United States of America

Ford’s Q3 power puts Europe woes in perspective

30 Oct 2012

The automaker’s North American unit had its best showing in at least 12 years. With core operations consistently profitable, CEO Alan Mulally has more than enough breathing room to fix the ailing European business. Even if that takes time, Ford still looks undervalued.

Apple infighting may be sign of golden age waning

30 Oct 2012

The company’s genius has been the smooth integration of art and engineering. Steve Jobs kept an uneasy peace between the two. With mobile software chief Scott Forstall out, design guru Jony Ive will rule over hardware and software. Apple needs mastery of both.

Rule of law finally catches up to Argentina

29 Oct 2012

The nation exploited fuzzy language to stiff debt-swap holdouts. As Breakingviews predicted, a U.S. court ordered it to pay up, saying a promise to treat creditors equally is plenty clear. Rather than spark market chaos, the ruling sends the message that deal terms have teeth.

Frankenstorm is salient risk management reminder

29 Oct 2012

When it comes to natural disasters like the freak storm slamming into the eastern U.S., there’s no such thing as too much preparation. The same is true in business, particularly banking: calamities often strike without warning and there’s no such thing as too much capital. 

Hugo Dixon: World needs healthy capitalism

29 Oct 2012

The term “healthy capitalism” may seem an oxymoron. But health involves vigour, well-being and resilience. Capitalism can have all those qualities provided warped incentives are corrected and the prevalent culture of greed is tempered by a culture of serving customers.

Pandit putsch is setback for U.S. board governance

26 Oct 2012

Separating the jobs of chairmen and chief executives is generally to be encouraged. But the logic is undermined by recent events at Citigroup. Chairman Mike O’Neill’s ouster of ex-CEO Vikram Pandit is looking increasingly like a power-grab rather than a service to shareholders.

U.S. GDP growth sharpens election knife-edge

26 Oct 2012

The economy grew at a 2 pct rate in Q3, just above expectations. That gives Obama a wafer-thin lead in Breakingviews’ election model. But beneath the headline, private sector growth has slowed further. That’s a hint of the problems facing whoever next occupies the White House.

To fix U.S. finances requires compromiser-in-chief

26 Oct 2012

Achieving a grand bargain on tax, entitlements and spending will take a leader who is capable of bipartisan dealmaking. Having worked with Democrats as governor of Massachusetts, Romney may have the edge over Obama, whose signature legislative triumphs were party-line deals.

Letter to the Editor: IAC

26 Oct 2012

Joey Levin, CEO of IAC Search & Applications, responds to an Oct. 19 Robert Cyran column about IAC’s internet strategy.

Risk relief may soften banks’ commodities blow

26 Oct 2012

Proposed regulation is making it tougher for investment banks to trade commodities. That presents unregulated trading houses an opportunity to poach people and looks unfair. But banks which pull back also dial down risk, and that may earn them higher valuations in the market.

Apple results shrink iPad mini’s relevance

25 Oct 2012

Hawking nearly 27 mln iPhones last quarter dwarfs all the hoopla around the launch of the tinier tablet, which may sell about the same amount in a year. Moreover, iPad margins don’t compare – and the mini’s will be smaller still. The phone still energizes the Apple ecosystem.

U.S. housing recovery not as solid as it looks

25 Oct 2012

Prices are up 4 pct. But cash-rich buy-to-rent investors, not consumers, seem to be behind the uptick. Blackstone is snapping up 666 houses a week. While helpful and done with no taxpayer aid, if investor interest dries up before individuals jump back in, the recovery may falter.

New York Times cash can stretch only so far

25 Oct 2012

The U.S. newspaper publisher’s ugly Q3 erased about 15 pct of its market value and put further demands on a roughly $1 bln war chest. Shareholders, including the Sulzberger family, will want a dividend and pension funds are short. The Times, however, could use the cushion.

Lazard advises Wall Street on how to take the pain

25 Oct 2012

Christmas came early for activist Nelson Peltz, if not some of Lazard’s employees. The firm will slice $125 mln in expenses by year-end. Though Lazard still pays out more to staff than rivals, the move is consistent with CEO Ken Jacobs’ goal to boost returns for shareholders.

Upbeat Unilever shows dangers in generalities

25 Oct 2012

A weak season for corporate earnings is creating new nervousness in the world’s leading equity markets. But the pleasant surprise just served up by Unilever shows what can be missed in broad brush impressions. Take your lead from averages, and your returns may be somewhat mean.

Conoco already falling behind new chosen peer

25 Oct 2012

After shedding its refineries in May, the energy explorer set its earnings to coincide with new rival Occidental. Conoco’s Q3 profit of $1.8 bln beat expectations. But output slipped, while at Oxy production increased 4 pct. Conoco has its work cut out to keep shareholders happy.

Gupta insider trading sentence apt but incomplete

25 Oct 2012

The former McKinsey boss and Goldman director asked to be allowed to help Rwandans. Instead he got two years in the slammer. His request oozed chutzpah but made a useful point. Ideally, sentences should punish crooks but also exploit their skills. This one goes only half way.

Why do investors prefer Amazon to Apple?

24 Oct 2012

Sure, the gadget maker’s market value is far larger. Yet investors are willing to pay almost nine times as much for the retailer’s estimated earnings. That’s expensive in any case. But it’s also odd, because Amazon perpetually promises more jam tomorrow, while Apple delivers it.

Fed may hike rates sooner than it reckons

24 Oct 2012

The FOMC’s sticking with its near-zero target till 2015. But after the presidential election longer-term savings and inflation risks of current policies may be more salient than short-term jobless trends. If so, the Fed may soon raise rates, no matter who wins the White House.

Ethical economy: Unrealistic Nobel economics

24 Oct 2012

The latest prize rewarded the study of stable pairwise matching. Like so much of game theory, the winning idea is simple, slightly illuminating for economists, occasionally useful for everyone - and profoundly misleading. People should not be reduced to calculating machines.