United States of America

Avis gives Zipcar a faster lane to profitability

2 Jan 2013

Selling to the mainstream car rental giant for $500 mln means a 32 pct loss for those who bought Zipcar’s shares in its 2011 IPO. But tapping into Avis’s underused fleet should boost the car-sharing company’s margins. And for Avis owners, cost savings justify the 49 pct premium.

Ethical economy: The world at work

2 Jan 2013

“The Family of Man”, a 1955 photography exhibit, spawned a best-selling book. The pictures of work are dated and misleading, but still bring out the timeless universality of the human condition. It’s a sobering theme for economists, who place too many hopes on technical progress.

Global relief on fiscal cliff misses the point

2 Jan 2013

The unnecessary fight over the U.S. budget ended with another messy and inadequate compromise. Other equally silly clashes loom. Investors may cheer, but their nail-biting was symptomatic of the world’s excessive dependence on dysfunctional American politics. That hasn’t changed.

Draft obit for 2020: 2-and-20 fee structures

28 Dec 2012

The archetypal hedge fund fee deal survived the 2008 crunch and the euro zone meltdown, but not the industry’s growth. Asset gathering, tight controls and cautious bets by a new generation of fund bosses brought a decade of low returns. Fee gravity was irresistible in the end.

Coal’s ascendancy to leave ailing U.S. miners in pit

28 Dec 2012

The black rock is set to replace oil as the world’s top energy source within five years. America sits on 28 pct of the planet’s coal. But geriatric mines and poor transport will prevent the U.S. industry profiting from the boom. Australian and Indonesian miners are better placed.

Bank CEO survivors’ club may shrink again in 2013

27 Dec 2012

Of the major bank chiefs who had their jobs before the crisis, three remain: Goldman’s Lloyd Blankfein, JPMorgan’s Jamie Dimon and Brady Dougan at Credit Suisse. Each has had setbacks. But the two U.S. bank heads appear to have shrugged them off. Dougan looks more vulnerable.

U.S. doesn’t need Washington for economic stimulus

27 Dec 2012

President Obama’s planned one-time jolt has been stymied. But a divisive corner of the energy industry has many hallmarks of a boost to the nation’s wallets. Shale oil and gas production pumped $140 bln into 2012’s economy. It won’t cure America’s ills, but it can ease the pain.

Penguin in bondage hides real risks in media M&A

27 Dec 2012

Three tie-ups from 2012 will alter media in 2013: Penguin-Random House, Universal-EMI and Disney-Lucasfilm. In books and music, the business case for consolidation is clear. Wags will giggle about “50 Shades of Penguin”, too. But the real cultural impact may be less benign.

US housing doesn’t need another government bailout

26 Dec 2012

The White House is mulling allowing homeowners with underwater private mortgages to refinance into cheaper government-backed loans. But Washington should be planning its exit from home finance, not extending its occupation. Luckily, these latest plans look like a pipe dream.

Mexico may teach U.S. a lesson on good government

26 Dec 2012

The country needs fiscal and energy sector reform. Its rival political parties have little history of working together, so that might sound hard. But they look set to reach a compromise with far less rancor than their counterparts north of the border.

Fading power of oil autocrats will aid growth

24 Dec 2012

Democracies are starting to outclass countries like Iran, Venezuela and Russia in energy production. That should reduce the economic and political influence of such authoritarian states. The West’s booming output should steady fuel prices, a rare boon for the global economy.

GE’s $4 bln swoop on Italian supplier is shrewd

21 Dec 2012

The U.S. conglomerate will buy aerospace components maker Avio for $4.3 bln, or 8.5 times EBITDA. GE simplifies its supply chain, grows in the booming civil aviation market, and should reap savings. After a bumpy ride, Avio’s private-equity owners also reap a solid return.

Washington may finally take up mortgage reform

21 Dec 2012

Assuming Congress settles the deficit debate, housing finance should be its next stop. Lawmakers have postponed reforming the government’s role in funding home loans for four years. Some hurdles still remain. But economic, regulatory and political obstacles are dissolving.

Upward U.S. GDP revisions explain a few surprises

20 Dec 2012

The boffins’ first stab at the Q3 growth rate was 2 pct; the third and final estimate is a much healthier 3.1 pct. That makes unexpectedly good jobs figures seem less odd and may help account for Obama’s win in November. Stronger growth makes the fiscal cliff less scary, too.

A guide for the perplexed: U.S. MBS lawsuits

20 Dec 2012

Banks, trustees and even investors had a hand in the debacle surrounding repackaged home loans. With lawyers running up against post-crisis filing deadlines, the last lawsuits are in sight - but the end of the fallout is years away. Breakingviews explains where things stand.

NYSE’s Niederauer takes ICE-cold shower

20 Dec 2012

The Big Board’s agreed $8.2 bln sale to ICE stacks up financially and strategically. But NYSE is fetching a quarter less than its new owner offered in a joint bid with Nasdaq last year. With its shares lagging the exchange sector since then, capitulation was the CEO’s best option.

Fed’s foreign bank crackdown is price of stability

20 Dec 2012

Forcing overseas lenders to properly capitalize their U.S. arms is necessary to protect the local - and global - financial system. The Federal Reserve’s unilateral approach could prompt others to follow suit. But fears that fragmentation will stifle global banking are overblown.

Mini-Berkshire shows it’s hard to beat the master

19 Dec 2012

Markel models itself after Warren Buffett’s company. The $4 bln insurer aims for smart underwriting, picking stocks and adding long-term value. It has even got into reinsurance and owning businesses. But performance isn’t as impressive as Berkshire given its far smaller size.

Growth outlook gives U.S. stocks edge over Europe

19 Dec 2012

On dividend yield and price-to-earnings measures, European shares look attractive - at least compared to the other big, mature market across the Atlantic. But that ignores superior growth potential in the United States. Savvy bargain-hunters will see that better value lies to the west.

U.S. government GM sale is more noise than motion

19 Dec 2012

The Detroit automaker’s bosses will be glad to lose the “Government Motors” moniker in a year or so – not to mention restrictions on their pay. But industry-wide worries, not Uncle Sam’s stake, are weighing on the stock. Treasury could have waited rather than take a $5 bln loss.