legacy, Geithner also managed the role’s diverse duties in the toughest economic times.

AIG’s bailout helped, not harmed, shareholders

8 Jan 2013

The insurer’s pesky ex-CEO is suing the U.S. government and wants the company to sign on. It probably won’t, but the case is weak anyway. Shareholders did better than if AIG had gone bust, and the terms of the $182 bln rescue were kinder than private investors would have allowed.

Chuck Hagel is good choice for U.S. deficit hawks

8 Jan 2013

Obama’s pick for defense secretary mixes dovish foreign policy views - at least for a Republican - with budget-cutting fervor. The combination could actually slash Pentagon spending. Reducing it to the proportion of GDP seen in the late 1990s would save Uncle Sam $250 bln a year.

Chesapeake sets unlikely governance reform example

8 Jan 2013

The U.S. gas firm’s revamped board slashed CEO Aubrey McClendon’s bonus to zero and reined in other perks. They’re overdue steps for Chesapeake, which has a long way to go to restore credibility. Still, there’s hope for similarly abused shareholders elsewhere in the oil industry.

Oil barons and tech hipsters share a dark side

7 Jan 2013

They seem so different. But SandRidge’s CEO and some peers jet around at shareholders’ expense, while at Facebook and Google founder-bosses are insulated from owners by super-voting rights. Clubby boards also feature in both sectors. The oil business may prove easier to clean up.

Private lawyers could add oomph to SEC enforcement

7 Jan 2013

The U.S. regulator has scored big settlements from Wall Street banks. But a new study suggests shareholder lawsuits may do better, especially at pinning blame on individuals. Other government agencies find ways to co-opt private-sector legal talent. Maybe the SEC should try it.

Fed quandary shows finance lost in economic space

7 Jan 2013

The U.S. central bank says it’s concerned about the economic costs of money-printing. That probably means inflation. They should worry more. Extraordinary policies have distorted asset prices. After providing misinformation for four years, markets risk becoming irrelevant.

Sokol’s escape further fogs insider-trading laws

4 Jan 2013

Warren Buffett’s fallen deputy was a prime target after dealing in Lubrizol shares as Berkshire Hathaway mulled a takeover. Yet the SEC dropped its probe. Even with a broad insider-trading crackdown since the David Sokol affair was disclosed, the crime’s contours remain elusive.